Vanguard LifeStrategy 40%

Pipthecat

Outside of my ISA I have a GIA set up specifically to hold the remainder of my car PCP loan.  The fund is the Vanguard LifeStrategy 40% and is currently down by £1000 after the changes in the bond market.  I have at least 3 years left before I need to access the funds and I'm wondering should I leave it as is, swap it for a super low risk money market fund, or swap to 100% equities.  I can't really see the bond markets falling much more, or returning to their previous highs, but then what do I know I'm the guy who bought in just before they dipped.  Any thoughts?

dealyboy

Pipthecat said:

Outside of my ISA I have a GIA set up specifically to hold the remainder of my car PCP loan.  The fund is the Vanguard LifeStrategy 40% and is currently down by £1000 after the changes in the bond market.  I have at least 3 years left before I need to access the funds and I'm wondering should I leave it as is, swap it for a super low risk money market fund, or swap to 100% equities.  I can't really see the bond markets falling much more, or returning to their previous highs, but then what do I know I'm the guy who bought in just before they dipped.  Any thoughts?

Well that's the $64,000 (or £) question. Is that how much you've got? 

Pipthecat

Total amount was originally £16k.  I'm inclined to go 100% equities

retiringtoosoon

Always go 100% equities

silvercue

Bonds are going to do better from here on in IMHO, inflation should start to reduce and interest rates will come back down again, though maybe not to where they were.

But...bonds will never make you big profits in short term, so if you ware trying to recover losses ...who knows.  But trying to chase losses doesn't always work.

Depends how risk averse/hungry you are.  I have just opened another ISA and it is 100% equity.  But, if we hit a deep recession that won't look so smart!!

masonic

Do you actually need the money after 3 years? Because it is a bit of a gamble to go 100% equities over such a short investment horizon.

Albermarle

Bonds are going to do better from here on in IMHO, inflation should start to reduce and interest rates will come back down again, though maybe not to where they were.But...bonds will never make you big profits in short term, so if you ware trying to recover losses ...who knows.

That would be my opinion too. Bonds/Gilts  will ( or already have done) should  revert to normal behaviour, but could take a few years to recover recent losses.

An alternative to going to the extremes of cash or 100% equities, is to go for a higher equity multi asset fund.

dealyboy

Hello again Pip ...actually it's a very good question, to which in my opinion there is no right answer except the one you see in 3 years time was the answer.

If it were me I would hold. Would I say that the VLS40 was the right vehicle (excuse the pun) when you invested, if it were a couple of years ago? I would say it wasn't a bad choice to cover your loan, a conservative fettered fund of funds with a reputable company, for a 5 year outlook. I might have considered a fixed interest 5 year account, but conditions were different 2 years ago and I probably would have rejected it.

- switching to a lower risk fund now would be locking in your losses. If you decided 5 years was your timescale, then you would know that there would be ups and downs, and actually 6.25% down is not that significant. There is opportunity for gains from this point with a 3 year outlook, is the fund good value now? are the fundamentals good?

- switching to 100% equities is again locking in your losses. You would be going from low risk to high risk with a reduced duration, how high a risk it would be depends on the vehicle and funds / equities and could be very high risk Even VLS100 would be considered high risk with an expected duration of perhaps 10 years. 100% equities would 'normally' be considered appropriate for those looking to invest for 20 to 30 years for younger people as retirement investments. If you have a need for the cash in 3-5 years I would argue against.

There are many formidably experienced and wise people on MSE forums, who I hope will give the benefit of their thoughts, if they haven't done so whilst I've been writing.

For reference, I am an OAP with a SIPP and a S&S ISA with all investments in the equivalent of VLS70 with an outlook remaining of 7 years. 

dunstonh

.  I have at least 3 years left before I need to access the funds and I'm wondering should I leave it as is, swap it for a super low risk money market fund, or swap to 100% equities.

So, in other words, should the crystal ball be telling you to go one extreme or the other.

Bonds are not going to recover within your timescale.   They may never recover (excluding income) as they were priced at a historic high that had not been seen in  in over 300 years.

How about paying the PCP early?  

eskbanker

dealyboy said:

If it were me I would hold.

[...]

- switching to a lower risk fund now would be locking in your losses. 

[...]

- switching to 100% equities is again locking in your losses.

I don't see these as being consistent - increasing risk in a bid to wipe out the losses is surely the opposite of locking them in?  That's not to say it's a good idea though....

adindas

retiringtoosoon said:

Always go 100% equities

I have been saying this for sometimes now for those whose aim is to grow their wealth and still have a lot of time to run. I even showing the historical evidence and quoting strategy from proven billionaire investors who have proven track record of making money in the stock market. Let alone for retailer investors you could now get saving account with 7%, 6% interest for a short term waiting allocation for equities using DCA.

But when you said in this MSE forum you will get heavily attacked by the same group of people cheering up each other.

What I have learn here is that when come to strategy in investing listen to all people, but pay attention to the people who have a proven track record of making money in the stock market, do your own DDs and pay less attention to random people on the internet. Do not just listen because they are very vocal getting cheering up by the same group of people.