Lifestrategy 60 or 80 ?

Iain_For

masonic said:

You can't sell just the bonds component of VLS60.

Indeed, while VLS60 served my ISA needs in the run up to retirement, having accumulated assets it now makes more sense to have a DIY portfolio. A bit more work, but then I also have a bit more time! Also makes it easier to have a shorter duration bond component and even a Money Market fund if I wanted. 

masonic

Iain_For said:

masonic said:

You can't sell just the bonds component of VLS60.

Indeed, while VLS60 served my ISA needs in the run up to retirement, having accumulated assets it now makes more sense to have a DIY portfolio. A bit more work, but then I also have a bit more time! Also makes it easier to have a shorter duration bond component and even a Money Market fund if I wanted. 

Quite right, and such an approach allows the use of a separate multi-asset fund, and improved risk adjusted returns, from including a small slice of equities and potentially property exposure. As you say, things do change at retirement, and different pots that have different functional purposes help with drawing an income from retirement assets.

Thrugelmir

Greylocks said:

Thrugelmir said:

Markneath said:

Im in LS100 and have increased my monthly contribution, a year of two of volatility doesn’t bother me.

A market correction might. Bear markets can be savage. 

As a very rough guide I thought 80% of market crashes recover within 1 year and 95% with 2 years for a balanced portfolio?

Hence the idea of holding 2 years of spending in a cash buffer if already retired…?

Taking the market fall from peak in July 2007. Recovery took some 6 years just to return to par.  

What does a balanced portfolio consist of ?  

Greylocks

Thrugelmir said:

Greylocks said:

Thrugelmir said:

Markneath said:

Im in LS100 and have increased my monthly contribution, a year of two of volatility doesn’t bother me.

A market correction might. Bear markets can be savage. 

As a very rough guide I thought 80% of market crashes recover within 1 year and 95% with 2 years for a balanced portfolio?

Hence the idea of holding 2 years of spending in a cash buffer if already retired…?

Taking the market fall from peak in July 2007. Recovery took some 6 years just to return to par.  

What does a balanced portfolio consist of ?  

50% equity, 50% bonds.

From 10 mins in…:

https://youtu.be/EfKoFIo9hcw

masonic

Greylocks said:

Thrugelmir said:

Greylocks said:

Thrugelmir said:

Markneath said:

Im in LS100 and have increased my monthly contribution, a year of two of volatility doesn’t bother me.

A market correction might. Bear markets can be savage. 

As a very rough guide I thought 80% of market crashes recover within 1 year and 95% with 2 years for a balanced portfolio?

Hence the idea of holding 2 years of spending in a cash buffer if already retired…?

Taking the market fall from peak in July 2007. Recovery took some 6 years just to return to par.  

What does a balanced portfolio consist of ?  

50% equity, 50% bonds.

From 10 mins in…:

https://youtu.be/EfKoFIo9hcw

While I've only skimmed and am happy to be corrected, this guy seems to be working from nominal values, which at a period of high inflation is a little misleading, before factoring in the rather unique position we find ourselves in regarding fixed interest. I think this video really highlights the need to factor in inflation and adopt a mindset that sits outside the popular 2010s mentality of low inflation, low yield, and high growth.

Greylocks

I would agree as the landscape has changed but perhaps it is a reasonable starting point for a DIY person.
For a more conservative approach it could be 3 years of cash, 5 years of lower risk investments giving 8 years buffer. Horses for courses. 

masonic

Greylocks said:

I would agree as the landscape has changed but perhaps it is a reasonable starting point for a DIY person.
For a more conservative approach it could be 3 years of cash, 5 years of lower risk investments giving 8 years buffer. Horses for courses.

I think the originally suggested approach remains sound, but a reduction in returns expectations is warranted. Providing there is a healthy safety margin incorporated, then a plan should be able to survive the change in landscape. The issue with taking the more conservative approach is in favouring the very assets most impacted by the current conditions.

Markneath

Thrugelmir said:

Markneath said:

Im in LS100 and have increased my monthly contribution, a year of two of volatility doesn’t bother me.

A market correction might. Bear markets can be savage. 

Hopefully not, my pension is 100% equities as well. 

I just believe you don’t get far without taking risk. If you listen to the news and experts they have been predicting a crash for a few years, if markets do crash they will probably still be higher than they were when the experts started predicting a crash.

eastmidsaver

Sun-Is-Fun said:

Why not go half way inbetween so you essentially create a VLS 70. Keep some in VLS 60 and VLS80. Blackrock mymap5 currently is just under 70% equities (but this is dynamic and can shift in allocation) if you fancy swapping to that and is currently beating the VLS for growth.

Thanks - i think for my ISA a 70/30 split is what I was kind of looking for, so this is what I have done.
Half of it will go into LS80, and other half remain in LS60. Will put £100 into each as a regular saver,  then every 6 months or so will rebalance it. I didn't want to complicate things,  but I think this should still be fairly simple.

Thrugelmir

Markneath said:

Thrugelmir said:

Markneath said:

Im in LS100 and have increased my monthly contribution, a year of two of volatility doesn’t bother me.

A market correction might. Bear markets can be savage. 

Hopefully not, my pension is 100% equities as well. 

I just believe you don’t get far without taking risk. If you listen to the news and experts they have been predicting a crash for a few years, if markets do crash they will probably still be higher than they were when the experts started predicting a crash.

When a bull market bubble bursts. The focus of attention returns to hard data, company fundamentals such as cash generation, strength of balance sheet, quality of the management team etc. Exposes those companies whose valuations have been driven by hope (i.e. social media hype)  and resets their share prices to more realistic levels. Markets have become detached from  economic reality in recent times.