Vanguard Life Strategy

valiant24

I'm in draw-down now, but I have quite a lot in ISAs and a SIPP, and am currently 100% in equities via global trackers, and some residual Fundsmith and Scottish Mortgage.  

I feel I should perhaps trim that back.  I've read a lot here but still don't think that I understand gilts enough to buy and sell my own, and create a "ladder".  Unless there's a simple guide anywhere?

Ref ETFs then, I could switch some from VWRP to VLS80 (I appreciate that the equity element of the two is rather different, with more home bias in the latter).   I'm struggling to find out how long-dated the gilt element of the Life Strategy products is, ie average time to maturity.  Does anyone know this please, or where I can find it?

Thanks
V

hewhohuntselves

Not all of their bonds will be gilts (UK bonds), but they have a so-called 'modified duration' of 8.11 years overall.  It's not an ETF by the way.  Hope this helps.

JohnWinder

A bond ladder can be ‘rolling’ (maturing bonds are replaced with new bonds) or ‘non-rolling’ (maturing bonds are not replaced). The latter can be useful for providing retirement income because the income can be government guaranteed (with linkers) and inflation protected, as well as completely predictable in amount and when you get it. What’s not to like? But you have to decide when the ladder will end, ie die, rely on other sources, provide for someone else.

It’s part of a ‘liability driven investment’ approach, or ‘liability matching portfolio’ (in contrast to an ‘at risk portfolio’ which you have with equities. Other components of a LMP are state pension, lifetime annuity, DB pension, aged care insurance etc. Putting those together allows you to sleep well, as your risky assets are no threat to your welfare.

https://retirementresearcher.com/how-do-i-build-a-tips-bond-ladder-for-retirement-income/ 

I think that explains it, but basically you start at the last year of your ladder, decide how many bonds you need for the last year’s income, then calculate how much these bonds will provide towards earlier years income with their coupons. This allows you to decide how many bonds you need to buy for the penultimate year….and on it goes. You never have to sell a bond. Once you set it up, you forget it. Now’s not the worst time for a linkers ladder, as yields are positive: you’ll spend less than you get back.

https://www.bogleheads.org/forum/viewtopic.php?t=128677

I doubt a rolling bond ladder is worth the trouble for when you get older, but it might be your style.

valiant24

JohnWinder said:

A bond ladder can be ‘rolling’ (maturing bonds are replaced with new bonds) or ‘non-rolling’ (maturing bonds are not replaced). The latter can be useful for providing retirement income because the income can be government guaranteed (with linkers) and inflation protected, as well as completely predictable in amount and when you get it. What’s not to like? But you have to decide when the ladder will end, ie die, rely on other sources, provide for someone else.

It’s part of a ‘liability driven investment’ approach, or ‘liability matching portfolio’ (in contrast to an ‘at risk portfolio’ which you have with equities. Other components of a LMP are state pension, lifetime annuity, DB pension, aged care insurance etc. Putting those together allows you to sleep well, as your risky assets are no threat to your welfare.

https://retirementresearcher.com/how-do-i-build-a-tips-bond-ladder-for-retirement-income/ 

I think that explains it, but basically you start at the last year of your ladder, decide how many bonds you need for the last year’s income, then calculate how much these bonds will provide towards earlier years income with their coupons. This allows you to decide how many bonds you need to buy for the penultimate year….and on it goes. You never have to sell a bond. Once you set it up, you forget it. Now’s not the worst time for a linkers ladder, as yields are positive: you’ll spend less than you get back.

https://www.bogleheads.org/forum/viewtopic.php?t=128677

I doubt a rolling bond ladder is worth the trouble for when you get older, but it might be your style.

Thanks.  I have to register with Compushare to be allowed to buy gilts, I believe?

wmb194

valiant24 said:

JohnWinder said:

A bond ladder can be ‘rolling’ (maturing bonds are replaced with new bonds) or ‘non-rolling’ (maturing bonds are not replaced). The latter can be useful for providing retirement income because the income can be government guaranteed (with linkers) and inflation protected, as well as completely predictable in amount and when you get it. What’s not to like? But you have to decide when the ladder will end, ie die, rely on other sources, provide for someone else.

