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VLS100 and 60

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  • DairyQueen
    DairyQueen Posts: 1,855 Forumite
    Ninth Anniversary 1,000 Posts Name Dropper
    One thing I have sometimes wondered - could risk be refined as a way of considering when you need to actually have access to the money? 
    Yes.
    Equities are considered a long term investment and high risk for money required in <10 years. My portfolio is split into 'buckets' and the asset allocation reflects when I plan to access the funds. 
    < 5 years = all cash
    5-7 years = VLS20 (low risk)
    7-10 years = VLS80 (high risk)
    10+ years = VLS100 (highest risk).

    I rebalance annually.

    OH's wrapped portfolio is allocated differently as we plan to withdraw minimal amounts and only when appropriate to do so. He can afford to take more risk. Much higher %age equities and minimal bonds.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
    10,000 Posts Fifth Anniversary Name Dropper Photogenic
    One thing I have sometimes wondered - could risk be refined as a way of considering when you need to actually have access to the money? 
    Yes.
    Equities are considered a long term investment and high risk for money required in <10 years. My portfolio is split into 'buckets' and the asset allocation reflects when I plan to access the funds. 
    < 5 years = all cash
    5-7 years = VLS20 (low risk)
    7-10 years = VLS80 (high risk)
    10+ years = VLS100 (highest risk).

    I rebalance annually.

    OH's wrapped portfolio is allocated differently as we plan to withdraw minimal amounts and only when appropriate to do so. He can afford to take more risk. Much higher %age equities and minimal bonds.
    Interesting.  I've short circuited your approach. <5 years, cash, > 5 years equities 
     :D 
  • btcp
    btcp Posts: 310 Forumite
    Part of the Furniture 100 Posts Photogenic Name Dropper
    edited 13 June 2020 at 9:04AM
    Using the approach to risk outlined  above, it looks like one could have several VLS in the portfolio and the allocation amount would depend on when you need the money. Say if you are planning to expand a house in 5 years you can put the money in VSL 20 pot. 
  • DairyQueen
    DairyQueen Posts: 1,855 Forumite
    Ninth Anniversary 1,000 Posts Name Dropper
    Interesting.  I've short circuited your approach. <5 years, cash, > 5 years equities 
     :D 
    Pretty much how I have positioned OH's portfolio except for a smidge of bonds/WP for 5-7 year. 

    More difficult to establish risk timeframes when you are decades from retirement as, tbh, it's tough to determine how much you may need to access within a medium-term timeframe. With decades to go to retirement we adopted the same bucket approach as you.
  • DairyQueen
    DairyQueen Posts: 1,855 Forumite
    Ninth Anniversary 1,000 Posts Name Dropper
    btcp said:
    Using the approach to risk outlined  above, it looks like one could have several VLS in the portfolio and the allocation amount would depend on when you need the money. Say if you are planning to expand a house in 5 years you can put the money in VSL 20 pot. 
    It's one strategy that can be used to manage risk. You need to ask yourself whether you would/could delay spending if the markets were less than optimum at the point you wanted access to the money. Using VLS20 in your example may mean that the value of the equity component could drop by up to 50% just at the point that you wanted the cash. How would you respond in that situation? 
  • btcp
    btcp Posts: 310 Forumite
    Part of the Furniture 100 Posts Photogenic Name Dropper
    btcp said:
    Using the approach to risk outlined  above, it looks like one could have several VLS in the portfolio and the allocation amount would depend on when you need the money. Say if you are planning to expand a house in 5 years you can put the money in VSL 20 pot. 
    It's one strategy that can be used to manage risk. You need to ask yourself whether you would/could delay spending if the markets were less than optimum at the point you wanted access to the money. Using VLS20 in your example may mean that the value of the equity component could drop by up to 50% just at the point that you wanted the cash. How would you respond in that situation? 
    Would VLS20 drop that much?
    I suppose have good cash as a backup is a good option but how to find the balance. taking into a count that pension is also an investment you need to have a backup for that too in case the value drops.
  • eskbanker
    eskbanker Posts: 37,208 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    btcp said:
    btcp said:
    Using the approach to risk outlined  above, it looks like one could have several VLS in the portfolio and the allocation amount would depend on when you need the money. Say if you are planning to expand a house in 5 years you can put the money in VSL 20 pot. 
    It's one strategy that can be used to manage risk. You need to ask yourself whether you would/could delay spending if the markets were less than optimum at the point you wanted access to the money. Using VLS20 in your example may mean that the value of the equity component could drop by up to 50% just at the point that you wanted the cash. How would you respond in that situation? 
    Would VLS20 drop that much?
    The equity component of VLS20 could drop that much, so that would represent a drop of 20% of 50%, i.e. 10%, of the value of a VLS20 holding in that scenario.
  • Sue58
    Sue58 Posts: 288 Forumite
    Fourth Anniversary 100 Posts Name Dropper
    Trojan O/X held up very well in the recent downturn as an alternative to VLS20.
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
    500 Posts Second Anniversary Name Dropper
    edited 13 June 2020 at 3:18PM
    One thing I have sometimes wondered - could risk be refined as a way of considering when you need to actually have access to the money? 
    Yes.
    Equities are considered a long term investment and high risk for money required in <10 years. My portfolio is split into 'buckets' and the asset allocation reflects when I plan to access the funds. 
    < 5 years = all cash
    5-7 years = VLS20 (low risk)
    7-10 years = VLS80 (high risk)
    10+ years = VLS100 (highest risk).

    I rebalance annually.

    OH's wrapped portfolio is allocated differently as we plan to withdraw minimal amounts and only when appropriate to do so. He can afford to take more risk. Much higher %age equities and minimal bonds.
    Very close to what I do, but I split between MyMap, Lifestrategy and HSBC global strategy and a few active funds. 
    I am retiring in November 
    1 year cash, 1 year Premium bonds
    Years 3-5 bonds heavy .. MyMap 3, an active bond fund and a wealth preservation trust PNL
    Years 6-9 HSBC 60/40 and an active fund Baillie  Managed
    Year 10+ Lifestrategy 100%, active funds (SMT, fundsmith, Train etc .. you get the idea) , bit of gold, commodities and infra
    Rebalance annually, OCF and platform/transaction fees 0.45% 
    I think some may disagree but this makes me sleep well at night.
  • btcp
    btcp Posts: 310 Forumite
    Part of the Furniture 100 Posts Photogenic Name Dropper
    1 year cash, 1 year Premium bonds
    Do you mean you keep cash enough for 1 year expenses? 
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