Vanguard LifeStrategy 80 v 60 over the next ten years minimum

rothers

I am torn between which one to invest in, the investment will be for a minimum of ten years and a max of 15.

I appreciate the volatility will be greater in the 80 and I will not be tempted to sell if there is a significant drop during that period. At the end of the ten year period I am able to wait if it is in the middle of a downturn. 

In the circs above which do you think is best? 

Alexland

rothers said:

At the end of the ten year period I am able to wait if it is in the middle of a downturn.

In the circs above which do you think is best? 

How many years are you willing to wait if it's a bad time to withdraw? For 10-15 years I would start with VLS80 (or 100 if you are feeling it's more likely to be 15 years and can cope with seeing circa 50% drops) and then drop down to a 60% equities weighting at a good time around 7 years before the money is needed. Now if VLS60 is the right fund to use at that time would need some consideration because at current valuations I wouldn't want to have 40% in bonds maybe some in cash, etc.

Or VTR2035 which is currently c70% equities (the midpoint between what you are considering) dropping to 50/50 in 15 years. If the money is only invested for 10 years then it would be c60% equities when withdrawn (as per VTR2025 fund).

https://www.vanguardinvestor.co.uk/investments/vanguard-target-retirement-2035-fund-accumulation-shares

Thrugelmir

 rothers said:

At the end of the ten year period I am able to wait if it is in the middle of a downturn. 

What if the equity bear market starts at the end of year 9 and you are buying into a falling market that doesn't start to recover for another three years. 

rothers

Thanks for your replies both of you, I would begin to look to take it out at ten years ideally with a five year buffer for it to recover in the case of a downturn. One thing that I am confident of is that I wouldn’t be panicked into selling in the event of a downturn, I will have enough income from my final salary pension to ride through it. 

I have read the Tim Hale book which indicates that the ideal split for that timescale is probably 60% but from what I’ve read about bonds I am tempted to go higher with equities to 80%. 

Edited to add, from reading that book it appears that most historical downturns don’t take much more than three years to recover. 

DrSyn

The Vanguard Target Retirement Fund of your choice, seems like a reasonable way to decide. Just hand the money over, say when you want access to the funds and let Vanguard do all the deciding for you.

https://www.vanguardinvestor.co.uk/investing-explained/what-are-lifestrategy-funds?intcmpgn=lifestrategyfunds_learnmore_link

https://www.youtube.com/watch?v=Sr-IFxRGT88

rothers

In addition, I have cash savings on top of that as a further buffer. 

Thrugelmir

Tim Hale's original book was first published in 2006. Bonds were in a very different place back then. 

dunstonh

Probably go 80 in the early years and switch to 60 mid way through and then to 40 later on and 20/cash towards the end.

rothers

Thrugelmir said:

Tim Hale's original book was first published in 2006. Bonds were in a very different place back then. 

Yeah, I read the 2013 version which was probably in a similar position in relation to bonds than 2006.

rothers

Thanks for your help everyone, it is much appreciated.

ratechaser

Right now I'm in 80, Mrs RC is in 60, probably about 200k between us just in those funds. Thinking was that she's 5 years older than me, and theoretically could retire ahead of me (not a chance in hell that's happening!)

Plus she's a 'bit' more risk averse - she was in 20 until not all that long ago...

Reality is that we are going to be invested for decades to come all being well, so I see it as an almost imperceptible difference...