It’s part of a ‘liability driven investment’ approach, or ‘liability matching portfolio’ (in contrast to an ‘at risk portfolio’ which you have with equities. Other components of a LMP are state pension, lifetime annuity, DB pension, aged care insurance etc. Putting those together allows you to sleep well, as your risky assets are no threat to your welfare.

https://retirementresearcher.com/how-do-i-build-a-tips-bond-ladder-for-retirement-income/ 

I think that explains it, but basically you start at the last year of your ladder, decide how many bonds you need for the last year’s income, then calculate how much these bonds will provide towards earlier years income with their coupons. This allows you to decide how many bonds you need to buy for the penultimate year….and on it goes. You never have to sell a bond. Once you set it up, you forget it. Now’s not the worst time for a linkers ladder, as yields are positive: you’ll spend less than you get back.

https://www.bogleheads.org/forum/viewtopic.php?t=128677

I doubt a rolling bond ladder is worth the trouble for when you get older, but it might be your style.

Thanks.  I have to register with Compushare to be allowed to buy gilts, I believe?

No, you can buy them via any stockbroker that offers them. 

If you look to buy them via the DMO it'll direct you towards Compushare and Compushare will act as your stockbroker (and you'll probably get ripped off in the process).

GeoffTF

You could buy 20% VAGP or its accumulating version.

Linton

valiant24 said:

JohnWinder said:

A bond ladder can be ‘rolling’ (maturing bonds are replaced with new bonds) or ‘non-rolling’ (maturing bonds are not replaced). The latter can be useful for providing retirement income because the income can be government guaranteed (with linkers) and inflation protected, as well as completely predictable in amount and when you get it. What’s not to like? But you have to decide when the ladder will end, ie die, rely on other sources, provide for someone else.

It’s part of a ‘liability driven investment’ approach, or ‘liability matching portfolio’ (in contrast to an ‘at risk portfolio’ which you have with equities. Other components of a LMP are state pension, lifetime annuity, DB pension, aged care insurance etc. Putting those together allows you to sleep well, as your risky assets are no threat to your welfare.

https://retirementresearcher.com/how-do-i-build-a-tips-bond-ladder-for-retirement-income/ 

I think that explains it, but basically you start at the last year of your ladder, decide how many bonds you need for the last year’s income, then calculate how much these bonds will provide towards earlier years income with their coupons. This allows you to decide how many bonds you need to buy for the penultimate year….and on it goes. You never have to sell a bond. Once you set it up, you forget it. Now’s not the worst time for a linkers ladder, as yields are positive: you’ll spend less than you get back.

https://www.bogleheads.org/forum/viewtopic.php?t=128677

I doubt a rolling bond ladder is worth the trouble for when you get older, but it might be your style.

Thanks.  I have to register with Compushare to be allowed to buy gilts, I believe?

Some of the platforms allow you to buy gilts in the same way as funds or shares.  I believe HL offer all gilts, and II some gilts.  With AJBell you can buy them by phone at the same charge as if they were available online.  I dont know about any others. 

Linton

JohnWinder said:

A bond ladder can be ‘rolling’ (maturing bonds are replaced with new bonds) or ‘non-rolling’ (maturing bonds are not replaced). The latter can be useful for providing retirement income because the income can be government guaranteed (with linkers) and inflation protected, as well as completely predictable in amount and when you get it. What’s not to like? But you have to decide when the ladder will end, ie die, rely on other sources, provide for someone else.

It’s part of a ‘liability driven investment’ approach, or ‘liability matching portfolio’ (in contrast to an ‘at risk portfolio’ which you have with equities. Other components of a LMP are state pension, lifetime annuity, DB pension, aged care insurance etc. Putting those together allows you to sleep well, as your risky assets are no threat to your welfare.

https://retirementresearcher.com/how-do-i-build-a-tips-bond-ladder-for-retirement-income/ 

I think that explains it, but basically you start at the last year of your ladder, decide how many bonds you need for the last year’s income, then calculate how much these bonds will provide towards earlier years income with their coupons. This allows you to decide how many bonds you need to buy for the penultimate year….and on it goes. You never have to sell a bond. Once you set it up, you forget it. Now’s not the worst time for a linkers ladder, as yields are positive: you’ll spend less than you get back.

https://www.bogleheads.org/forum/viewtopic.php?t=128677

I doubt a rolling bond ladder is worth the trouble for when you get older, but it might be your style.

Gilt prices are only fixed when you buy and at maturity.  In the meantime, depending on the gilt duration they may vary in price significantly.

For your gilt investments to be be risk-free you need to hold the gilts to maturity so choose your gilts so that the maturity dates meet your needs.  Holding the gilts in funds does not achieve the same objective since when you sell the underlying bonds will  in general be some way from maturity.

Albermarle

I could switch some from VWRP to VLS80 (I appreciate that the equity element of the two is rather different, with more home bias in the latter). 

There are alternatives to the Life strategy funds, with no home bias.