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Vanguard funds allocation and distribution

Hi,

I invest in VLS80 and S&P500 on the Vanguard platform.

I was thinking on when to buy monthly, but because the index is impossible to be monitored by me alone, I thought that the best would be to drop feed every month anyway, so in the long term, any potential loss during the time of investment is actually a greater advance for the future.

If I understood correctly, any calculator online is giving me lower return each year, right?
The tool can't predict any market drop when I actually I will buy, it follows a linear growth, therefore higher cost per share. At this point, is it not better to set up multiple direct debits for each month?
So if I want to invest 1k per month for example, I do 3 or more transactions through direct debit in different days, as said, actively monitoring the story by myself is not possible. 

Or let's try to change the question, how do you drop feed your funds monthly if you use something like Vanguard? If it's only once a month, are you sure is the best way?

In Vanguard I've notice that once I make the transaction, it takes up to 5 days to buy the funds, I'm not sure if that is for a delay or because they decide when to allocate me the funds, is this normal? It says so for the transaction itself (5 days max delay), but the money reach the account the 2nd day, if not immediately.
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Comments

  • eskbanker
    eskbanker Posts: 35,387 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    RobHT said:
    If I understood correctly, any calculator online is giving me lower return each year, right?
    The tool can't predict any market drop when I actually I will buy, it follows a linear growth, therefore higher cost per share. At this point, is it not better to set up multiple direct debits for each month?
    No idea if you're understanding anything correctly but I can't understand what you're getting at!  If there are any online calculators that project future growth, then they have to be doing so based on guesswork, but if you believe that you can time the market to buy in the dips then of course this won't be predictable by any tool.  You can read up on 'pound/dollar cost averaging' if you feel that'll be an appropriate way to invest, but given the underlying expectation that markets will rise more than they fall, you won't go far wrong getting your money invested at the earliest opportunity rather than drip-feeding for the sake of it.

    RobHT said:
    Or let's try to change the question, how do you drop feed your funds monthly if you use something like Vanguard? If it's only once a month, are you sure is the best way?
    As above, drip-feed whenever you have investable cash available, if there are no transaction fees that would dilute the effect.

    RobHT said:
    In Vanguard I've notice that once I make the transaction, it takes up to 5 days to buy the funds, I'm not sure if that is for a delay or because they decide when to allocate me the funds, is this normal? It says so for the transaction itself (5 days max delay), but the money reach the account the 2nd day, if not immediately.
    It's normal for fund purchases not to be real time but five days from order placement seems slack, or does that include a weekend?  Or does your reference to money reaching the account suggest that you're adding in the time to get money into the platform in the first place, as well as the actual purchase of funds?
  • csgohan4
    csgohan4 Posts: 10,600 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Photogenic
    OP are planning for active investing or passive investing?
    It's not clear from your strategy from your other thread:
    https://forums.moneysavingexpert.com/discussion/6175155/investment-management/p1

    op please read and research on passive investing, it is evident from your threads your investment management needs more fine tuning:
    https://monevator.com/category/investing/passive-investing-investing/

    How are you going to actively manage those VLS funds? They do it themselves, you going to put more money in the one that makes you more money for example?

    For buying funds, it depends on the platform, but there can be a delay

    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
  • ZeroSum
    ZeroSum Posts: 1,144 Forumite
    Fifth Anniversary 1,000 Posts Name Dropper
    It doesn't take 5 days. 
    If I have DD on Monday, it'll be invested on Tuesday. By Debit card, will be invested by Wednesday 
  • barnstar2077
    barnstar2077 Posts: 1,580 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper Photogenic
    If you buy on Friday evening it will use Mondays price and tell you it is done on Tuesday.  This seems like a long time, but it is just down to when the next price point is available and having the weekend in between,

    You are still going ahead with buying the S&P 500 as well as the VLS fund and throwing off the weightings I see.

    Just invest monthly when the money becomes available.  Or maybe I should just hit my head against a brick wall now.
    Think first of your goal, then make it happen!
  • noClue
    noClue Posts: 163 Forumite
    Fourth Anniversary 100 Posts Name Dropper
    vanguard is slower i think, it takes 2+ days but 5 days that must include a weekend...
  • RobHT
    RobHT Posts: 348 Forumite
    100 Posts Second Anniversary Name Dropper
    eskbanker said:
    RobHT said:
    If I understood correctly, any calculator online is giving me lower return each year, right?
    The tool can't predict any market drop when I actually I will buy, it follows a linear growth, therefore higher cost per share. At this point, is it not better to set up multiple direct debits for each month?
    No idea if you're understanding anything correctly but I can't understand what you're getting at!  If there are any online calculators that project future growth, then they have to be doing so based on guesswork, but if you believe that you can time the market to buy in the dips then of course this won't be predictable by any tool.  You can read up on 'pound/dollar cost averaging' if you feel that'll be an appropriate way to invest, but given the underlying expectation that markets will rise more than they fall, you won't go far wrong getting your money invested at the earliest opportunity rather than drip-feeding for the sake of it.

