Vanguard Pension

[Deleted User]

You should look at asset allocation taking into account your total assets. For example, if you have a large DB pension then she should be 100% in stocks. If you have lots of equity then the calculation would change. 

The answer to the question “what is low risk”? Depends on your circumstances. First of all you need to answer the question “risk of what?” Assuming your family does not already have enough money to retire, the answer is “the risk of not having enough to retire when you want to retire”. 

 In general, for someone with a long investment horizon (like your wife), a 100% equity portfolio represents the lowest risk.  Thats because equity performs well long term and has the best chance of helping you and your wife to achieve the objective. Bonds, on the other hand, might not even beat the inflation and could lose value over the long term.  

So for her, a 100% equity portfolio likely represents the lowest risk.  This will change as she gets older, eg in her 50s. 

VLS100 is the 100% equity fund which would be the easiest to manage. 

BritishInvestor

Mutton_Geoff said:

Albermarle said:

Due to her young age the LISA should be invested so should be a stocks and shares LISA.
I used to be a low/medium risk sort of person but having learnt more about investing , it is clearly the wrong strategy for a long term regular  pension or LISA investor with a very long time frame . The VLS 20 and 40 funds mentioned above are really more suitable for someone already with a big pot and near retiring . You need to look at the VLS 60 & 80  &100 .
Maybe these links will be useful.
https://monevator.com/investing-for-beginners-why-do-we-invest/
https://www.moneysavingexpert.com/savings/investment-beginners/

Good advice. The danger of a risk averse investment with a long timescale ahead is that by the time you realise performance is related to risk, it will be too late to do anything about it. Risk must be measured over a long period of time together with the compounding effect of time.

You'll need to hold your nerve too, most people would be horrified if your chosen investment suddenly halved in value but I would view it as a buying opportunity since your £100 a month will now be buying twice as many units which then recover value further down the line. (Pound cost averaging).

The other point is that whilst any pension saving is admirable, especially at a young age, £100 a month will only generate a pot of £100,000 in 30 years (conservative estimate). A drawdown rate of 4% will provide you with a pension of £4,000 a year. All at today's rates but hardly life changing. If you can afford to squirrel away more nuts now, the compounded effect will be even greater.

There are plenty of funds and platforms to choose from but Vanguard are currently in vogue, and as Albermarle suggests, I would seriously be looking at being 100% in equity based investments at this stage in life.

"I would seriously be looking at being 100% in equity based investments at this stage in life."
I think you would have to be very comfortable that you would stick to the plan during the inevitable downturns. I would suggest that many might not.

Alexland

Mutton_Geoff said:
£100 a month will only generate a pot of £100,000 in 30 years (conservative estimate).

After adjusting for inflation and average fees more like £50k. Say equities return 4.5% pa, inflation at 2% pa and 0.5% pa fees that would be a 2% pa real return so £36k contributed and just over £13k real return. Might even be less with derisking as she gets closer to withdrawal.
I echo the suggestion of a S&S LISA as more efficient than direct pension contributions for a basic rate taxpayer without access to a workplace pension.
EQi's LISA platform fee is only 0.05% higher than a Vanguard ISA/SIPP (and EQi cap their fees at £40 pa compared to £375 pa) and they offer access to a broader range of funds including some tracker funds that are cheaper than Vanguard.

[Deleted User]

Alexland said:

Mutton_Geoff said:
£100 a month will only generate a pot of £100,000 in 30 years (conservative estimate).

After adjusting for inflation and average fees more like £50k. Say equities return 4.5% pa, inflation at 2% pa and 0.5% pa fees that would be a 2% pa real return so £36k contributed and just over £13k real return.
I echo the suggestion of a S&S LISA as more efficient than direct pension contributions for a basic rate taxpayer without access to a workplace pension.
EQi's LISA platform fee is only 0.05% higher than a Vanguard ISA/SIPP (and EQi cap their fees at £40 pa compared to £375 pa) and they offer access to a broader range of funds including some tracker funds that are cheaper than Vanguard.

1. That’s an extremely  pessimistic forecast.  Possible but   I doubt we’ve ever had the stock market return so little over a 30 year period.  

2. Multi-asset tracker funds cheaper than VLS? Which ones? 

Albermarle

BritishInvestor said:

Mutton_Geoff said:

Albermarle said:

Due to her young age the LISA should be invested so should be a stocks and shares LISA.
I used to be a low/medium risk sort of person but having learnt more about investing , it is clearly the wrong strategy for a long term regular  pension or LISA investor with a very long time frame . The VLS 20 and 40 funds mentioned above are really more suitable for someone already with a big pot and near retiring . You need to look at the VLS 60 & 80  &100 .
Maybe these links will be useful.
https://monevator.com/investing-for-beginners-why-do-we-invest/
https://www.moneysavingexpert.com/savings/investment-beginners/

Good advice. The danger of a risk averse investment with a long timescale ahead is that by the time you realise performance is related to risk, it will be too late to do anything about it. Risk must be measured over a long period of time together with the compounding effect of time.

You'll need to hold your nerve too, most people would be horrified if your chosen investment suddenly halved in value but I would view it as a buying opportunity since your £100 a month will now be buying twice as many units which then recover value further down the line. (Pound cost averaging).

