Switching between VLS funds?

Alexland

tel_ wrote: »

My Vanguard LS investments are currently at +15%. I'm thinking of reducing mine to £500 because of this, as I also pay1k into my investments. Then I will increase those contributions back to 1k when the markets are down. Isn't this wise?

Assuming it's affordable then I would keep the contribution rate constant but maybe slightly vary your asset allocation (staying within your volatility tolerance and long term outcome range) based on your contrarian view on market exuberance. This has served me very well in recent years but I accept it's not for everyone, increases risk and most people would get a perfectly good result keeping to a suitable fixed asset allocation ignoring short term market valuations.

tel_ wrote: »

but from the good people of these forums - Alexland, coleston etc. Thanks guys!!

You wouldn't trust us if you could see how we dress :dance:

Thrugelmir

Roland_Flagg wrote: »

My thoughts are that as I won't need to access this fund for 10-13 years, that even though we could be going through a market downturn, it is best just to leave it as it is and ride out the dips.

How much volatilty can you stomach? Markets don't just dip. They can serially underperform for extended periods of time.

nrsql

Bravepants wrote: »

But if you have equal amounts in VLS60 and VLS20 then you may as well have just bought VLS40.

Equal amounts being the relevant bit. Not sure even then it would be true.
This was just to alleviate the op's concerns and give an option. I wouldn't expect changing the drip feed to give equal amounts unless it's just started - and even then it would overweight the new fund.

It is a way of balancing without selling and giving some comfort without avoiding the risk/reward. Basically removing the temptation to deal on a whim or try to time the market too much.

sendu

tel_ wrote: »

Doesn't it make a little more sense for Roland to reduce his contributions to, say, £500 during periods of growth?

My Vanguard LS investments are currently at +15%. I'm thinking of reducing mine to £500 because of this, as I also pay1k into my investments. Then I will increase those contributions back to 1k when the markets are down. Isn't this wise?

Sort of, but not really. The whole point of the LS funds (other than LS100) is to do this for you with automatic rebalancing.

Holding 50% of your investment as cash, and buying 50% LS50 (if such a thing existed, just for ease of maths), is sort of like buying LS25. Only it's worse, because you're not being systematic about buying or selling more equity in line with market performance.

Just buying 100% LS60 means that during a crash, when equities are worth less, the bonds in the fund are sold to buy the cheap equities, to maintain the 60% ratio. At market peaks, when the equities have high prices, they are sold to buy more bonds, again to maintain the ratio.

You can go with a 100% equity fund and keep cash if you don't like bonds (who would, right now?), but just be sure to properly rebalance each year. The approach of blindly keeping exactly 50% cash for new investments when your think markets seem OK won't work as well.

badger09

tel_ wrote: »

Doesn't it make a little more sense for Roland to reduce his contributions to, say, £500 during periods of growth?

My Vanguard LS investments are currently at +15%. I'm thinking of reducing mine to £500 because of this, as I also pay1k into my investments. Then I will increase those contributions back to 1k when the markets are down. Isn't this wise?

I suppose the only negative side to this that I can see, is the longer you leave contributing, the longer you will have to leave your funds alone before accessing them.

When I first started my VLS funds nearly a year ago, VLS funds were underperforming, so pouring 1k a month into them was a very wise decision. This wasn't from my huge knowledge & experience in funds I have to add, I don't have any! but from the good people of these forums - Alexland, coleston etc. Thanks guys!!

Underperforming against what?:cool:

tel_

Alexland wrote: »

You wouldn't trust us if you could see how we dress :dance:

I've just checked to see if MSE have a forum dedicated to fashion. I can't see one - phew! :rotfl:

tel_

badger09 wrote: »

Underperforming against what?:cool:

Underperforming is probably not the right word (even though it is used somewhat on these forums), but it was a small challenging period for funds when the US-China trade war started.

badger09

tel_ wrote: »

Underperforming is probably not the right word (even though it is used somewhat on these forums), but it was a small challenging period for funds when the US-China trade war started.

'Underperforming' is usually used to describe when a fund is performing less well than its comparable benchmark over a defined period;).

What you are describing is a fall in value, which should be expected to happen at any time. Sadly, investment values don't increase on a straight upward trajectory.