Vanguard VLS or retirement fund?

havingaball74

Hi, 
I am 49 year old, mortgage free, medium risk potential investor with a teacher pension. I have £70,000 in a cash ISA to invest. Which is better: VLS 60 or 2035 retirement fund?
Thanks. 

tacpot12

It depends on whether you want Vanguard to switch the investments for less risky funds the closer you get to retirement (or some other fixed date in 2035). If you don't intend to sell your investment in 2035, then VLS60 is more likely to give you a better return (but you might have to wait a couple of years if there is a financial crisis in 2034/5), but VLS80 would likely be better than VLS60 as well. Don't be fooled by the suggestion that the Vanguard Retirement funds will preserve your fund investment - they won't guarantee to do this. If there is a financial crisis in 2034/5, you will lose a good amount of your savings, but you can expect to lose less than if you had invested in VLS60 or VLS80. 

Don't forget that a 'high' risk fund with someone like Vanguard is much lower risk than investing in gold, crypto, art or wiskey. 

Alexland

havingaball74 said:

I am 49 year old, mortgage free, medium risk potential investor with a teacher pension. I have £70,000 in a cash ISA to invest. Which is better: VLS 60 or 2035 retirement fund?

Not the question you asked but if you transferred that ISA account to a Lloyds Bank Share Dealing ISA they would give you £300 cashback and their fees are only £20 every 6 months and £1.50 per fund trade so the cashback incentive would cover their fees for over 5 years assuming you traded once per month (£40 + £18 pa). Their platform will offer lots of investment choices including Vanguard funds. It would save you the 0.15% (£105 pa on £70k) that you would pay to invest in the same fund directly with Vanguard Investor platform.

https://www.lloydsbank.com/investing/landing-pages/transfer-offer.html

dunstonh

Which is better: VLS 60 or 2035 retirement fund?

I wouldnt use either nowadays but which is best depends on your objective as they do different things.

havingaball74

dunstonh said:

Which is better: VLS 60 or 2035 retirement fund?

I wouldnt use either nowadays but which is best depends on your objective as they do different things.

Thank you all. What are good alternatives to Vanguard? I'm also having issues with drip feeding to Vanguard from my cash ISA as they don't appear to do partial transfers in. 

Alexland

havingaball74 said:

Thank you all. What are good alternatives to Vanguard? I'm also having issues with drip feeding to Vanguard from my cash ISA as they don't appear to do partial transfers in. 

In terms of fund managers with low cost multi-asset offerings also consider the HSBC Global Strategy and L&G Multi Index series.

As per my previous comment the Vanguard Investor platform is expensive for that value of S&S ISA consider someone with a fixed or capped fee rather than a percentage fee (and even better if they offer a cashback transfer incentive). These platforms tend to offer a much wider range of funds rather than being limited to Vanguard only funds.

If you do a whole account transfer then consider putting the part you want to keep at near cash levels of risk in a respectable money market fund which offers a similar return to the best Cash ISAs after fees with a 1 out of 7 risk rating. Obviously putting the money into any fund would not be instant access might take a week or so to get your money out

havingaball74

Alexland said:

havingaball74 said:

Thank you all. What are good alternatives to Vanguard? I'm also having issues with drip feeding to Vanguard from my cash ISA as they don't appear to do partial transfers in. 

In terms of fund managers with low cost multi-asset offerings also consider the HSBC Global Strategy and L&G Multi Index series.

As per my previous comment the Vanguard Investor platform is expensive for that value of S&S ISA consider someone with a fixed or capped fee rather than a percentage fee (and even better if they offer a cashback transfer incentive). These platforms tend to offer a much wider range of funds rather than being limited to Vanguard only funds.

If you do a whole account transfer then consider putting the part you want to keep at near cash levels of risk in a respectable money market fund which offers a similar return to the best Cash ISAs after fees with a 1 out of 7 risk rating. Obviously putting the money into any fund would not be instant access might take a week or so to get your money out

Thank you! Really helpful. 
As well as looking into Lloyds, which other fixed fee platforms are worth looking into? Iweb or Fidelity? My partner is with HL but that seems expensive.
If I have to transfer all of my previous years' isa allowances, does that mean ALL of it, even if I want to keep some back or transfer it to a different cash isa? If, as you suggest, I put it into a low risk rated fund, can I then drip feed into medium risk from there?

Alexland

havingaball74 said:

As well as looking into Lloyds, which other fixed fee platforms are worth looking into? Iweb or Fidelity? My partner is with HL but that seems expensive.

iWeb, Lloyds and Halifax Share Dealing are almost the same platform (part of Lloyds Banking Group group) with different charging models. The Lloyds branded version is currently offering the best incentive for your account valuation as I said it should cover their fees for around 5 years with 1 fund trade per month unless they increase their charges but you can leave after 12 months and keep the cashback anyway.

HL and Fidelity have higher % platform charges than investing directly with Vanguard, HSBC or L&G but they can offer good value on child accounts, lifetime ISAs or capped accounts for holding exchange traded assets (not traditional OEIC funds as you seem to be likely to use).

havingaball74 said:
If I have to transfer all of my previous years' isa allowances, does that mean ALL of it, even if I want to keep some back or transfer it to a different cash isa?

If the old Cash ISA provider supports partial transfer out and the new S&S ISA provider does not support partial transfer in I guess you could find a Cash ISA provider that supports parital transfer in and then partially transfer out a proportion to the new Cash ISA provider in advance of transferring the rest of the account to the new S&S ISA provider.

havingaball74 said:

If, as you suggest, I put it into a low risk rated fund, can I then drip feed into medium risk from there?

Yes you could do this all within the new S&S ISA provider assuming they offer access to a good 'money market' fund which holds short dated bonds from reputable borrowers. Vanguard have one and there should be several on Lloyds Share Dealing although it's £1.50 per fund buy or sell trade.

On average historically it delivers a more profitable outcome to just have the confidence to invest the money at a suitable level of risk as soon as you have it available and that's why rich people are not in a loop of repeatedly uninvesting their money to drip feed it back in again.

Still you might get unlucky and the market might crash as soon as you invest it but then it could do the same as soon as you have finished your drip feeding into the market.

havingaball74

Thank you! I am reading a lot of good things about ii. It also seems to be a good option because of the flat fees (as opposed to Vanguard's 0.15%).
With a £60,000 investment it seems to be on the cusp between which would be cheaper.

Alexland

havingaball74 said:

Thank you! I am reading a lot of good things about ii. It also seems to be a good option because of the flat fees (as opposed to Vanguard's 0.15%).
With a £60,000 investment it seems to be on the cusp between which would be cheaper.

I don't really see the appeal of II for your scenario it's £120 pa so the breakeven point with Vanguard is £80k at 0.15%. It's completely your choice but i would rather pay Lloyds £58 pa assuming one fund trade a month and take the £300 cashback. If you do go with II remember they also offer signup cashback.
https://www.topcashback.co.uk/interactive-investor-stocks-and-shares-isa/