Vanguard LifeStrategy 100 or Index Tracker?

YellowDuc

Hello,

I'm looking at putting a lump sum into a long term based investment fund and then monthly payments of around £500 in. 

I'm 29 years old, so wont be looking at taking out any money until im sort of 60/65+. 

I have an investment portfolio mixed up of high risk and low risk. For this I just wanted something that follows the markets and gives 8-12% a year or so. I dont mind if it goes down some years and up others.

Would an ETF or Index tracker be best? Or something like Vanguard LifeStrategy 100? 

I really don't know too much about this.

Thanks,
Alex

ColdIron

But surely crypto is a better investment?

YellowDuc said:

I could write an essay on why everyone should invest into BTC + ETH.. It's the best  investment you can make at the moment and I fully expect BTC to hit anywhere from $250-500K by 2024-2025. 

I'm predicting BTC to $100K by end of January latest and ETH at $10-12K. 

Just remember, dont sell the dips, buy the dips. Accumulate and HODL.

BTC averages at 300%+ returns a year, meanwhile your savings bank gives you 0.05% when inflation is estimated to be around 10%. You're losing money by keeping savings in the bank.

Albermarle

Would an ETF or Index tracker be best? Or something like Vanguard LifeStrategy 100?

All these types of investments are broadly similar and probably will give similar results .

VLS 100 has a higher UK % than a standard global tracker .

Ones following the FTSE World index have a % of Emerging Markets , whilst ones following the equivalent MSCI index have no Emerging markets .

For this I just wanted something that follows the markets and gives 8-12% a year or so.

The lower figure looks more realistic ( we all hope ) 

tebbins

YellowDuc said:

Hello,

I'm looking at putting a lump sum into a long term based investment fund and then monthly payments of around £500 in.

How much? In an ISA or could this go into a pension and what is your living/rent/mortgage situation? Are you sure you won't need this money for ideally at least 10 years given you are looking at 100% equity?

I'm 29 years old, so wont be looking at taking out any money until im sort of 60/65+. 

Then this could/should got into a pension. What is your current pension provision, are you working and paying into a pension scheme, do you expect to get a full state pension (https://www.gov.uk/new-state-pension/what-youll-get).

I have an investment portfolio mixed up of high risk and low risk (in what type of account). For this I just wanted something that follows the markets and gives 8-12% a year or so (this may be optimisic). I dont mind if it goes down some years and up others (good to know that you understand this).

Would an ETF or Index tracker be best? Or something like Vanguard LifeStrategy 100?

Again, what type of tax wrapper would this be in, and on what platform is your first question.
Fund selection depends on many things. For most retail investors, conensus in the forum is that a global index tracker such as HSBC FTSE All-World or Vanguard FTSE Global All Cap is sensible. These funds have aboout 4-5% of their money in UK equity, whereas most on the forum have some home bias (or less global bias, depends how you see it), i.e. they own more of the UK than that. VLS100 builds in home bias by having ~21%, or ~5x that allocation to UK equity. UK large-cap equity (which makes up the majority of VLS 100's total UK equity exposure) has underperformed the rest of the world since the mid-2010s, mostly due to the US' very strong run since then. Personally I think this trend will reverse because the US is so highly valued relative to the UK, but over 30 year whether your money is 4% of 21% in the UK may not make a significant difference as over the very-long term, the UK and global stock markets have performed similarly. 

I really don't know too much about this.

Thanks,
Alex

.........

kuratowski

Yes index trackers are fairly popular, and low maintenance, having said that your goal of 8-12% growth per annum is quite aggressive.   Markets can go down as well as up, so even if you get 10%+ growth in the good years, the average growth is lower taking the bad years into account as well.  Especially if you have some allocation to low risk assets, these will bring the growth rate down as well.  As a rough guide, I would plan on the basis of long term growth being something like inflation + 3%, and if you get more it's a bonus.

I suggest you read a lot of the articles on this page.  Most are targeted at beginners

https://monevator.com/category/investing/passive-investing-investing/

You can ignore the hard sell on passive investing if you want, it's the broader concepts you need to understand.

