55 next month, investment decisions

Thrugelmir

Moe_The_Bartender said:

At 55 with a life expectancy of another 30 years or so, I can’t think of a reason not to be 100% in equities.

Depends how easily you may wish to sleep at night over that period. 

Notepad_Phil

quirkydeptless said:

I thought the first thing they teach in spam school is to actually include your link in your spam link post

For anyone confused about the above -  a spammer contributed a very useful post (Not!) which has now been deleted thanks to the ever vigilant readers reporting it.

Bravepants

"Previously on MSE..."

peterg1965

I don’t think it is that sensible (for me) to be 100% in equities, I never was 10 years ago, so will, not be Changing that now. Given my likely £320k  drawdown fund in 3 years time, my intend is to make it last 25 years minimum.

BritishInvestor

NoMore said:

BritishInvestor said:

NoMore said:

Going 20 and 80 life strategy or 60 and  40 results in the exact same thing. 

All of the life strategy are fund of funds. Using the exact same funds in each.  The only thing that changes between them is the ratio of the bond funds to the equity funds. 

You'd likely get a slightly better risk-adjusted return from the 40/60 combo due to return per unit of risk decreasing slightly as you move up the risk curve. 

Why? As I said overall you end up invested in the exact same things in the exact same ratios. 

The differences are small but a 20/80 holding is not the same as a 40/60 holding. For example compare 

"US Investment grade credit index" across all the four offerings.

Interestingly (or not ), the 2080 has outperformed LS4060 over the last 9 years which contradicts what I expected (with both monthly and annual rebalancing).

Linton

NoMore said:

But we are only talking about lifestrategy funds which do the rebalancing internally. The investor doesn’t rebalance once a year he just continued to buy the same lifestrategy funds in the same ratios. 

The thread is talking about holding VLS80+VLS20 or VLS60+VLS40.
Consider the VLS80/VLS20 held as 50% each.  Over a year without a rebalance between funds if equities do well the ratio could move to say 55% VLS80 and 45% VLS20, so more VLS80 than should be the case.  This means more equity than a real VLS50, were there one.  So you will get some compounding (% gain on gains) that would not occur if you just held a VLS50 which is rebalanced frequently.  The effect would be less marked for VLS60/VLS40.