VLS100 and 60

[Deleted User]

btcp said:

Deleted_User 

1 year cash, 1 year Premium bonds

Do you mean you keep cash enough for 1 year expenses? 

Yes, well slightly more 
All the buckets are on a 110% expected expenses with tax (apart for the last one)

Audaxer

DairyQueen said:

Hopingforthesimplelife said:

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.

DairyQueen, I'd be interested to know what percentage of your portfolio you keep in each bucket if you care to share?

StellaN

Sue58 said:

Trojan O/X held up very well in the recent downturn as an alternative to VLS20.

I hold the Trojan fund and it never disappoints in a downturn therefore in my opinion it is a very good wealth preservation fund.

AngieP61

StellaN said:

Sue58 said:

Trojan O/X held up very well in the recent downturn as an alternative to VLS20.

I hold the Trojan fund and it never disappoints in a downturn therefore in my opinion it is a very good wealth preservation fund.

I am currently reassessing my investment portfolio and intend to include some wealth preservation funds (up to now it has been a 100% growth equity portfolio). Trojan X is one I will definitely be including in the revised portfolio.  

DairyQueen

Audaxer said:

< 5 years = all cash
5-7 years = VLS20 (low risk)
7-10 years = VLS80 (high risk)
10+ years = VLS100 (highest risk).

DairyQueen, I'd be interested to know what percentage of your portfolio you keep in each bucket if you care to share?

Happy to do so.

I am front loading drawdown so current allocation of pension portfolio reflects that. As at today:

< 5 years = all cash (21.1%)
5-7 years = VLS20 (6.6%)
7-10 years = VLS80 (28.4%)
10+ years = VLS100 (43.9%).

The drawdown rate will drop to <2% of the balance in 2027 so these allocations will change over time. I also have the option to suspend drawdown if required. Belt and braces  

Audaxer

DairyQueen said:

Audaxer said:

< 5 years = all cash
5-7 years = VLS20 (low risk)
7-10 years = VLS80 (high risk)
10+ years = VLS100 (highest risk).

DairyQueen, I'd be interested to know what percentage of your portfolio you keep in each bucket if you care to share?

Happy to do so.

I am front loading drawdown so current allocation of pension portfolio reflects that. As at today:

< 5 years = all cash (21.1%)
5-7 years = VLS20 (6.6%)
7-10 years = VLS80 (28.4%)
10+ years = VLS100 (43.9%).

The drawdown rate will drop to <2% of the balance in 2027 so these allocations will change over time. I also have the option to suspend drawdown if required. Belt and braces  

Thanks. If we were to go into a bear market for the next few years and VLS80 and VLS100 went down a good bit, would you be using some of the cash to buy more VLS80 and VLS100 to rebalance back to these percentages, or is all the cash bucket intended to be used for spend required in the first 5 years?

Thrugelmir

btcp said:

Albermarle said:

Here is a risk questionnaire
https://www.standardlife.co.uk/c1/guides-and-calculators/assess-your-attitude-to-risk.page

Thank for the link. It is so high level and I can answer to every question - It depends It may indicate I am a medium risk overall. at the same time I wouldn’t mind to have some amount invested in risky business for a high return. 

Investing in a "risky" business does not equate to a high return. Don't let the tail wag the dog. Bottom line is how much you can afford to lose.

DairyQueen

Audaxer said:

DairyQueen said:

Audaxer said:

< 5 years = all cash
5-7 years = VLS20 (low risk)
7-10 years = VLS80 (high risk)
10+ years = VLS100 (highest risk).

DairyQueen, I'd be interested to know what percentage of your portfolio you keep in each bucket if you care to share?

Happy to do so.

I am front loading drawdown so current allocation of pension portfolio reflects that. As at today:

< 5 years = all cash (21.1%)
5-7 years = VLS20 (6.6%)
7-10 years = VLS80 (28.4%)
10+ years = VLS100 (43.9%).

The drawdown rate will drop to <2% of the balance in 2027 so these allocations will change over time. I also have the option to suspend drawdown if required. Belt and braces  

Thanks. If we were to go into a bear market for the next few years and VLS80 and VLS100 went down a good bit, would you be using some of the cash to buy more VLS80 and VLS100 to rebalance back to these percentages, or is all the cash bucket intended to be used for spend required in the first 5 years?

I assess %ages at each annual review. The current allocations are the output of refining our budget and spending plans for the next 5/7 years, market movements since the last review (January), and our attitude to risk (high). Cash has increased from 18% courtesy of market movements and a bit of new money, but the high cash %age also reflects my unease about current bond values. Minus QE I would likely hold less cash/more bonds to fund 2/5-year withdrawals but the same relatively high equity %age for 7+ year investment.

Going forward, the equity %age will increase as the short-term dependence on withdrawals reduces.  The rolling 10+ year investment will remain 100% equities, the 5-10 year may also move to 100% equities although I am mindful that my attitude to risk may change in my dotage. In 5 years I will likely limit cash to 2 years withdrawals  - a much smaller %age and value than held currently. The rolling 2-5 year period is less clear. I would previously consider bonds for this bucket to reduce volatility and inflation risk, but the function of bonds is no longer so clear cut. Holding more equities and suspending withdrawals for prolonged periods in bear markets may be a better strategy in a QE-fuelled world. 

A long preamble but, yes, it's likely I will buy more equities but not to balance back to these %ages. More a factor of attitude to risk and of having the luxury of being able to suspend withdrawals whenever necessary.

Linton

DairyQueen said:

Audaxer said:

< 5 years = all cash
5-7 years = VLS20 (low risk)
7-10 years = VLS80 (high risk)
10+ years = VLS100 (highest risk).

DairyQueen, I'd be interested to know what percentage of your portfolio you keep in each bucket if you care to share?

Happy to do so.

I am front loading drawdown so current allocation of pension portfolio reflects that. As at today:

< 5 years = all cash (21.1%)
5-7 years = VLS20 (6.6%)
7-10 years = VLS80 (28.4%)
10+ years = VLS100 (43.9%).

The drawdown rate will drop to <2% of the balance in 2027 so these allocations will change over time. I also have the option to suspend drawdown if required. Belt and braces  

How is that different to just holding VLS60 or whatever the average is?

Audaxer

Linton said:

DairyQueen said:

Audaxer said:

< 5 years = all cash
5-7 years = VLS20 (low risk)
7-10 years = VLS80 (high risk)
10+ years = VLS100 (highest risk).

DairyQueen, I'd be interested to know what percentage of your portfolio you keep in each bucket if you care to share?

Happy to do so.

I am front loading drawdown so current allocation of pension portfolio reflects that. As at today:

< 5 years = all cash (21.1%)
5-7 years = VLS20 (6.6%)
7-10 years = VLS80 (28.4%)
10+ years = VLS100 (43.9%).

The drawdown rate will drop to <2% of the balance in 2027 so these allocations will change over time. I also have the option to suspend drawdown if required. Belt and braces  

How is that different to just holding VLS60 or whatever the average is?

I think the main difference is that it allows DairyQueen to withdraw from the VLS20 bucket before touching the higher risk VLS funds. 

In my case I hold VLS40 and VLS60. I have more in VLS60 which effectively give me roughly 53% equities between the two funds. My thinking is that if I do need to withdraw from my VLS funds during a downturn, I would be better to draw from the VLS40 as it would have suffered a smaller loss that the VLS60.