Linton

If you are starting from scratch with a monthly contribution, for the first 5-10 years it makes  little difference which broadly based global fund you use.  Most of the increase in the value of the pot will come from the contributions.  So just start ASAP and by the time your pot has reached say £30K you should have the experience to reconsider your investment choices.

YellowDuc

ColdIron said:

But surely crypto is a better investment?

YellowDuc said:

I could write an essay on why everyone should invest into BTC + ETH.. It's the best  investment you can make at the moment and I fully expect BTC to hit anywhere from $250-500K by 2024-2025. 

I'm predicting BTC to $100K by end of January latest and ETH at $10-12K. 

Just remember, dont sell the dips, buy the dips. Accumulate and HODL.

BTC averages at 300%+ returns a year, meanwhile your savings bank gives you 0.05% when inflation is estimated to be around 10%. You're losing money by keeping savings in the bank.

Eggs and baskets.. I want to diversify my investment portfolio more, as well as a mixture of long term and short term investments.

YellowDuc

Albermarle said:

Would an ETF or Index tracker be best? Or something like Vanguard LifeStrategy 100?

All these types of investments are broadly similar and probably will give similar results .

VLS 100 has a higher UK % than a standard global tracker .

Ones following the FTSE World index have a % of Emerging Markets , whilst ones following the equivalent MSCI index have no Emerging markets .

For this I just wanted something that follows the markets and gives 8-12% a year or so.

The lower figure looks more realistic ( we all hope ) 

Thanks. I looked into S&P 500 too, but thats obviously US focused and I dont like the idea of currency fluctuations too 

Thanks for your help. I'll probably go or VLS 100 

YellowDuc

How much? In an ISA or could this go into a pension and what is your living/rent/mortgage situation? Are you sure you won't need this money for ideally at least 10 years given you are looking at 100% equity?

Thanks for your reply. I'm currently living mortgage free in my first house, but looking at moving to a much bigger place in the next few months. House has been on the market for a few months + Mortgage is all good to go. I don't plan on needing access to this money for 20+ years or so. Just an out of sight, out of mind type long term investment that can reap the rewards of compound interest.

I've got a pension setup for my wife and I. We are both directors of my Ltd company. We pay healthily into that.

I wonder if the US markets have increased recently with their stimulus cheques and mass over printing. I read online (perhaps bloomberg or FT) that in 2020 they printed 35% of all USD in circulation since the start of their country. I'm sure this will have knock on effects. Perhaps Vanguard FTSE Global All cap would be good though.

Is it easy to transfer down the line? For example say I build up £100K in Vanguard TSE Global All Cap, can I transfer this amount to VLS100 if I feel like it without tax implications? 

Thanks for your help and detailed reply. Much appreciated.

YellowDuc

Yes index trackers are fairly popular, and low maintenance, having said that your goal of 8-12% growth per annum is quite aggressive.   Markets can go down as well as up, so even if you get 10%+ growth in the good years, the average growth is lower taking the bad years into account as well.  Especially if you have some allocation to low risk assets, these will bring the growth rate down as well.  As a rough guide, I would plan on the basis of long term growth being something like inflation + 3%, and if you get more it's a bonus.

I suggest you read a lot of the articles on this page.  Most are targeted at beginners

You can ignore the hard sell on passive investing if you want, it's the broader concepts you need to understand.

Thanks for your reply. tbh 3% on top of inflation is good. I have no interest in really keeping any significant cash in the bank except for 24 months living expenses as an emergency fund. Inflation is high and interest rates are low. I'd rather be investing it or buying appreciating assets.

I'll give the link a read. Thanks again.

YellowDuc

If you are starting from scratch with a monthly contribution, for the first 5-10 years it makes  little difference which broadly based global fund you use.  Most of the increase in the value of the pot will come from the contributions.  So just start ASAP and by the time your pot has reached say £30K you should have the experience to reconsider your investment choices.

I was thinking of starting with a £10K down payment and then monthly contributions of £500. I figured if I got 8% / yr, if I did this and didnt put any further lump sums in, then it would equate to around £1.1M in 30 years by the time I'm 60. Obviously I can increase this or put more lump sums in, if I need/want to down the line.

Going to start up an account next month. On my list of things to do :-) 

Thanks for the help all.