The other point is that whilst any pension saving is admirable, especially at a young age, £100 a month will only generate a pot of £100,000 in 30 years (conservative estimate). A drawdown rate of 4% will provide you with a pension of £4,000 a year. All at today's rates but hardly life changing. If you can afford to squirrel away more nuts now, the compounded effect will be even greater.

There are plenty of funds and platforms to choose from but Vanguard are currently in vogue, and as Albermarle suggests, I would seriously be looking at being 100% in equity based investments at this stage in life.

"I would seriously be looking at being 100% in equity based investments at this stage in life."
I think you would have to be very comfortable that you would stick to the plan during the inevitable downturns. I would suggest that many might not.

Which is why I also suggested VLS 60 & 80 as possibilities , but clearly even for the risk averse , VLS 40 & 20 are not suitable for someone in the thirties.

Cnkp21

I really appreciate all your help here guys. My wife has a LISA and I have a S&S LISA so we are just trying to hedge our bets and have a range of options. I will have a good look at the 100% equity funds so together we would have a good portfolio of investments. 

[Deleted User]

BritishInvestor said:

Mutton_Geoff said:

Albermarle said:

Due to her young age the LISA should be invested so should be a stocks and shares LISA.
I used to be a low/medium risk sort of person but having learnt more about investing , it is clearly the wrong strategy for a long term regular  pension or LISA investor with a very long time frame . The VLS 20 and 40 funds mentioned above are really more suitable for someone already with a big pot and near retiring . You need to look at the VLS 60 & 80  &100 .
Maybe these links will be useful.
https://monevator.com/investing-for-beginners-why-do-we-invest/
https://www.moneysavingexpert.com/savings/investment-beginners/

Good advice. The danger of a risk averse investment with a long timescale ahead is that by the time you realise performance is related to risk, it will be too late to do anything about it. Risk must be measured over a long period of time together with the compounding effect of time.

You'll need to hold your nerve too, most people would be horrified if your chosen investment suddenly halved in value but I would view it as a buying opportunity since your £100 a month will now be buying twice as many units which then recover value further down the line. (Pound cost averaging).

The other point is that whilst any pension saving is admirable, especially at a young age, £100 a month will only generate a pot of £100,000 in 30 years (conservative estimate). A drawdown rate of 4% will provide you with a pension of £4,000 a year. All at today's rates but hardly life changing. If you can afford to squirrel away more nuts now, the compounded effect will be even greater.

There are plenty of funds and platforms to choose from but Vanguard are currently in vogue, and as Albermarle suggests, I would seriously be looking at being 100% in equity based investments at this stage in life.

"I would seriously be looking at being 100% in equity based investments at this stage in life."
I think you would have to be very comfortable that you would stick to the plan during the inevitable downturns. I would suggest that many might not.

People who put money into a simple  fund find it easier to stick to the plan. People who have a complex portfolio, requiring regular monitoring and rebalancing, find it much harder. 

Cnkp21

Deleted_User said:

BritishInvestor said:

Mutton_Geoff said:

Albermarle said:

Due to her young age the LISA should be invested so should be a stocks and shares LISA.
I used to be a low/medium risk sort of person but having learnt more about investing , it is clearly the wrong strategy for a long term regular  pension or LISA investor with a very long time frame . The VLS 20 and 40 funds mentioned above are really more suitable for someone already with a big pot and near retiring . You need to look at the VLS 60 & 80  &100 .
Maybe these links will be useful.
https://monevator.com/investing-for-beginners-why-do-we-invest/
https://www.moneysavingexpert.com/savings/investment-beginners/

Good advice. The danger of a risk averse investment with a long timescale ahead is that by the time you realise performance is related to risk, it will be too late to do anything about it. Risk must be measured over a long period of time together with the compounding effect of time.

You'll need to hold your nerve too, most people would be horrified if your chosen investment suddenly halved in value but I would view it as a buying opportunity since your £100 a month will now be buying twice as many units which then recover value further down the line. (Pound cost averaging).

The other point is that whilst any pension saving is admirable, especially at a young age, £100 a month will only generate a pot of £100,000 in 30 years (conservative estimate). A drawdown rate of 4% will provide you with a pension of £4,000 a year. All at today's rates but hardly life changing. If you can afford to squirrel away more nuts now, the compounded effect will be even greater.

There are plenty of funds and platforms to choose from but Vanguard are currently in vogue, and as Albermarle suggests, I would seriously be looking at being 100% in equity based investments at this stage in life.

"I would seriously be looking at being 100% in equity based investments at this stage in life."
I think you would have to be very comfortable that you would stick to the plan during the inevitable downturns. I would suggest that many might not.

People who put money into a simple  fund find it easier to stick to the plan. People who have a complex portfolio, requiring regular monitoring and rebalancing, find it much harder. 

Yeah we want a simple fund where we don’t need to do a lot. I haven’t got the time to monitor it and my wife won’t. 

Dazed_and_C0nfused

Personally I agree with the other posters about the risk profile however in your original post you did say this,

She is wanting to invest in a medium to low risk fund option 

As it is your wife's money/pension presumably you will try and persuade her to go with the much higher risk funds (VLS 80 or 100).

Which definitely would need re-evaluating closer to retirement.

[Deleted User]

The terms “high risk” and “low risk fund” are misleading. In this case VLS100 is likely the low risk fund. Higher volatility but lowest risk.