Year of VLS60

GeoffTF

Malthusian said:

GeoffTF said:

The advice service seems to have disappeared from Vanguard's website.

I found it here via a site: Google search, but if there's a way to get to it by browsing the website in the normal way, I haven't seen it.

Thanks for that. The service is still running, but they are hiding it away. They must be having problems of some sort. It could be short term capacity problem, or perhaps they have not got the numbers they were hoping for and are running the service down. Putting people into VLS ot TRF would probably do that in most cases. There would not be much point in continuing to pay for advice.

thriftylynny

Some interesting thoughts thankyou ...right now i'm thinking it would be less stressful if I just transferred everything out to  Vanguards easy access saver at 3% & be done with it ! 

Malthusian

thriftylynny said:

Some interesting thoughts thankyou ...right now i'm thinking it would be less stressful if I just transferred everything out to  Vanguards easy access saver at 3% & be done with it ! 

Yes, it would. That has always been the case. Over the long term you would have less money (which in itself would be a source of stress for some), but only you can decide whether the potential future returns are worth the stress.

P933alilli

I too was concerned about bonds in vls60 but i think i saw some 'prediction' by vanguard in october referring to the improved outlook for bonds and that they envisage the VLS funds to get back to their previous highs , (£238; december 2021), between 18 months-2years, albeit its only a prediction.  However most of my savings are in cash and even my dc pension, a Royal London with profits, only has 44% shares, with the rest being 36%  bonds, 13% property and 7% cash & other investments ( so, it looks a bit like a 60/40 but different assets?). Shares only amount to 16.75% of what i have in total, 12.5% bonds. With being retired and my SP being 6 years away obviously i need a decent amount in cash but ,maybe theres too much? As alluded to, my dc pension apart, it may have been better to just invest 100% equities and the rest in cash . Unless the bonds portion of vls60 over ten years or so would outperform fixed rate cash which if it would then i'm better just carrying on as was!

Albermarle

 a Royal London with profits, only has 44% shares, with the rest being 36%  bonds, 13% property and 7% cash & other investments ( so, it looks a bit like a 60/40 but different assets?)

A with profits fund is more complex than a straight 60/40 fund. Profits are kept back in the good years to be utilised in the bad years. So a smoother ride.

phillw

GeoffTF said:

It is no good rejoicing that your shares have fallen after a global nuclear war. Nobody knows the future, but if you are buying anyway, buying cheaper is good.

I don't think you should plan your investments based on a nuclear war. Even something less severe like societal collapse is impossible to plan for, and your money will be worthless whatever you do today regardless.

You can't know for sure that the stock market will definitely recover, but it always has. So making decisions on the assumption it won't, is more likely to leave you worse off.

GeoffTF

phillw said:

GeoffTF said:

It is no good rejoicing that your shares have fallen after a global nuclear war. Nobody knows the future, but if you are buying anyway, buying cheaper is good.

I don't think you should plan your investments based on a nuclear war. Even something less severe like societal collapse is impossible to plan for, and your money will be worthless whatever you do today regardless.

You can't know for sure that the stock market will definitely recover, but it always has. So making decisions on the assumption it won't, is more likely to leave you worse off.

My point was that if your stocks fall in value because the fundamentals have worsened (i.e. because the companies are going to make less profit), that is bad not good. (It is also not good if you buy at the top of a price bubble, just before investors regain their its sanity.)

Historically, stock markets have not always recovered. When I last looked, only two stock markets had survived 100 years. When they have recovered, it has sometimes taken over thirty years for them to recover their value in real terms. The Japanese stock market still has not fully recovered from its crash over thirty years ago.

If you buy equities, you will most likely eventually make more money than you would in cash, but you could also lose a lot of money, or even have your investment wiped out entirely. Higher equity returns (when they happen) are the reward for taking a higher risk.

JohnWinder

As alluded to, my dc pension apart, it may have been better to just invest 100% equities and the rest in cash . Unless the bonds portion of vls60 over ten years or so would outperform fixed rate cash which if it would then i'm better just carrying on as was!

