Investment period VLS

badger09

sixpence. said:

@bowlhead99 Say I am invested in the VLS 80% equity and after 5 years it's up 30%
I want to buy a car or a cottage or a pedigree dachshund, so I want to sell 5%. Can I ever sell immediately or am I subject to the market dropping in the three days it takes for the sale to go through? Probably also something to check with Vanguard's customer service. 

If you are invested in Funds, (not just Vanguard Funds) you cannot ever guarantee to get the price you see when you decide to sell. That's because Funds are priced daily, so depending on your platform's cut off time for dealing, you will usually sell at the following day's valuation. However, you probably won't see the actual selling price or have access to your money until the day after that.

In short, you might have lost the cost of your pedigree dachsund or even the old banger, but unlikely to have lost the price of the cottage in that timescale. On the other hand, you might be able to buy the whole litter, a 2 year old car, or cottage with an extra bedroom  

Thrugelmir

tcallaghan93 said:

Thrugelmir said:

To ensure a positive return on equities minimum investment period would need to be 12 years. Any shorter timeframe (historically) could result in a potential loss. 
After a decade of exceptional equity returns. The next decade may not be as rewarding. 

/
Yep, worst periods for UK equity since the war have been 1972-1983 (11 years) and 1999-2013 (14 years). I don't have global data but it's probably similar-ish. So unless we're walking into something worse, I.e. WWIII, COVID 2, a great depression, and a complete breakdown of the globalised world order all at once, that's the worst that can happen.

If you like a heavyweight read then 

This Time Is Different: Eight Centuries of Financial Folly - Reinhart and Rogoff 

is an interesting book. 

83705628

Thrugelmir said:

tcallaghan93 said:

Thrugelmir said:

To ensure a positive return on equities minimum investment period would need to be 12 years. Any shorter timeframe (historically) could result in a potential loss. 
After a decade of exceptional equity returns. The next decade may not be as rewarding. 

/
Yep, worst periods for UK equity since the war have been 1972-1983 (11 years) and 1999-2013 (14 years). I don't have global data but it's probably similar-ish. So unless we're walking into something worse, I.e. WWIII, COVID 2, a great depression, and a complete breakdown of the globalised world order all at once, that's the worst that can happen.

If you like a heavyweight read then 

This Time Is Different: Eight Centuries of Financial Folly - Reinhart and Rogoff 

is an interesting book. 

/
Ooh that's my kind of thing. I have a 20th century chronicle and literally every page has one of those articles that people would say "but what about...?"about investing.

Albermarle

sixpence. said:

If one decided to invest a lump sum in Vanguard LifeStrategy. Have I got this about right:

• 20% equity 1-3 year investment period
• 40% equity 3-5 year 
• 60% equity 7-10 year
• 80% equity 10-15 year
• 100% 15-20 year

Would it be foolish to invest in the 80% equity VLS for a five year period? What if you wanted to maximise profits but didn't mind tightening your belt for a few years if there was a crash / lack of growth? Is there any time period projection for the VLS?

You are assuming ( like all of us really) that the higher % equity then the better the return, given a long enough timescale.
However this can only ever be an assumption/forecast based on history. It is a normal  assumption and what most people work with, but it is sensible to keep in mind that the result is not guaranteed and your plan is only that , a plan. 
For example the 3 year return on VLS 40 is only 0.4% a year less than VLS 60 . The 5 year comparison is a bit better at 1.4%
The probability that the bond portion of VLS will likely not perform that great ( as mentioned in another thread ) probably does mean the higher % equity, the higher growth will continue to prevail, but that overall growth of these funds ( and others) could be lagging a bit behind expectations over the next few years. 

sixpence.

Honestly the idea of a 12 year long recession is so frightening. I'm thirty now so I was only eighteen during 2008 but I remember that youth unemployment was 25%. It was so hard to get a job. At one point in 2009, there were only two teaching jobs going in the whole of the U.K. It also took a hell of a lot longer than two years for the economy to recover (which is how much my emergency fund is). Maybe the best thing to do is to prepare yourself to be able to live on very little money for 5 years if that was necessary? Porridge and biking everywhere.

83705628

sixpence. said:

Honestly the idea of a 12 year long recession is so frightening. I'm thirty now so I was only eighteen during 2008 but I remember that youth unemployment was 25%. It was so hard to get a job. At one point in 2009, there were only two teaching jobs going in the whole of the U.K. It also took a hell of a lot longer than two years for the economy to recover (which is how much my emergency fund is). Maybe the best thing to do is to prepare yourself to be able to live on very little money for 5 years if that was necessary? Porridge and biking everywhere.

/
I think that number is the maximum time equity has taken to recover after a crash in real, total return terms. I don't think the UK has a 12 year recession before though.
And there's no harm in preparing for the worst, but neither is it insensible to plan on the average.

Sailtheworld

sixpence. said:

Honestly the idea of a 12 year long recession is so frightening. I'm thirty now so I was only eighteen during 2008 but I remember that youth unemployment was 25%. It was so hard to get a job. At one point in 2009, there were only two teaching jobs going in the whole of the U.K. It also took a hell of a lot longer than two years for the economy to recover (which is how much my emergency fund is). Maybe the best thing to do is to prepare yourself to be able to live on very little money for 5 years if that was necessary? Porridge and biking everywhere.

I think the comment about 12 years was about investing timeframes rather than recessions. Recessions are usually short lived - just a few quarters. Stock markets though can give negative returns for much much longer.

At age thirty with two years spending as an emergency fund, a thrifty attitude, a secure job and a teacher's pension you're well insulated.

The last recession which lasted longer than 12 years started in 1430.

bowlhead99

Sailtheworld said:

The last recession which lasted longer than 12 years started in 1430.

If you want to get in before history repeats itself, get in quick and invest now, as it's 0930 already!

cloud_dog

Boo, get orf the stage.

csgohan4

bowlhead99 said:

Sailtheworld said:

The last recession which lasted longer than 12 years started in 1430.

If you want to get in before history repeats itself, get in quick and invest now, as it's 0930 already!

invest in Gold and bit coins quick, seems to be the flavor of the month sadly