Vanguard stocks & shares ISA's: Invest in multiple LifeStrategy funds in same year?

Dan54321

I recently opened a Vanguard LifeStrategy funds stocks and shares ISA. I had planned to invest in just one LifeStrategy fund, but when I created an account I was presented with the option to invest in multiple LifeStrategy funds, so I decided to split my money between 3 of them. Today I remembered you can't invest in more than one stocks & shares ISA per year, so I cancelled two of the pending transactions to avoid any potential problems. I'm assuming each LifeStrategy fund is considered a totally separate ISA as per the ISA rules; why do Vanguard give you the option to invest in multiple stocks and shares ISA's in the same tax year, if that's not allowed?

eskbanker

What you have in mind is allowed.  You have one ISA and can buy what you like within it, although whether it's sensible to buy multiple variants of VLS is a different matter....

Edit: just to expand on this, you need to understand the difference between the ISA (a wrapper, within which you can hold investments) and the investments themselves, so you don't have "a Vanguard LifeStrategy funds stocks and shares ISA" as such, but have a S&S ISA, presumably with the Vanguard Investor platform, and wish to buy into multiple LifeStrategy funds within that, which doesn't breach the ISA rules in any way.

https://www.moneysavingexpert.com/savings/stocks-shares-isas/

dunstonh

I had planned to invest in just one LifeStrategy fund,

As do most people as the fund is designed to be held alone.

so I decided to split my money between 3 of them. 

And what you have you achieved doing that?

Today I remembered you can't invest in more than one stocks & shares ISA per year, so I cancelled two of the pending transactions to avoid any potential problems. I'm assuming each LifeStrategy fund is considered a totally separate ISA as per the ISA rules

It is one ISA manager a year.  Not one fund a year.   Unless you were using different ISA managers to use the VLS range.

why do Vanguard give you the option to invest in multiple stocks and shares ISA's in the same tax year, if that's not allowed?

It is allowed.   
Vanguard didn't give you the choice of funds because it's a good idea to have multiple VLS funds.  It gave you the choice in case you there will be portfolios that use multiple funds (such as a portfolio of single sector funds).  There are also people who will have different investment needs.  e..g money for 5 years time.  Money for 15 years time.  They would use a different VLS fund for those different objectives.

Albermarle

so I decided to split my money between 3 of them

Just decide which one suits your objectives, risk tolerance etc and invest in that one . That is what they are designed for .

Some people might invest in two , such as VLS 40 and 60 to effectively get a VLS 50 , but probably 10% equity difference either way is not going to make much difference in the long run.

Dan54321

Thanks for the clarification; it states on MSE and other websites that you can only invest in one stocks and shares ISA per year but it doesn't make it clear that this can be split among investments with the same provider. Holding multiple stocks and shares ISA's with the same provider sounded like a breach of this, hence the uncertainty.

As to why someone would invest in different VLS ISA's, this is quite straight forward and is based on risk and how long you want to invest for. The higher risk (i.e. higher share percentage) options are more suited to longer term investments to ride out any dips along the way, whereas the lower risk options are more suited to medium term investments as they carry less risk and less chance of losing money in the medium term. People might want to access part of their cash in 3-4 years without the risk of losing money, whilst also saving some of their cash for 5+ years as a longer term investment. In this way, splitting between different VLA's can be a good option.

Alexland

Dan54321 said:

As to why someone would invest in different VLS ISA's,

I suspect you might still be confused - the 'A' in ISA means account.

You have a Vanguard Investor ISA not VLS ISA(s).

You can hold various funds including those from the VLS series in your ISA.

eskbanker

Dan54321 said:

People might want to access part of their cash in 3-4 years without the risk of losing money

If any 'people' think they can achieve this when investing then they really need to educate themselves and think again....

dunstonh

 People might want to access part of their cash in 3-4 years without the risk of losing money,

But they wouldnt be investing the money allocated to that period as there is a significant risk of losing money in that period.

 whilst also saving some of their cash for 5+ years as a longer term investment. 

5+ is still short term.  5-15 is generally considered medium term and 16+ is long term.   You may find variances to that but that is the ballpark for timescales.  In no model is 5 years long term.

In this way, splitting between different VLA's can be a good option.

Segment your portfolio is a valid strategy.  It isn't one of the more popular ones but it is viable.

jimjames

Dan54321 said:

Thanks for the clarification; it states on MSE and other websites that you can only invest in one stocks and shares ISA per year but it doesn't make it clear that this can be split among investments with the same provider. Holding multiple stocks and shares ISA's with the same provider sounded like a breach of this, hence the uncertainty.

The MSE guide linked above is helpful to read and does explain that the S&S ISA is like a basket you can put different investments in. In your example you'd be expecting to have a shopping basket for each item of shopping you buy rather than one for all your goods. So don't worry, what you have done is not against the rules. It's also absolutely fine to use the same S&S ISA every year, you don't need to open a new account every April.

Dan54321

Alexland said:

Dan54321 said:

As to why someone would invest in different VLS ISA's,

I suspect you might still be confused - the 'A' in ISA means account.

You have a Vanguard Investor ISA not VLS ISA(s).

You can hold various funds including those from the VLS series in your ISA.

That was a typo, I meant different VLS funds but thanks for re-clarifying.

Dan54321

dunstonh said:

 People might want to access part of their cash in 3-4 years without the risk of losing money,

But they wouldnt be investing the money allocated to that period as there is a significant risk of losing money in that period.

 whilst also saving some of their cash for 5+ years as a longer term investment. 

5+ is still short term.  5-15 is generally considered medium term and 16+ is long term.   You may find variances to that but that is the ballpark for timescales.  In no model is 5 years long term.

In this way, splitting between different VLA's can be a good option.

Segment your portfolio is a valid strategy.  It isn't one of the more popular ones but it is viable.

I should clarify, I didn't mean to imply 5+ years was long-term, I said it was longer-term (relatively speaking). Vanguard consider short-term as 3-5 years, and medium-long term as 5+ years. And while there's always risk of losing money in 3-5 years, you lessen that risk by going with a higher bond percentage. With interest rates on savings so low, even if you 'broke even' after 5 years (after platform and fund manager fees are taken into account) that wouldn't be bad situation.