Bonds v Shares best bet for 2022

longleggings

Hi
I am looking to invest around 100K soon into a Vanguard LS account
I am not adverse to some risk but am interested in your views regarding markets going forward - i realise this is not a science.
Can't decide whether to go for a 60% shares option or 60% bonds option with Vanguard - im looking at a 3-5 yr period
Any views gratefully received
Thanks in advance
L

Albermarle

The most obvious comment to make is that 5 years is the absolute minimum recommended for holding investments . > 10 years is better . Three years is too short unless you are happy to take a significant risk of loss .

Regarding bonds and shares, both seem to be running at the higher  end of valuations.
Most outlooks for equities over the next decade seem to point  to only modest real returns ( after inflation) maybe 2 or 3 % pa on average .
Bonds are more complicated as there are different types, but the issue is that any significant rise in interest rates will adversely effect bond prices .
Normally 40% equities 60% bonds would be the safer option, but could be that is reversed in the coming years . 
So heads or tails I guess.

JohnWinder

Go to the portfolio visualiser site, create your two portfolios (60/40 and 40/60). Choose a sensible equity and bond holding to roughly match what VLS has eg if VLS has global equities, then choose half the equities to be US and half to be global ex US as I don't think it offers a single choice of global. Have a look at the resultant graphs for what can happen over any 3-5 year period within the last few decades.  That should give you some idea of what might happen in the next few years.

Thrugelmir

The higher the equity % the greater the volatility. The inherent danger with holding equities over the short term is that if the market dips.  You may not regain the lost capital within the timeframe that you wish to hold the investment. In your case 3-5 years.  Roll back to 2007 when global markets peaked. The GFC subsequently followed. Markets didn't recover pre GFC levels until 2013. 

Picking up on your thread title. Never bet on markets. 

Linton

When designing a portfolio the primary driver should be what you want to achieve in what timeframe.  There is no point in planning on the basis of your or anyone else's predictions of future market behaviour - neither you nor they know what the furture will bring.

In your case if your requirement really is to spend all the money in 3-5 years time anything other than keeping it in cash would be foolish IMHO.

tebbins

What do you want the money for in 3-5 years? Because if you definitely do need it in 3-5 years investing is not appropriate and you could look at £50k in premium bonds and the rest (perhaps) in fixed-rate savings accounts.

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

eskbanker

longleggings said:

Bonds v Shares best bet for 2022

[...]

im looking at a 3-5 yr period

In which case, why the specific interest in what may or may not happen in 2022?

longleggings said:

I am looking to invest around 100K soon into a Vanguard LS account

Taking a step back, what are your investment objectives, and on what basis do you feel that Vanguard LifeStrategy gives you the best chance of achieving them, versus their competitors and other solutions in the wider market?

dunstonh

 im looking at a 3-5 yr period

So very short term which means you should take minimal risk unless you are a high risk investor by nature.

You should anticipate a 15-20% loss being possible, even probable if you invest for such a short period.

longleggings

Thanks all
Thruglemir's suggestion about more volitility in shares over the short term makes sense - ie the ref. to 2007
If so then 60% bonds may be the way - markets seem hard to predict at the moment. I've got a few 'informed' friends who suggest that USA stocks could well crash or lose significant value in the next year or so.

eskbanker

longleggings said:

markets seem hard to predict at the moment

Are you under the impression that you actually need the last three words there?

Hansplace

what age you are now?
If approaching 58, dump some in SIPP and get 20-25% extra from the government and then can start withdraw slowly.