Vanguard lifestrategy 80 for newbies

thegentleway

Sounds like a good idea because you have of the flexibility of waiting longer than 5 years if you need to. (It’s pretty much what I’m doing)
The advice is because ~20% of the time you end up with less money than you started with after 5 years. Drops to ~10% for 10 years.

Most people don’t have the flexibility to extend timelines so can’t afford to take as much risk.
An important point you may have missed is that if your investment drops by 50% it needs to gain 100% (not 50%) to get back to original value. 

Thrugelmir

Beardybaldy said:

I must be missing something. I'm not so arrogant as to think I know better than literally everyone else, so there's got to be something I'm missing, but from the data, it all looks fairly safe to me, even on fairly short timescales.

Ask yourself the question. If it's the case what hasn't everybody still got an interest only mortgage. What happened in the past for the regulators to step back in. Ever heard the quote "Financial disasters happen when the last person who remembers the last one has left the building".  No one can say what the futures holds over any given time frame. 

[Deleted User]

Thrugelmir said:

Beardybaldy said:

I must be missing something. I'm not so arrogant as to think I know better than literally everyone else, so there's got to be something I'm missing, but from the data, it all looks fairly safe to me, even on fairly short timescales.

Ask yourself the question. If it's the case what hasn't everybody still got an interest only mortgage. What happened in the past for the regulators to step back in. Ever heard the quote "Financial disasters happen when the last person who remembers the last one has left the building".  No one can say what the futures holds over any given time frame. 

That's easy. People either didn't understand them, or, like some people I know that have them, chose to bury their heads in the sand, and live a, good life on tiny mortgage repayments on the assumption that at some point in the future, they'll be earning enough to just pay it off.

I've heard so many people casually claiming that yeah in 10 or 15 years your salary will be four or five times what it is now. Not true of course for the vast majority of people.

I'm just slightly too young to remember the details, but I seem to recall that a load of interest only mortgages were mis sold in the 1970s and 80s, and a substantial compensation scheme resulted, which would always put lenders off offering it again.

Yellowvest23

On a side note,whats the timescale on purchasing VLS80 on lets say iweb.?
If I instructed a buy on a Friday morning when would it be carried out?
Hope that makes sense.

underground99

Yellowvest23 said:

If I instructed a buy on a Friday morning when would it be carried out?

Depends how early on Friday morning - the dealing cut-off in the prospectus to get Friday night's value is 10am Friday morning, which means Vanguard's administrator needs to get the order by then; some platforms will have an earlier cut-off to allow them to package up their orders and communicate to Vanguard's administrator. May be e.g. 8,9,10am depending on broker (you said 'let's say IWeb' rather than specifically them).

https://www.vanguardinvestor.co.uk/rs/gre/gls/1.3.0/documents/2077/gb

Thrugelmir

Beardybaldy said:

Thrugelmir said:

Beardybaldy said:

I must be missing something. I'm not so arrogant as to think I know better than literally everyone else, so there's got to be something I'm missing, but from the data, it all looks fairly safe to me, even on fairly short timescales.

Ask yourself the question. If it's the case what hasn't everybody still got an interest only mortgage. What happened in the past for the regulators to step back in. Ever heard the quote "Financial disasters happen when the last person who remembers the last one has left the building".  No one can say what the futures holds over any given time frame. 

That's easy. People either didn't understand them, or, like some people I know that have them, chose to bury their heads in the sand, and live a, good life on tiny mortgage repayments on the assumption that at some point in the future, they'll be earning enough to just pay it off.

I've heard so many people casually claiming that yeah in 10 or 15 years your salary will be four or five times what it is now. Not true of course for the vast majority of people.

I'm just slightly too young to remember the details, but I seem to recall that a load of interest only mortgages were mis sold in the 1970s and 80s, and a substantial compensation scheme resulted, which would always put lenders off offering it again.

Hence my quote.  A new generation. The same potential trap to fall into. There's rarely any free lunches in this world that last for any length of time. 

[Deleted User]

Thrugelmir said:

Beardybaldy said:

Thrugelmir said:

Beardybaldy said:

I must be missing something. I'm not so arrogant as to think I know better than literally everyone else, so there's got to be something I'm missing, but from the data, it all looks fairly safe to me, even on fairly short timescales.

Ask yourself the question. If it's the case what hasn't everybody still got an interest only mortgage. What happened in the past for the regulators to step back in. Ever heard the quote "Financial disasters happen when the last person who remembers the last one has left the building".  No one can say what the futures holds over any given time frame. 

That's easy. People either didn't understand them, or, like some people I know that have them, chose to bury their heads in the sand, and live a, good life on tiny mortgage repayments on the assumption that at some point in the future, they'll be earning enough to just pay it off.

I've heard so many people casually claiming that yeah in 10 or 15 years your salary will be four or five times what it is now. Not true of course for the vast majority of people.

I'm just slightly too young to remember the details, but I seem to recall that a load of interest only mortgages were mis sold in the 1970s and 80s, and a substantial compensation scheme resulted, which would always put lenders off offering it again.

Hence my quote.  A new generation. The same potential trap to fall into. There's rarely any free lunches in this world that last for any length of time. 

Forgive me, I'm confused. We seem to have changed the subject from investing over a flexible time frame, to interest only mortgages. I know the two are kind of linked, because some would use investment pots to make the repayment at the end of the term, but I don't think that was the norm, and in any case, I'm not talking about investing tied to a specific deadline.

justme111

"It took 8 years for S&P 500 prices to recover after the dot-com bubble burst in 2000, which was immediately followed by the crash of 2008. Following that crash, it took about 6 years for prices to recover to their previous all-time highs"
So 8 years , 6 years or altogether 14 years. 
Different to 3 months in 2020, is not it ?
Taken me 2 minutes to find this info online and to me it looks like it answers your original question and disproved your assertion of "markets ever going up except for short drops" .

[Deleted User]

justme111 said:

"It took 8 years for S&P 500 prices to recover after the dot-com bubble burst in 2000, which was immediately followed by the crash of 2008. Following that crash, it took about 6 years for prices to recover to their previous all-time highs"
So 8 years , 6 years or altogether 14 years. 
Different to 3 months in 2020, is not it ?
Taken me 2 minutes to find this info online and to me it looks like it answers your original question and disproved your assertion of "markets ever going up except for short drops" .

That's the S&P 500. From what I can gather, all funds are not equal. 

justme111

It measures performance of 500 largest companies. Do you think it would be the only one that has been down for 8 years while everything else went up ?