Time to take the xmas plunge- Vanguard LS 80 to LS 100?

Vet

Hi all!
Background - 28 years old, investing 16k/year in S&S ISA with Vanguard (Extra 4k goes to LISA as no house yet! )

This is the first year i've been able to afford to put the full £20k into ISA's. I currently have about £40k in an ISA with Vanguard in LifeStrategy 80.
I think this is the year i'm going to move this up to LS100. I figure that as i'm still in my 20s then this is the time to take the plunge!
I've continued to invest during the pandemic (with good results).
I'd appreciate some thoughts on this.
Also side note - at what age would you reassess your portfolio e.g. drop to 80/60/40/20 etc?

Any help would be amazing!

tl;dr - VLS80 -> VLS100 - worth the move in your 20s?

Thank you!

older_and_no_wiser

Okay I'll risk being shot down in flames, but if you leave your investment in a 100% equity fund for a 30  year period then I would say there's a very good chance that it will outperform any 80/20 fund. I doubt there's any 30 year period in history that this hasn't been the case. Yes, past performance is no guarantee of the future.

The other point to make is that there could be 'better' (more diverse) 100% equity funds than LifeStrategy - as it has that UK bias. 

older_and_no_wiser

...and of course this depends on your risk appetite and that a 100% equity fund will potentially have more Volatility than one with a bond/safe element in it. So if you're happy to just leave it, ignore market noise and let it grow then that's a bonus

Alexland

It's not so much about your age as when you might spend the money.

For example is this money needed in the short to medium term towards the house deposit?

If this money is not needed until retirement would it be more efficient contributing more into a pension?

Vet

older_and_no_wiser said:

Okay I'll risk being shot down in flames, but if you leave your investment in a 100% equity fund for a 30  year period then I would say there's a very good chance that it will outperform any 80/20 fund. I doubt there's any 30 year period in history that this hasn't been the case. Yes, past performance is no guarantee of the future.

The other point to make is that there could be 'better' (more diverse) 100% equity funds than LifeStrategy - as it has that UK bias. 

I appreciate the help - whats your view on rebalancing e.g. 80/60/40 etc?

Alexland said:

It's not so much about your age as when you might spend the money.

For example is this money needed in the short to medium term towards the house deposit?

If this money is not needed until retirement would it be more efficient contributing more into a pension?

I have a workplace pension but our work only contributes the minimum. I have a separate LISA for a house deposit. I doubt i'll need the money for at least 20 years but I may use it to fund an earlier retirement rather than wait till 55+

GeoffTF

I would echo the words of Alexland. LS 80 is pretty aggressive, possibly too aggressive. LS 60 is the most popular option. There are different schools of thought on increasing your bond allocation as you age. Some like the idea. Some do not. It depends on your circumstances and risk tolerance as you age. My equity allocation has increased since I retired over 20 years ago.

older_and_no_wiser

 I doubt i'll need the money for at least 20 years but I may use it to fund an earlier retirement rather than wait till 55+

Well 20 years is a good run in the market for that fund. Remember that most people will leave their money in investments during retirement too. There are methods to mitigate any market downturns during retirement in addition to rebalancing. For example keeping 2 years of living expenses in cash. This means you don't have to sell investments during a market downturn. You sell investments at times when the markets are doing okay to keep that buffer/float during the bad times.

In addition, you will also have your state pension from age 68.

jimjames

Vet said:

Also side note - at what age would you reassess your portfolio e.g. drop to 80/60/40/20 etc?

Maybe when I'm 90? I've no plans to drop from 100% equity at the moment and am around 10-15 years from retirement

older_and_no_wiser

GeoffTF said:

I would echo the words of Alexland. LS 80 is pretty aggressive, possibly too aggressive. LS 60 is the most popular option. There are different schools of thought on increasing your bond allocation as you age. Some like the idea. Some do not. It depends on your circumstances and risk tolerance as you age. My equity allocation has increased since I retired over 20 years ago.

There's also the school of thought that a bond allocation isn't quite the hedge against market downturn as it once was. A number of finance 'gurus' advocate 100% equity funds over the long period. I suppose this depends on the more you can afford to invest earlier and give yourself room for loss later in life. Ie ensure you have sufficient in the portfolio to ride out a few big market dips/crashes.

wiseonesomeofthetime

I am retired and invested a sum in April 2021 in VLS100 whose return today is 11.04%. In the last week, it has been around 9%
I invested a much smaller sum in VLS100 in September 2021, which was showing a return of 0.19% yesterday and 2.19% today
My VLS80 investment in August 2021, today shows a return of 3.47% Yesterday was 2 point something.

What I am trying to show is what many other MSEers post. They're all volatile, to varying degrees.

Pick what you are comfortable with, and maybe consider wider outside of VLS products.

I am unlikely to put April 2022's ISA into VLS100, despite the figures shown above. Probably more likely VLS80 or VLS60

Each to their own really. I, for example, had never invested before April 2021!

MX5huggy

I don’t use LS, I don’t want the UK bias and think the fee is a bit high, you can build your own version using the funds in LS for lower fees. 

Having said that if you want to move towards LS100 you don’t have to do it in in one go. Maybe just put all new money in LS100 when you have 50% in each you will basically have LS90.