compound interest and the avg % year on year

bowlhead99

GotPrincess said

Your point is very valid its just a personal point I am stuck on I don't like the idea of not earning the extra 6% I would investing into a pension however maybe I need to look into contributing to this alongside a regular investment also 

The boost is only as low as 6% if all of the money you put in, other than the quarter of it that can be taken as a tax free lump sum, is fully taxed at basic rate on the way out. However, the personal allowance (currently £12500 a year) gives you plenty of space to draw money out of the pension with 0% income tax to pay, especially in the years before state pension starts kicking in. This would mean the ability for a basic rate taxpayer with hardly any private pension provision to buy £10 of pension for £8 contribution would work out as a 25% boost, or 67% boost for a high rate taxpayer buying £10 of pension for £6 contribution.

Eco_Miser

GotPrincess said:

Eco_Miser said:

What's the difference between the money in the first paragraph (investment via ISA) and the money in the second paragraph (investment via pension)?

With a pension you get at least 6.25% more, thanks to tax advantages, but can't touch it until age 55 (probably 57 when you get there).

In both cases, if you don't live long enough your heirs get it, not exactly wasted though you don't get direct benefit.

I don't have any heirs and family wise im the oldest of my brothers however were not close and they never helped me when I was on my !!!!!! so I don't intend on helping them when i pop my clogs

Everybody's got an heir, even it's the state - for someone with no will and no close relatives. If you write a will, you can leave it to your favourite charity.

A_T

GotPrincess said:

eskbanker said:

GotPrincess said:

I was trying to figure out a tier system so below avg performance, Middle and above average.

The last thing anyone needs just now is another tier system....

The performance of VLS80 is a matter of record so you can see it for yourself at a whole range of sites, Vanguard's own plus Trustnet/Morningstar and many platforms, so you can see 7-8% in the last year and much the same in each of the last three years on average, with better performance further back, but, as you recognise, averages are of limited value when looking forward - if you're looking for genuinely long-term averages then Vanguard LifeStrategy isn't a suitable model, as it only came into existence in the early years of a sustained bull run so hasn't gone through significant downturns yet....

Interesting are you of the opinion that as a investor its a solid product with risk attached to it 

you tend to get a lot of pessimism when people talk about future returns - not wanting to hope for too much - cognitive dissonance is very powerful in investing. The FTSE 100 has shown an average 8% yearly total return since 1984 - the MSCI World about 10% - both measured in sterling. I'll get told-off for posting this.

MaxiRobriguez

A_T said:

GotPrincess said:

eskbanker said:

GotPrincess said:

I was trying to figure out a tier system so below avg performance, Middle and above average.

The last thing anyone needs just now is another tier system....

The performance of VLS80 is a matter of record so you can see it for yourself at a whole range of sites, Vanguard's own plus Trustnet/Morningstar and many platforms, so you can see 7-8% in the last year and much the same in each of the last three years on average, with better performance further back, but, as you recognise, averages are of limited value when looking forward - if you're looking for genuinely long-term averages then Vanguard LifeStrategy isn't a suitable model, as it only came into existence in the early years of a sustained bull run so hasn't gone through significant downturns yet....

Interesting are you of the opinion that as a investor its a solid product with risk attached to it 

you tend to get a lot of pessimism when people talk about future returns - not wanting to hope for too much - cognitive dissonance is very powerful in investing. The FTSE 100 has shown an average 8% yearly total return since 1984 - the MSCI World about 10% - both measured in sterling. I'll get told-off for posting this.

Interest rates and bond yields have been on the downward trend since 1984 which is a boon for stocks.

FTSE100/MSCI World both with majority of earnings not in GBP. GBP has lost ground against major currencies over the last 30 years, hence returns from foreign denominated earnings will be higher.

Many new breeds of investors as equity ownership has democratised with index, robo investing etc.

I think what I'm trying to say is, you can't assume 10% growth over the next 30 years as those things are unlikely to be replicated. It makes more sense to forecast low, and overperform, than vice versa - especially if a retirement for example depends on it. I'm comfortable forecasting 4% annual growth on my portfolio for the next 30 odd years. It's low, but I can meet my goals still despite that.