Vanguard funds allocation and distribution

barnstar2077

I have a feeling this is pointless, but here goes.

Linton summed it up perfectly by saying "Since prices generally go up you are more likely to choose a high day"

Imagine that you love to collect shiny gems.  The gems are £100 each.  The price of gems goes up and down a bit every day.  Lets say that the price of gems also goes up by a few pounds on average randomly a couple of times a year.  You only have enough money to buy a few gems a month.  You know the price is going to slowly increase over time, but you don't know exactly when.  Is it better to buy the gems as soon as possible knowing that there is going to be an increase in the price soon, or wait and try and time buying them?  In the long run the difference would be small, but statistically you are more likely to get caught out the longer you wait.  It's not a perfect analogy, but you get the idea.  Plus, who wants the hassle of having to buy gems three times a month!

With regards to the weighting.  The VLS80 fund is 42% US funds already, by adding 50% of the S&P 500 you make your total US investment 71%!

Are you that sure that the US is going to perform that well over the next ten or so years? 

The whole point of investing in a global fund is to spread the risk, not put all your gems in one basket.

Swipe

Not sure where 5 days comes from but assuming you have available cash in your Vanguard account, if you buy before the day's deadline (this time varies with each fund) you will get the end of that day's price. If you buy a fund directly using debit card, add a day on to that.

RobHT

barnstar2077 said:

I have a feeling this is pointless, but here goes.

Linton summed it up perfectly by saying "Since prices generally go up you are more likely to choose a high day"

Imagine that you love to collect shiny gems.  The gems are £100 each.  The price of gems goes up and down a bit every day.  Lets say that the price of gems also goes up by a few pounds on average randomly a couple of times a year.  You only have enough money to buy a few gems a month.  You know the price is going to slowly increase over time, but you don't know exactly when.  Is it better to buy the gems as soon as possible knowing that there is going to be an increase in the price soon, or wait and try and time buying them?  In the long run the difference would be small, but statistically you are more likely to get caught out the longer you wait.  It's not a perfect analogy, but you get the idea.  Plus, who wants the hassle of having to buy gems three times a month!

With regards to the weighting.  The VLS80 fund is 42% US funds already, by adding 50% of the S&P 500 you make your total US investment 71%!

Are you that sure that the US is going to perform that well over the next ten or so years? 

The whole point of investing in a global fund is to spread the risk, not put all your gems in one basket.

I would not pay manually, just with direct deposits.

Looking the charts, S&P500 can go down even more than 40% in one year, and the years that will follow... If I had bought before I would have just paid my gems more, no? Obviously, if these spikes down are rare, then you are right!
Unless you are talking about VLS80, which I still didn't look for such matter.

Anyway, my way to invest is to drop feed every month and I've already allocated my lump sum, the rest is hopefully for an house, which unfortunately costs a fortune, I wouldn't probably reach the budget to buy a decent house in UK in a safe neiboughrood, neither after 30 years due to inflaction and the life that has always some surprise.
Now please don't tell me again about the house market here  

Replies to previous questions:
- I have 0.0015% annual account fee
- The cost of VLS80 is 0.0022 per transaction, 0.0007 for S&P500, that is more performant and costs 3 times less, yes, it's more risk
- There is no cost per transaction, so I can pay in as many times as I wish during the year/month.

barnstar2077

I was wrong.  Banging my head against a brick wall would be less painful.

AnotherJoe

RobHT said:

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.

You've done far too much reading, not understood it  and are trying to make up your own silly strategies.

Do you really think for example thers a best day of the month to buy?????

If there was i can tell you people would (a) know that, (b) act on it and (c) then buying on that day of the month wou;d affect prices such that it was no longer the best day of the month.

Aside from , why would anyone sell on the best day of the month? You have to have a seller as well as a buyer.

Just buy once a month when your money is available. As Linton said "If you have the money now invest now.   If you have the money once every month, say from your wages, invest once a month.  "

Notepad_Phil

Let's start with a couple of assumption 1) you do not believe that you have more knowledge than the collective wisdom of the crowd 2) over time the fund price will increase but in a non-deterministic manner.

If you agree with the above then if you have the chance to buy now or at some point in the future what do you do? Surely you would buy now because you are expecting the fund price to increase over time rather than delay the purchase. Yes the price might be lower a few days into the future but then again it may be higher - and if you expect that in the long term the price will go up then there must be more days where the price is higer rather than lower.

So if you have a lump sum then on average you would do better to buy now rather than later, and if you are buying monthly then on average you would do better by buying as soon as you have the money available rather than split it into multiple direct debits (assuming there are no costs involved in the purchasing).

Thrugelmir

RobHT said:

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.  

I understand your point about low and high, but if that goes always higher in longer term, how that should actually be worst?

The Nikkei index is an example of when it can go badly wrong for a very long time.  

RobHT

Notepad_Phil said:

Let's start with a couple of assumption 1) you do not believe that you have more knowledge than the collective wisdom of the crowd 2) over time the fund price will increase but in a non-deterministic manner.

If you agree with the above then if you have the chance to buy now or at some point in the future what do you do? Surely you would buy now because you are expecting the fund price to increase over time rather than delay the purchase. Yes the price might be lower a few days into the future but then again it may be higher - and if you expect that in the long term the price will go up then there must be more days where the price is higer rather than lower.

So if you have a lump sum then on average you would do better to buy now rather than later, and if you are buying monthly then on average you would do better by buying as soon as you have the money available rather than split it into multiple direct debits (assuming there are no costs involved in the purchasing).

Good answer, I'm here discussing my ideas and my understandings, hopefully to improve knowledge, for sure I don't care to be considered the master in something, and btw here I'm not really anyone .

I'll look the charts (in the past) to verify the same from your perspective.

Yes, there are no costs for the transaction, but I see Vanguard taking the money in advance for my funds due to the amount + that 0.0015 annual account maintenance fee, I don't know when that will be taken precisely, but yeah, it's on the list of expenses.
The first underlines the need to invest long term, at least to take these costs back... Ok that was obvious.

Sebo027

RobHT said:

barnstar2077 said:

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  

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

You can do an x-ray analysis on morningstar.co.uk to check the holdings by geography, industry, asset class etc.