Where to put the rest of this years ISA allowance?

Thrugelmir

Annie1612 said:

Thrugelmir said:

Annie1612 said:

Thrugelmir said:

Annie1612 said:

 I am cobbling together funds that I can use for pension income in the future. 

Why not switch to VLS80? Cobbling together suggests there's no coherent strategy in place. Which could result in an unbalanced and far riskier portfolio. Set your aims and objectives. Then work towards them. As these are the only numbers that matter to you. 

I also think though it might not be a bad idea to have less uk weighting. From what I have read at least. 

I'd focus on your appetite for risk and leave the choosen fund manager to decide upon the actual investment allocation. Unless you invest in the smaller companies segment of the UK markets. Listed UK companies will in themselves be international in terms of where they generate their revenues.  

I think I would like a bit more risk. It is only a portion of my overall savings. I started off with Vls 80 then lost my nerve very early on and dialled down the risk 😂 I feel a lot calmer now as I have sorted my finances a bit better and discovered I had 28 years of state pension (wow!) that I didn’t know I had so not overly reliant on my isa and will be able to leave it alone for a long time.

Risk comes in many forms. Until you've been invested through a particularly turbulent period you are unlikely to know what's a comfortable level on a personal level.  As an investor you'll never stop learning or experiencing something new. 

Bobziz

Modelled expected 10 yr returns via this site would seem to support a significantly lower exposure to US. Not had an opportunity to dig in to the workings of the model yet so can't comment on it's validity. May be complete nonsense, but would seem to align to some extent with Vanguards new active multi asset fund which I believe is still only available through advisors. 

https://interactive.researchaffiliates.com/asset-allocation#!/?currency=USD&model=ER&scale=LINEAR&terms=REAL&_k=brgrem

masonic

Bobziz said:

Modelled expected 10 yr returns via this site would seem to support a significantly lower exposure to US. Not had an opportunity to dig in to the workings of the model yet so can't comment on it's validity. May be complete nonsense, but would seem to align to some extent with Vanguards new active multi asset fund which I believe is still only available through advisors. 

https://interactive.researchaffiliates.com/asset-allocation#!/?currency=USD&model=ER&scale=LINEAR&terms=REAL&_k=brgrem

The projected returns for equities are loosely modeled on valuation metrics such as the Cyclically Adjusted Price to Earnings ratio (among others) and was predicting negative real returns for US large companies as early as 2014 when I was first introduced to the site. Of course we now know the actual 10 year annualised real returns have been in excess of +15% and CAPE has gone up from ~25 to 38. In valuation terms, the US is close to where it was at the peak of the dotcom boom, so I'd take concerns about it being 'expensive' rather more seriously now than I did then, but hedge fund managers like Research Affiliates are ultimately just trying to use data to promote their own services, so I'd take their analysis with a pinch of salt.

Generally it is best not to bet the farm on a particular outcome, but to me nearly 50% in the US market for a UK investor seems high. It worked very well over the last 10 years, but the odds seem to be stacking against it now.

Annie1612

Still thinking about this 😂 not sure how much it will matter what I do in 15 years time with such a modest amount of money (in investment terms) but now thinking I might just transfer the isa to another platform as suggested. Or do nothing till next year and then open a new isa. 

tebbins

For return expectations I use the inverse CAPE, ie the cyclically adjusted earnings yield (https://indices.barclays/IM/21/en/indices/static/historic-cape.app, or multpl.com and http://www.econ.yale.edu/~shiller/data.htm just for the US) as an optimistic/moderate expectation of the next 10 years real total return, and the dividend yield as a "baseline" real total return expectation.
I have studied this properly but lost my spreadsheet!
The CAEY predicts the UK's next 10y RTR with an average difference of close to 0% and a standard deviation of 3%, and the dividend yield is only higher than the next 10y RTR about 1/6 of the time.

The FTSE All Share yield is around 3%, the CAPE is 17.6, the CAEY is 5.6% (rounded down for pessimism).
That's completely average and in line the last 30 years. Dec 1990-Dec 2020 the FTSE All Share returned 7.87% annualised, CPI was 2.16% (going off Dec 1990/2020 Jan 1991/2021 data), the RTR was 5.59%.
This becomes less accurate for extreme values. The S&P 500 has never had a positive return over the next decade when its CAPE has been this high.

Billycock

Annie1612 said:

Still thinking about this 😂 not sure how much it will matter what I do in 15 years time with such a modest amount of money (in investment terms) but now thinking I might just transfer the isa to another platform as suggested. Or do nothing till next year and then open a new isa. 

Annie1612  - as per your first post on thread :--
Alternatively, could I put £15k into a cash isa and then transfer it to a stocks and shares isa next tax year when I would have a bigger choice of funds, which would give me 35k allowance to invest in total (don’t know if I am allowed to do that!!)?

You won't have a 35k allowance to invest next year if you do nothing until next year and then open a new ISA.
Currently, ISA investment allowance is 20k per tax year. Therefore if you do nothing until the next tax year then you can only invest the 15K you currently have plus an extra 5k.
If you wanted to invest 35k in the next tax year (theoretically) then at the very least you would actually need to invest the 15k into a bog standard cash ISA this year and transfer the cash ISA into whatever fund you decide next year, therefore you still have a 20k allowance the next tax year.
I'm not sure why you think you will have a bigger choice of funds next year though.
Also from reading your first post again, I'm under the impression that you're thinking that further investments into your Vanguard account will automatically be invested into your VLS60 fund, if so then that's not the case, you can choose to invest your 15k into a different fund if you wish, you also say that you're happy to have a bit more equity, why not put the 15k into VLS80?

Billycock

Or even better IMHO, split the 15k 50/50 between VLS80 & FTSE Global All Cap.
Then your holdings would be
20k VLS60
7.5k VLS80
7.5k FTSE Global All Cap.
  

Annie1612

Sorry, yes, when I said I might do nothing,  I meant just park the spare cash in a cash isa and transfer next year. It can go into a new isa on a different platform into a different multi-asset fund. Can’t commit to just one fund - that’s  me being me 😂

I probably will end up putting a bit more into VLS 80/100 - or as you suggest, half and half, as probably sensible really. Then transfer 5k across to use next year. Thank you for the reply!

masonic

If going the cash ISA route, then it probably would make sense to delay opening the cash ISA until next year and this would not risk the ISA allowance. Providing the cash ISA is opened and funded at least a few weeks before the end of the tax year (allowing for potential account opening delays), then it can be transferred to a new S&S ISA any time from 6th April. In the mean time there are better prospects for short term interest in standard savings accounts, and this way you can keep your options open should you change your mind and decide you do wish to contribute directly to the Vanguard ISA.

Annie1612

Billycock said:

Annie1612 said:

Sorry, yes, when I said I might do nothing,  I meant just park the spare cash in a cash isa and transfer next year. It can go into a new isa on a different platform into a different multi-asset fund. Can’t commit to just one fund - that’s  me being me 😂

I probably will end up putting a bit more into VLS 80/100 - or as you suggest, half and half, as probably sensible really. Then transfer 5k across to use next year. Thank you for the reply!

Presumably you mean just one platform not fund.

No. New platform, new fund. Sorry if I am being confusing 😂 I would like to have VLS on the Vanguard platform, but I would like to invest in a new multi-asset fund now,  probably, HSBC Global Strategy, so I will need to open a new ISA next year in order to buy it.