    RobHT said:
    Or let's try to change the question, how do you drop feed your funds monthly if you use something like Vanguard? If it's only once a month, are you sure is the best way?
    As above, drip-feed whenever you have investable cash available, if there are no transaction fees that would dilute the effect.

    RobHT said:
    In Vanguard I've notice that once I make the transaction, it takes up to 5 days to buy the funds, I'm not sure if that is for a delay or because they decide when to allocate me the funds, is this normal? It says so for the transaction itself (5 days max delay), but the money reach the account the 2nd day, if not immediately.
    It's normal for fund purchases not to be real time but five days from order placement seems slack, or does that include a weekend?  Or does your reference to money reaching the account suggest that you're adding in the time to get money into the platform in the first place, as well as the actual purchase of funds?
    I think I complicated my message.
    Looking the amount of funds that a VLS80 holds, I don't think I can monitor them properly, so drop feeding multiple times a month could give me a better chance to leverage spikes and gain more value on the long term, rather than deciding one day when to buy and take care of it manually, not using a direct deposit, obviously in case of growth for months in a row and then a drop, that would be anyway not efficient, but again, I don't think I can have it under control so I thought that doing multiple direct debits in a month could help.

    I have cash available every month, so I intend to do multiple transactions a month, for example, if my budget is 1k a month, I would buy 10 times a month with direct deposit.

    I say up to 5 days since I purchase the funds (weekends excluded), the balance is immediately visible in my account, but it takes 2-3 days average more to buy the funds, it didn't exceed 5 days.
    So, I buy the funds straight away, I don't just top up my account and then buy the funds manually, for the whole operation they take 3 days average as of now.
    I should try to buy manually from my balance to see if there is any difference.




  • Linton
    Linton Posts: 17,945 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    Drip feeding several times a month is pointless and possibly, depending on your platform, very expensive. You may happen to randomly pick a day when the price is lower than today, but then you may randomly pick a day when the price is higher.  Since prices generally go up you are more likely to choose a high day.  This situation is made worse because when you buy you are buying at the price in typically 1-2 days time. You have no idea what that will be and today's price doesnt help you.

    If you have the money now invest now.    If you have the money once every month, say from your wages, invest once a month.  
  • Albermarle
    Albermarle Posts: 26,039 Forumite
    10,000 Posts Sixth Anniversary Name Dropper
    I agree with Linton, buying several times a month is just going to be wasted effort.
    The idea of these types of funds is for long term investment, weekly variations in price will have zero effect on the final result .
  • RobHT
    RobHT Posts: 348 Forumite
    100 Posts Second Anniversary Name Dropper
    If you buy on Friday evening it will use Mondays price and tell you it is done on Tuesday.  This seems like a long time, but it is just down to when the next price point is available and having the weekend in between,

    You are still going ahead with buying the S&P 500 as well as the VLS fund and throwing off the weightings I see.

    Just invest monthly when the money becomes available.  Or maybe I should just hit my head against a brick wall now.
    No please, I still need you :D 

    These 2 index/funds have different funds, or I became blind... Not a bad idea to invest in both, when I'll see the bad idea, I'll think to modify the plan, unless here I get something else https://monevator.com/category/investing/passive-investing-investing/ as the previous user mentioned.

    At the moment I've decided to invest 50/50


  • RobHT
    RobHT Posts: 348 Forumite
    100 Posts Second Anniversary Name Dropper
    Linton said:
    Drip feeding several times a month is pointless and possibly, depending on your platform, very expensive. You may happen to randomly pick a day when the price is lower than today, but then you may randomly pick a day when the price is higher.  Since prices generally go up you are more likely to choose a high day.  This situation is made worse because when you buy you are buying at the price in typically 1-2 days time. You have no idea what that will be and today's price doesnt help you.

    If you have the money now invest now.    If you have the money once every month, say from your wages, invest once a month.  
    Thanks a lot.

    I may sound a bit stabborn, but till I don't get one point, I may spin around it or crash on it too.

    I understand your point about low and high, but if that goes always higher in longer term, how that should actually be worst?
    If I have in plan to withdraw after 10 years, or to just reach my financial freedom in 5-10 years (it will depend if the world is still up and running in the same way :D), how that can be bad if I buy in lower value? I only see an advantage.

    Looking previous performance, these funds may have a huge drop monthly (especially S&P500, probably you were talking only about VLS80), and there I'm supposed to buy, right? Unless Vanguard does that for me because it delays as I said previously, but I can't be sure of it.

    Due to the fact that I don't think I may get that precise day and time, the only way is to buy multiple times a month spreading every possible mistake or anyway, buy more low-cost possible in that monthly window.

    Yes, I take the salary monthly and eventually I may invest only on that day.
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