Firstly, dc pension apart, if you invest in 100% equities there is nothing left for ‘the rest in cash’, because 100% is all of it. Did I misinterpret something?
Secondly, if one, or we are going to agonise over whether the VLS60 bonds will be better or worse than cash over the next decade, then it may be worth considering bond duration, reflecting on the history of bond vs cash returns (try portfoliovisualizer) and try to picture what might happen. In truth, no one knows which will be better, but you can try to understand the issues to be less in the dark and it might suggest one approach appeals to you over the other.
Firstly, there are different types of bonds. Does VLS have the type you like?
Secondly, and related, bonds have duration, and by roughly matching the duration of the bonds with the ‘duration’ of your spending needs then you reduce one of the risks of bonds, ie interest rate risk - the risk that rising interest rates will drop the value of your bonds.
Thirdly, if the VLS bond duration is too long for you, you can combine it with some cash which has almost no duration. Here’s a nice demonstration https://www.bogleheads.org/forum/viewtopic.php?p=7092049#p7092049
Fourthly, bonds have a history of outperforming cash because they come with more risk: interest rate risk and default risk. There’s compensation for that, on average, but duration and interest rate risk can combine to trash the benefits over short time frames, like last year.
As to changing your investment portfolio: with investing, ‘time is your friend, impulse is your enemy’ someone said.

P933alilli

JohnWinder said:

As alluded to, my dc pension apart, it may have been better to just invest 100% equities and the rest in cash . Unless the bonds portion of vls60 over ten years or so would outperform fixed rate cash which if it would then i'm better just carrying on as was!

Firstly, dc pension apart, if you invest in 100% equities there is nothing left for ‘the rest in cash’, because 100% is all of it. Did I misinterpret something?
Secondly, if one, or we are going to agonise over whether the VLS60 bonds will be better or worse than cash over the next decade, then it may be worth considering bond duration, reflecting on the history of bond vs cash returns (try portfoliovisualizer) and try to picture what might happen. In truth, no one knows which will be better, but you can try to understand the issues to be less in the dark and it might suggest one approach appeals to you over the other.
Firstly, there are different types of bonds. Does VLS have the type you like?
Secondly, and related, bonds have duration, and by roughly matching the duration of the bonds with the ‘duration’ of your spending needs then you reduce one of the risks of bonds, ie interest rate risk - the risk that rising interest rates will drop the value of your bonds.
Thirdly, if the VLS bond duration is too long for you, you can combine it with some cash which has almost no duration. Here’s a nice demonstration https://www.bogleheads.org/forum/viewtopic.php?p=7092049#p7092049
Fourthly, bonds have a history of outperforming cash because they come with more risk: interest rate risk and default risk. There’s compensation for that, on average, but duration and interest rate risk can combine to trash the benefits over short time frames, like last year.
As to changing your investment portfolio: with investing, ‘time is your friend, impulse is your enemy’ someone said.

Thanks John, i was just pondering that because i hold mostly cash in fixed rate bonds/isas then any investment fund i did hold for ten years may as well have been in vls100 than vls60 if bonds were continue to trash. Or maybe not! I think the bonds in vls are more fair value now? Theres a mix of short, intemediate and long term duration bonds in vls so presumably as interest rates rise and a bond matures it will be replaced by a higher yielding bond . Hopefully there will be progressively more returns on yield for the next decade and doesnt most of the return on bonds come from yield increases rather than price increases? As alluded to in your last sentence, i think i'm better sticking!

thriftylynny

Hi Collyflower good to hear from you & apologies for my hijacking your thread a little!  I too took early retirement at 59 & have a smallish DB pension which I draw on gives about 7k p/a , downsized house then too & invested all  the residual (110k) in a Prufund Risk managed investment bond , I didn't really understand much about investing back then but at least it had what they call 'smoothing' & just plodded on achieving not much more than a fixed bond but never lost any original capital . Got fed up with the plodding & transferred all out to the VLS60 as it did well after the pandemic &  which was fab for about 1 month, then came tumbling down as you know . I started off at early retirement hoping to take a 2.5 % ish income from investment but I managed not to by living frugally ! So in my 5 years of not touching any of it I've made at present 7k ..not a loss but not great either ! I have no mortgage but no cash savings . SP is 2 years approx & I just wanted to top this up along with the db pension so that I'd have a moderate retirement say of 20k . Really not sure what to do apart from get it out & open a 2 yr fixed bond as i haven't got decades of time ahead ?