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Which VLS for S&S ISA?

8 replies 381 views
I've decided to continue with my plan to move cash into S&S ISA despite COVID.  I will be investing £20k when the new tax year starts. Our non-discretionary spending is well catered for by secure income and we won't need the £20k for the foreseeable future.
I would probably have gone for VLS60. Should I stick with that? I'm asking because I assume (possibly wrongly) that shares are good value at present.
Does it make sense buying 40% bonds at present or would VLS80 or even 100 be a better bet?
Views please.

Replies

  • dunstonhdunstonh Forumite
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    We dropped VLS60 as our preferred multi-asset fund for that risk profile. We no longer consider it the best option in that range.  However, it is perfectly fine and, of course, investing is subject to opinion as well as data.

    Does it make sense buying 40% bonds at present or would VLS80 or even 100 be a better bet?

    No.   You should select the one that you are comfortable with both now and in the foreseeable future.

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • eskbankereskbanker Forumite
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    I assume (possibly wrongly) that shares are good value at present. 
    They're cheaper than they were but that doesn't inherently mean they're good value at present, they could just as easily have been overvalued before rather than undervalued now, and nobody knows whether the next moves will be up or down....
  • ThrugelmirThrugelmir Forumite
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    Have you read through the informative guide on the Vanguard website?  
    “An investor who has all the answers doesn’t even understand all the questions.” - John Templeton
  • waveydavey48waveydavey48 Forumite
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    Have you read through the informative guide on the Vanguard website?  
    Yes thank you, I find all of their educative guidance interesting.

  • ThrugelmirThrugelmir Forumite
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    Have you read through the informative guide on the Vanguard website?  
    Yes thank you, I find all of their educative guidance interesting.

    Fair enough.
    Why do you believe that shares offer good value? 
    “An investor who has all the answers doesn’t even understand all the questions.” - John Templeton
  • edited 26 March at 7:33PM
    bowlhead99bowlhead99 Forumite
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    edited 26 March at 7:33PM

    I would probably have gone for VLS60. Should I stick with that? I'm asking because I assume (possibly wrongly) that shares are good value at present.
    Does it make sense buying 40% bonds at present or would VLS80 or even 100 be a better bet?
    Views please.
    It seems relatively non-contentious to say it's better to buy shares now for £70 than to have bought them at £100 and watch them fall to £70 and then down to some lower price. Still, buying today they might fall to some lower and fairer price, which would be even better value.

    You will only know if they were 'good value' at £70 when you have watched them for a few years forward from here and observed that they did or didn't fall to some lower and fairer price.

    If buying a fund holding only 60% equities is more suitable for your objectives and risk tolerance, then it would seem like the better thing to buy, even though it has lower total returns potential over time than a fund that's got a higher allocation to equities. Do you need to take on 80% equities to reach your objectives and are you OK with the investment risk and volatility inherent in doing that? If yes, then it would seem an OK thing to do. But if you would have probably gone for something that didn't require so many equities and risk so much volatility to reach your objectives, and the only reason you want to up the equities is a gamble on markets 'being cheap', it is probably not a move you should make.

    Markets are priced at £70 instead of £100 because companies are closed, productivity is down, some businesses will fail (or default on obligations to other businesses, or to bondholders), and some potential customers around the world won't have jobs to give them income to fund discretionary expenditure let alone essential expenditure, for some unknown period, etc etc. The price of £70 and risk of that £70 going up or down from here may with hindsight turn out to be a good bargain or an extortionate price for the future value of the companies. The fact that under certain conditions the price was £100, doesn't make £70 cheap. The conditions for the £100 are no longer available.

  • waveydavey48waveydavey48 Forumite
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    Have you read through the informative guide on the Vanguard website?  
    Yes thank you, I find all of their educative guidance interesting.

    Fair enough.
    Why do you believe that shares offer good value? 
    I don't have any evidence to prove that they do but in my simplistic view the virus is a relatively short term thing, there will be a lot of pent up demand and I'm happy to keep investing for the long term. An esteemed fellow forum member posted in the last few days "It's a great time to invest.   The markets are 35% lower than a month ago" on another thread.

    Rest assured I accept it's my call and if it ends in tears I won't be on whining.   
  • bowlhead99bowlhead99 Forumite
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    Have you read through the informative guide on the Vanguard website?  
    Yes thank you, I find all of their educative guidance interesting.

    Fair enough.
    Why do you believe that shares offer good value? 
    I don't have any evidence to prove that they do but in my simplistic view the virus is a relatively short term thing, there will be a lot of pent up demand and I'm happy to keep investing for the long term. An esteemed fellow forum member posted in the last few days "It's a great time to invest.   The markets are 35% lower than a month ago" on another thread.

    The esteemed poster followed the same train of thought with, "you were prepared to buy when they were higher priced. So, why concerned now that they are cheaper". 

    That was a comment in response to someone who was having second thoughts about investing in the current climate. The response was effectively that it wasn't a bad time to buy and if your plan was fine before it will still be fine now.

    In your situation here, you were saying that you had selected to probably buy VLS60, but now you were considering a different fund because it might make you more money, assuming "(possibly wrongly) that shares are good value".

    The entirely consistent response from the esteemed poster to your suggestion that 80 or 100 might be better was that you should buy a fund "that you are comfortable with both now and in the foreseeable future". In other words the 60% equity fund that you had selected to most probably buy because it would meet your needs now and in the foreseeable future, was still probably appropriate for you to buy, even if equities and some bond types are now cheaper.

    Rest assured I accept it's my call and if it ends in tears I won't be on whining
    Of course. That's what the esteemed poster suggested earlier - you should select the one that you are comfortable with... :)
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