Vanguard: How much is in bonds?

Pete_J75

Thank you all for your comments. I have now moved everything invested so far into a single fund: the Vanguard 80/20 LifeStrategy fund. This seems to be the best strategy given the advice of Lars Kroijer, echoed by some people here. I think i was making it too complicated and it never occurred to me that while trying to cherry pick stocks is obviously trying to outsmart the market (and futile), just making up your own geographical allocation effectively amounts to the same thing.

I can accept the risk involved as i am planning this investment over a 10 year period if not longer so can take any hits in the short term and am still holding the majority of my assets in cash for now.

Alexland

VLS80 is a good fund choice for a 10+ year investment period provided you can tollerate a circa 40% crash. Sure the UK weighting has underperformed in recent years but nobody knows if it might be a value market opportunity going forwards. Remember to derisk as you get towards the withdrawal date to avoid selling low or having delayed access to your money while you wait for a recovery.

aroominyork

DrSyn wrote: »

Continuing on from my Post 7.

As you mentioned Vanguard you may prefer to invest in them this way. Think of it as investing from beginning to end the very easy way. Where all you do is chose a date and pay them your money :-

Vanguard Target Retirement Fund

https://www.youtube.com/watch?v=Sr-IFxRGT88

https://www.vanguard.co.uk/adviser/adv/investments/about-funds/target-retirement-funds

Good Luck!

The target retirement funds are interesting and, I think, underused products. For people who want to self-manage their finances without making calls on when to dial down risk they offer a good solution. But investors need to be really clear about whether they plan to buy an annuity or go into drawdown when they retire; the 2020 fund has 50% invested in equities which would of course be too high for someone planning to buy an annuity next year.

Vanguard's 2025 target fund is essentially a replica of VLS60. While it has not been around as long as LifeStrategy it has only £33m invested while VLS60 has £6.5bn.

Alexland

There was a good discussion about target date funds in this week's Morningstar US Investing Insight video (from 2min 30sec onwards). Their research suggests investors have consistently good outcomes due to the asset allocation discipline and automatic de-risking as they lead up to withdrawal. I agree these types of funds seem to be underused.

https://www.youtube.com/watch?v=FIIYSSeoRgc

Audaxer

aroominyork wrote: »

But investors need to be really clear about whether they plan to buy an annuity or go into drawdown when they retire; the 2020 fund has 50% invested in equities which would of course be too high for someone planning to buy an annuity next year.

That's true, but I wonder how many people would consider an annuity a good option when starting out in retirement. I agree some would, but I don't think it would be a good decision with current annuity rates. I think nowadays, most people on this forum would only consider annuities a possible option at a much later stage in retirement.

AnotherJoe

IMO the only reason target date funds would be a good choice would be if you set them for 15 or 20 years after retirement date. Too many set them for their retirement date not understanding what their purpose is and that they may have 10-20 years of investing before they buy an annuity.
In the main i suspect they do more harm than good.

Thrugelmir

Alexland wrote: »

There was a good discussion about target date funds in this week's Morningstar US Investing Insight video (from 2min 30sec onwards). Their research suggests investors have consistently good outcomes due to the asset allocation discipline and automatic de-risking as they lead up to withdrawal. I agree these types of funds seem to be underused.

https://www.youtube.com/watch?v=FIIYSSeoRgc

US Treasuries & Bonds offer far better yields than their UK equivalents.

Thrugelmir

Audaxer wrote: »

That's true, but I wonder how many people would consider an annuity a good option when starting out in retirement. I agree some would, but I don't think it would be a good decision with current annuity rates. I think nowadays, most people on this forum would only consider annuities a possible option at a much later stage in retirement.

Annuity rates have declined somewhat in the past 9 months. Low Gilt yields are starting to bite hard.