Stocks and Shares ISA

Mrc44

Alexland said:

Mrc44 said:

I am currently invested in vls80 and keep seeing VWRL mentioned , what would be the main difference between the two funds other than the LifeStrategy holding 20% in bonds and over a 20year period would you expect there performances to be similar or one to outperform the other by quite a margin? (I understand you don’t have a crystal ball for future performance or mentioned funds) 

VWRL is an ETF so has a bid/ask spread and no FSCS protection. It has a very similar asset allocation to their Global All Cap fund covering equities in proportion to their global weightings in both developed and emerging markets. They are both tracking specific and similar FTSE indexes. Given the choice I would rather have the fund but then I hold most of our money in ETFs to benefit from capped platform fees on large account balances at Fidelity, AJ Bell, etc. On platforms where it makes no difference I hold funds.

The VLS fund series are not a trackers and contains underlying funds in a designed allocation to get market exposure. For the equities proportion VLS have a bias to hold around 25% UK stocks compared to their global weighting of circa 5%. Over a very long measurement period, you would expect a 100% equities fund to do slightly better than an 80% equtiies fund but it really depends when you buy and sell the fund units at particular points in the economic cycle. There can be long periods in which equities do badly. VLS80 should give you a smoother ride but is still considered adventurous with market crash drop potential of around 40%+ from peak.

Thank you for your informative reply Alex,
Having read that, the global all cap fund sounds a better option for me over the etf , in regards to the vls80 being considered “adventurous” I’m ok with that and have been and will continue with my monthly contributions throughout this crisis however long it may last, I don’t look at my isa as I know it is down from where I started but I’m confident it will all be forgotten about come 15+ years when I need said money.  Would it be a stupid idea to buy some of the global all cap fund alongside vls80 or would it be a better option to just stick with one fund in your opinion? 

Thank you 

badger09

Royal5555 said:

Interesting, 1 fund out of 50!! Is there a resource you can point a newbie to quickly gain an understanding of the right funds to invest in. Given the current situation, passive stockmarket tracker funds appear to make sense eg low management fees and sharp falls maybe a good time to get in for the long haul

Have a read around this website. Author is biased towards passive investing, but articles are largely jargon free and not a bad place to start your education
https://monevator.com/category/investing/passive-investing-investing/

Alexland

Mrc44 said:

Would it be a stupid idea to buy some of the global all cap fund alongside vls80 or would it be a better option to just stick with one fund in your opinion?

Both options are valid if you are investing with Vangaurd for different withdrawal events you might chose to hold multiple funds at different risk levels as your plans might be to withdraw the VLS60 money several years before the Global All Cap money. Or if you are using your ISA to invest for the kids so might use VTR2035 for the younger and VTR2030 for the older one, etc.

However if all the money is aiming at the same target then having it all in a single mixed asset fund would be simpler. Another option if you want a custom ratio (eg 70% equities) would be to hold your equities and bonds in a 2 fund portfolio using something like the Global All Cap fund for the equities and the Global Bond Index Hedged fund for the bonds and then regularly rebalance between the two to maintain your target allocation.

[Deleted User]

Alexland said:

Mrc44 said:

Would it be a stupid idea to buy some of the global all cap fund alongside vls80 or would it be a better option to just stick with one fund in your opinion?

Both options are valid if you are investing with Vangaurd for different withdrawal events you might chose to hold multiple funds at different risk levels as your plans might be to withdraw the VLS60 money several years before the Global All Cap money. Or if you are using your ISA to invest for the kids so might use VTR2035 for the younger and VTR2030 for the older one, etc.

However if all the money is aiming at the same target then having it all in a single mixed asset fund would be simpler. Another option if you want a custom ratio (eg 70% equities) would be to hold your equities and bonds in a 2 fund portfolio using something like the Global All Cap fund for the equities and the Global Bond Index Hedged fund for the bonds and then regularly rebalance between the two to maintain your target allocation.

