Investing 50k in a Vanguard LS fund

Purplefleur

I may be receiving a lump sum of £50k and would want to invest it if I did, so have been researching the options available. I have read through loads of posts on this forum and followed recommended links and read through those as well. I am a completely novice and every time I think I’ve understood the concepts, I read some more and realise I haven’t!
I just want something simple and fairly low risk.
I would really appreciate it if I could get some input on what I think I have understood, just to make sure I haven’t got something wrong and I haven’t missed any other fees.
- I put 20k into a Vanguard Lifestrategy 40 or 60 using an ISA wrapper
- I put 30k into the same fund
- If I use the Vanguard platform, I would incur a £75 fee
- If the performance after a year is 5% (I know there are no guarantees) I would be able to take out the £2,500 at that point without any further charges and still have the original amount invested.
Am I missing anything?

bowlhead99

Purplefleur wrote: »

I
- I put 20k into a Vanguard Lifestrategy 40 or 60 using an ISA wrapper
- I put 30k into the same fund
- If I use the Vanguard platform, I would incur a £75 fee

Yes, the platform/account fee is £75, paid separately to the £50k.

To be pedantic if you are expecting the fund to go up in value it will not be just £75.00, because it's based on average asset value over the period - if your funds go up in value from £50k at the start of the year to £52.5k at the end, on average for the year they will be worth a little over £51k, so maybe the platform fee will be more like £76 or £77.

The fund itself will also have running costs to operate it (management fees and so on paid to its manager and administrator etc), so there are some other costs in the background but you won't pay for them separately, they are paid by the fund itself. So would show up as a lower performance rather than something for you to pay separately from your pocket.

- If the performance after a year is 5% (I know there are no guarantees) I would be able to take out the £2,500 at that point without any further charges and still have the original amount invested.

Yes:

- your ISA would be worth £21k and your non-ISA investment would be worth £31.5k;

- the income/dividend on the £30k non-ISA investment is unlikely to be more than your £2k dividend exemption limit because that would imply income of over 6% a year, whereas 1-3% is more likely. So no dividend tax to pay.

- To get your money out, you could easily sell £2.5k of the non-ISA fund without going anywhere near the annual capital gains exemption (no point selling the tax-protected ISA).

You mention if you did that (take out the £2.5k) you would still have the original £50k invested, which is true. However, of course the market could still drop heavily the year after, leaving you with, say, less than £40k invested, before going up again later.

Purplefleur

bowlhead99 wrote: »

You mention if you did that (take out the £2.5k) you would still have the original £50k invested, which is true. However, of course the market could still drop heavily the year after, leaving you with, say, less than £40k invested, before going up again later.

A bit scarey!
Thanks for the reply 😀

xylophone

How about £20,000 in the ISA and £30,000 in a one year fixed rate?

At the end of the year you could fund the ISA for 20-21 and use a fixed rate for £10,000.

In 21 -22 you could fund the ISA again.

Remember that investing is for the long term.

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa

https://monevator.com/using-vanguard-lifestrategy-funds-life/

https://www.thisismoney.co.uk/money/article-1621507/Best-savings-rates-Fixed-rate-accounts.html

Purplefleur

I presume you mean 20k in a S&S Vanguard ISA and 30k in a one year fixed rate and so on, minimising the risk...
That’s a good idea!

xylophone

I presume you mean 20k in a S&S Vanguard ISA and 30k in a one year fixed rate and so on,

Yes - it gives you a way of "dipping your toe in the water" and seeing how you get on?

badger09

Without wishing to muddy the waters...

If you are going to invest £20k in an S&S ISA in a lump sum, please look at IWEB, rather than Vanguard as a platform.


The fund charges will be the same - but you won't see them as they are taken from within the fund.

1st year
Vanguard charge will be £30.
IWEB charge will be £25 to open the S&S ISA + £5 to buy £20k worth of VLS 40% or 60%

2nd year
Vanguard charge will be £60 (plus a bit on the increased value as outlined by bowlhead99)
IWEB charge will be £5 to buy £20k worth of VLS 40% or 60%

etc etc

However, if you want to drip feed your annual ISA allowance, then ignore the above and carry on:)

Purplefleur

Will do as I would invest the ISA in a lump sum...thanks...

Albermarle

A bit scarey!

If you are scared/worried by potential big drops in the markets , then you might be better in the VLS 40 , rather than the 60 , although the latter will probably give a better return in the long run.
Although if you initially have £20K in VLS 60 and £30k in cash , you have already diluted the equity content of the £50K to 24% in any case .

AnotherJoe

I wouldnt choose VLS. Too much of a concentration in a small number of industries.

There are similar risk matched investments with similar costings that dont have that artificial concentration.

Purplefleur

Any suggestions, examples? I chose VLS as it is the most discussed on this forum and in the few blogs I have read, so as a newbie, it felt like the easiest, safest option...
Also not sure what artificial concentration means?
Trying to learn as much as I can before making any firm decisions...