Does my plan need altering already?

AdmanPea

Hi all

I recently started investing for the first time after reading lots of stuff, listening to lots of stuff, and eliminating debt and creating a block of savings. 

I decided to open a Vanguard LifeStrategy 60% and 80% with the idea being that I put £100 a month into each for the next 20 years (possibly increase contributions over time). However, given the current state of the finances in the country and the outlook ahead, is this something I should already alter? I know I'm playing the long game here but I'm also conscious that once reality hits the economy the slump could be devastating for a long, long time. 

What do you think? Keep going as is and it'll ride out okay or tinker with what I'm doing just a few months in to the plan? 

dunroving

AdmanPea said:

Hi all

I recently started investing for the first time after reading lots of stuff, listening to lots of stuff, and eliminating debt and creating a block of savings. 

I decided to open a Vanguard LifeStrategy 60% and 80% with the idea being that I put £100 a month into each for the next 20 years (possibly increase contributions over time). However, given the current state of the finances in the country and the outlook ahead, is this something I should already alter? I know I'm playing the long game here but I'm also conscious that once reality hits the economy the slump could be devastating for a long, long time. 

What do you think? Keep going as is and it'll ride out okay or tinker with what I'm doing just a few months in to the plan? 

There's really two questions: (1) Should I continue investing? and (2) Should I continue in VLS? 

The answer to (a) is Yes - do some research on pound cost averaging (or dollar cost averaging - same principle).

The answer to (b) is "It depends on your time frame", and "It depends on your plan" (what do you intend to do with the money, especially will you possibly take some of it out in 3 years, 5 years, etc.). In general, though, I'd say for a 20-year time frame, maybe less of a bond holding would make sense. The ups and downs of the stock market will iron out over 20 years (especially if you are drip-feeding), and the stock market tens to deliver higher returns over the long-term, compared to bonds. If you decide that you will withdraw the money after 20 years, you'd potentially gradually reduce the balance in equities as you get closer to the end, and increase bonds, etc. But at the moment, 20 years out, bonds don't make much sense to me.

masonic

Vanguard Lifestrategy is not going to be significantly impacted by the finances of the UK. It's certainly more exposed than some other multi-asset funds, but most of that exposure comes from global companies that have significant overseas sales. There is some risk in the bonds component of the fund (Vanguard uses currency hedging, so even international bonds may be impacted by further devaluation of the pound), but if you are ~70% equities, this is not a significant problem and you presumably chose the asset allocation of Vanguard vs L&G, HSBC, Blackrock etc for a reason. So far that asset allocation has held up better than that others. Going forward it's likely to be far more susceptible to events in the USA than in the UK.

AdmanPea

Hi. 

By that, do you mean go with a 100% LifeStrategy rather than what I have above? 

I'm just thinking, that as my mortgage ends around then, it would be nice to have a nest egg to withdraw and use so rebalance my working life come the time. Not taking anything out in meantime unless it's an absolute emergency in life. My thinking was to lower risk in last few years to avoid a big drop prior to drawing it out. 

I'm no expert just thought investing this way would help make my money work for me more rather than just sitting in savings accounts gathering dust!

wjr4

What is your actual objective/reason for investing? 

AdmanPea

I want to be able to retire late 50s and just thought 'oh investing may help that' so over time I want to build up wealth. Or, at least, if not retire, have financial options or more freedom. 

83705628

AdmanPea said:

Hi all

I recently started investing for the first time after reading lots of stuff, listening to lots of stuff, and eliminating debt and creating a block of savings. 

I decided to open a Vanguard LifeStrategy 60% and 80% with the idea being that I put £100 a month into each for the next 20 years (possibly increase contributions over time). However, given the current state of the finances in the country and the outlook ahead, is this something I should already alter? I know I'm playing the long game here but I'm also conscious that once reality hits the economy the slump could be devastating for a long, long time. 

What do you think? Keep going as is and it'll ride out okay or tinker with what I'm doing just a few months in to the plan? 

/
Mind if I ask why LS60 and 80? I guess 70:30 is a decent balance, just seems curiously specific.
People who read the news, and let that, or their emotions, or nostalgia, or pessimism about the way the country's going, affect their investment decisions tend not to do well. Don't listen to it, stay the course.
Is this a SIPP or ISA you're saving into?

AdmanPea

It's an ISA. I just looked into it a bit and saw that 100 was highest risk, and 20 least. Decided to go with two different ones and they seemed moderate and moderate to high which, given the length of time I'll be waiting on drawing out, just seemed a sensible yet mildly adventurous way in!

I have a workplace pension which is still (as it stands) a final salary defined benefits scheme with high employer contributions. 

83705628

AdmanPea said:

It's an ISA. I just looked into it a bit and saw that 100 was highest risk, and 20 least. Decided to go with two different ones and they seemed moderate and moderate to high which, given the length of time I'll be waiting on drawing out, just seemed a sensible yet mildly adventurous way in!

I have a workplace pension which is still (as it stands) a final salary defined benefits scheme with high employer contributions. 

/
Fair enough. Yeah seems fine to me, perfectly sensible.

dunstonh

However, given the current state of the finances in the country and the outlook ahead, is this something I should already alter?

1 - The UK makes up around 4% of global GDP.  Dont be so UK focused.

2 - dont assume that debt and stockmarket are linked.

I know I'm playing the long game here but I'm also conscious that once reality hits the economy the slump could be devastating for a long, long time.

I'm not sure what you are concerned about. You are buying monthly.  You want negativity in the early years.

Keep going as is and it'll ride out okay or tinker with what I'm doing just a few months in to the plan? 

WIth a regular contriubtion, you are looking at a period of investment of at least 15 years to be on the safe side.    You arere just a few months in.  Stop worrying about things.

Sebo027

@AdmanPea
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