Vanguard Life Strategy vs Target Retirement

Thrugelmir

lvader said:

Thrugelmir said:

lvader said:

If the market goes into a bear cycle thats generally a good thing if you have many years of adding money to the pot.

Which market though?  Markets can and do move independently. 

I was thinking of something along the lines of 2000-2004, so quite broad and relatively long lasting, if you were well into retirement and 100% in equities thats going to sting.

Not everyone invested heavily in tech stocks. Holders of Woodford's Perpetual Income funds did rather well in fact. Access to the S&P 500 etc wasn't so easy nor as cost effective back then. Far more listed UK companies to chose from. 

lvader

I wasn’t even thinking of tech stocks, we also had 9-11 and the Iraq war that affected markets. Had it existed I don’t imagine a Vanguard Global fund would have done well during that period.

jamesd

zagfles said:

If you're going to assume what happened in the past will happen in the future, then use historic sequences.

If you're not going to assume what happened in the past will happen in the future, then you have nothing to go on.

The idea of using historic data jumbled in a random way seems pointless. If the future is not going to be a repeat of the past, why assume historic averages will repeat? Future stockmarket returns may be on average lower than past returns. That seems about as likely as average returns being the same but in some random jumbled order.

Some people prefer a third approach: using estimated future returns instead of historic.

It's about getting comfortable enough with the planning to rely on it and preferences for that will differ.

Thrugelmir

lvader said:

I wasn’t even thinking of tech stocks, we also had 9-11 and the Iraq war that affected markets. Had it existed I don’t imagine a Vanguard Global fund would have done well during that period.

Global funds would have been dominated by US stocks. There was no access to markets such as China back then. The BRICS were the future in the early to mid 00's.