Hi I don't want to hijack the thread but just wanted to ask a newbie question.
I've have a fair chunk of money, been sitting around for a while losing money to inflation.
I've been looking at the 'Vanguard life strategy 60' as I didn't want to jump into all equities.
As the markets are down atm would say £20k now (I have other savings) and maybe £200 per month be a reasonable investment?
Bit of background, age 48, mortgage paid off, no debts, earning £30000.
Thanks in advance.

Mrc44

Alexland said:

Mrc44 said:

Would it be a stupid idea to buy some of the global all cap fund alongside vls80 or would it be a better option to just stick with one fund in your opinion?

Both options are valid if you are investing with Vangaurd for different withdrawal events you might chose to hold multiple funds at different risk levels as your plans might be to withdraw the VLS60 money several years before the Global All Cap money. Or if you are using your ISA to invest for the kids so might use VTR2035 for the younger and VTR2030 for the older one, etc.

However if all the money is aiming at the same target then having it all in a single mixed asset fund would be simpler. Another option if you want a custom ratio (eg 70% equities) would be to hold your equities and bonds in a 2 fund portfolio using something like the Global All Cap fund for the equities and the Global Bond Index Hedged fund for the bonds and then regularly rebalance between the two to maintain your target allocation.

Thanks Alex that’s a great help and one I will reading into a lot further , the different timescale “targets” you mention is a very good point and now has me thinking stick with the vls80 fund in one isa/sipp and then possibly the global all cap fund in the other, it would just be a question of which fund to use for the isa (target 15yrs) and which one for the sipp (can’t touch it for 27years) 

Alexland

Deleted_User said:

I've have a fair chunk of money, been sitting around for a while losing money to inflation.
I've been looking at the 'Vanguard life strategy 60' as I didn't want to jump into all equities.
As the markets are down atm would say £20k now (I have other savings) and maybe £200 per month be a reasonable investment?
Bit of background, age 48, mortgage paid off, no debts, earning £30000.

Would you have enough cash left over for emergencies and any other lump sum expenditure events in the next 5 years? What would be the objective of this investment and are you making the best use of your pension options?

[Deleted User]

Alexland said:

Deleted_User said:

I've have a fair chunk of money, been sitting around for a while losing money to inflation.
I've been looking at the 'Vanguard life strategy 60' as I didn't want to jump into all equities.
As the markets are down atm would say £20k now (I have other savings) and maybe £200 per month be a reasonable investment?
Bit of background, age 48, mortgage paid off, no debts, earning £30000.

Would you have enough cash left over for emergencies and any other lump sum expenditure events in the next 5 years? What would be the objective of this investment and are you making the best use of your pension options?

Thanks for your reply.
I would confidently say I would not need to call on the money.
No particular objective apart from to increase wealth.
Pension is on par to what i'm earning now so could be better...(I could afford to pay more into this as well as the above investment)

Alexland

Deleted_User said:

I would confidently say I would not need to call on the money.
No particular objective apart from to increase wealth.
Pension is on par to what i'm earning now so could be better...(I could afford to pay more into this as well as the above investment)

It might be worth making a significantly higher rate of contribution to your pension as you would save 20% income tax on earnings (those above your personal allowance) now and then from age 55 onward, under the current rules, be able to withdraw 25% tax free and the remaining 75% at your tax rate in retirement which assuming you are 20% basic rate would be an effective overall rate of around 15%. It might also be worth checking to see if your employer operates Salary Sacrifice when making pension contributions as this would also save the 12% national insurance.

[Deleted User]

Alexland said:

Deleted_User said:

I would confidently say I would not need to call on the money.
No particular objective apart from to increase wealth.
Pension is on par to what i'm earning now so could be better...(I could afford to pay more into this as well as the above investment)

It might be worth making a significantly higher rate of contribution to your pension as you would save 20% income tax on earnings (those above your personal allowance) now and then from age 55 onward, under the current rules, be able to withdraw 25% tax free and the remaining 75% at your tax rate in retirement which assuming you are 20% basic rate would be an effective overall rate of around 15%. It might also be worth checking to see if your employer operates Salary Sacrifice when making pension contributions as this would also save the 12% national insurance.

Thanks Alex. The advice is appreciated.