Vanguard Life Strategy funds Versus Vanguard Target Retirement funds

singhini

@Albermarle Your example is spot on (i panicked i had lost £4k but didn't look at the bigger picture).
Also i have a terrible habit of logging into Vanguard to see how things are doing (on a weekly basis), where as i don't look at my company pension pots more than once a year (if that).
Again you make a good point about inflation and thinking about returns in relation to inflation.
I'm going to do the following investments and stop looking at the funds excessively.

Balanced 
Target Retirement 2035 fund = £20,000 invested
Fixed Income
Global Aggregate bond UCTIS ETF = £15,000 invested
Equity
SRI European stock fund = £5,000 invested

Albermarle

Also i have a terrible habit of logging into Vanguard to see how things are doing (on a weekly basis), where as i don't look at my company pension pots more than once a year (if that).

This seems a common theme from many newer posters .

They agonise over which investments /S&S ISA, and almost ignore the fact that often their pension is similarly invested ,

sheslookinhot

Get back into VLS 60 and forget about it.

Jox

I'm doing well with Scottish Mortgage Investment Trust

RetSol

You should always think in terms of return above inflation . In the past you could make 15% and still be behind inflation .
A product like VLS 60 should normally produce a return of around 2 - 5% above inflation - on average in the long term and not guaranteed of course.

This.  I think. 

Alexland

Albermarle said:
A product like VLS 60 should normally produce a return of around 2 - 5% above inflation - on average in the long term and not guaranteed of course.

Was it normal seeing interest rates decrease for decades driving those high returns? Are asset prices currently normal? Investing today if a 60/40 fund can achieve inflation after fees that would probably be a good result and a reasonable expectation.

firestone

singhini said:

@Albermarle Your example is spot on (i panicked i had lost £4k but didn't look at the bigger picture).
Also i have a terrible habit of logging into Vanguard to see how things are doing (on a weekly basis), where as i don't look at my company pension pots more than once a year (if that).
Again you make a good point about inflation and thinking about returns in relation to inflation.
I'm going to do the following investments and stop looking at the funds excessively.

Balanced 
Target Retirement 2035 fund = £20,000 invested
Fixed Income
Global Aggregate bond UCTIS ETF = £15,000 invested
Equity
SRI European stock fund = £5,000 invested

Not saying you are making the wrong choice and its only a personal view but you could look at it another way.If you was to ask Vanguard i would guess they might say that they offer a One stop shop product in target dated based on their best ideas and that you should trust them if you go down that route.
You have picked & payed them for their best idea and then decided  that you maybe know better & changed the portfolio by adding the bond fund(which is already in the target fund i believe) and more European which might be seen as you now designing the product weightings not them
If you are/were worried by the amount of equity you could also have picked either 2025 or 2030 which would hit the bond target quicker or just pick a global tracker and the aggregate bond fund in the percentages you want at a cheaper fee

singhini

@firestone your spot on
If you look at just the Retirement 2035  and the £20k and let say that's a ratio of Equity : Bond split of roughly 70:30.
By me also investing in Aggregate bonds and some European Equity with another £20k at a ratio of £15k : £5k you could argue that the overall investment of the full £40,000 is now 47% : 53% in the form of Equity : Bond (i.e. £19k of the pot is Equity and £21k is Bonds).

As we nearer the year 2035 the amount of Equity held in the Retirement fund will lessen and the overall portfolio with be more like 30% : 70% split of Equity : Bond.

Therefore i agree, why don't i just pick the Retirement 2030 fund in the first place ???? 
In economics i think its called irrational choice theory (

firestone

singhini said:

@firestone your spot on
If you look at just the Retirement 2035  and the £20k and let say that's a ratio of Equity : Bond split of roughly 70:30.
By me also investing in Aggregate bonds and some European Equity with another £20k at a ratio of £15k : £5k you could argue that the overall investment of the full £40,000 is now 47% : 53% in the form of Equity : Bond (i.e. £19k of the pot is Equity and £21k is Bonds).

As we nearer the year 2035 the amount of Equity held in the Retirement fund will lessen and the overall portfolio with be more like 30% : 70% split of Equity : Bond.

Therefore i agree, why don't i just pick the Retirement 2030 fund in the first place ???? 
In economics i think its called irrational choice theory (

Not sure if its irrational choice or fear of making a wrong decision  but it might be a good idea to pay the fee on the cash for a couple of more days while you think it through and don't invest unless you want to rather then convince yourself you should.I.e did you have a good reason for picking Europe over say Japan,Asia,EM etc when you were still stuck on which multi asset fund to pick?
Target funds have not really caught on yet in this country but in America they are a much bigger business and if anyone is going to grow them here it will be Vanguard i would guess.So it may pay to search key words like target, pension funds,Vanguard etc but with America also in the search to get a bigger review sample on how they work (albeit in a different market the portfolio,fees etc will be different but not the idea behind it)
Most people on here would probably pick the LS fund they are happy with now and maybe even look to step down the ladder at a later date but that might mean making a decision in the future that again your not comfortable with or mistime.To be fair i would guess in the long run there would not be a lot of difference between the Target date and LS60 until the dated fund starts to go over more into bonds.But what the target fund might do psychologically is take the process at of your hands and stop you thinking about it
The target fund might be the most hands off decision you can make (apart from panicking) and the fact that is in an ISA  still gives you freedom at any time to change as the date is just a guide and you could cash 2 years early or 20 years after or take a part out at anytime but that's another decision

singhini

firestone said:

  did you have a good reason for picking Europe over say Japan,Asia,EM etc when you were still stuck on which multi asset fund to pick?

Funny you asked that because if you read the fifth post in this thread i jokingly said i had put money into European equity "German all Cap UCTIS" and also in the Asia-Pacific equity "FTSE Developed A-S ex-Japan UCTIS" fund (i had looked into them a day or so ago and i liked them).
However being risk cautious and both these funds being a 6 out of 7 risk i knew they weren't for me.
Infact since i posted earlier today about putting £5,000 into "SRI European stock" fund i don't think i will as its 5 out of 7 risk.

I'm coming to the conclusion i will leave the majority in "Target Retirement 2035" and also a bit in "Global Aggregate bond UCTIS ETF".
And as you say [and i agree on both] (1) - the psychologically aspect will take the process at of my hands and stop me thinking about it, and (2) - i won't be doing anything immediately