Is 'Vanguard LifeStrategy' enough in your portfolio?

enthusiasticsaver · 19 May 2019 at 9:15AM

bostonerimus wrote: »

You sound as if you have organized things well on your own. I’m not sure it’s worth paying someone 1% to do what you seem to be doing perfectly well yourself. People too often believe, or are told by the financial industry, that there is some special sauce. The “sauce” isn’t that special, just common sense and time as I think you have found our.

Believe me I have been to and fro on this. I have been told charges are not everything and sometimes other investments have outperformed the Vanguard lifestrategy funds even after the charges have been deducted and on a relatively large portfolio the setting up costs can be significant let alone 5 years of ongoing charges.

To me the biggest argument for keeping things as they are is that we are invested according to our risk profile - I rarely panic if prices move or even check these days beyond the 6 monthly review date I set myself and we have more than sufficient income and capital to lead the sort of life we want to lead. Don't get me wrong it is always nice to have more but even the IFA was having difficulty justifying why we should engage him beyond saying he could add enough value for us to take another holiday each year even after charges. To my mind I am not sure how he can say that but we have not yet seen the report as he says our pensions situation is more complex than he thought so I am fully expecting the £250 review charge to be higher should we not invest with him. He has also taken longer than he first said so my guess is he cannot demonstrate conclusively why we should sign with him.

I think my difficulty is as the OP says when the pot was small I was fine with doing it myself but now it is much larger a couple of extra percent on performance each year could add £5k to the overall investment pot each year and I don't have the tax expertise to decide on the best way to manage the SIPP and remaining DC pot for my DH who shows no wish to manage his own financial affairs and says he will just go along with what I want to do. Helpful not.

My base line really up until now has been the same as you and I will settle for average returns rather than chasing better percentages on a temporary basis. Slow and steady has always been my mantra. Not exciting but reliable.

andy001 · 19 May 2019 at 10:20AM

Nice thread, Some great answers...

What should OP add to his vanguard 60 portfolio to diversify?

dunstonh · 19 May 2019 at 11:04AM

andy001 wrote: »

Nice thread, Some great answers...

What should OP add to his vanguard 60 portfolio to diversify?

Nothing.

It is a multi-asset fund. It is diversified and follows a structure. If the OP believes they are a better investor than Vanguard then they wouldn't need to ask the question.

JustAnotherSaver · 19 May 2019 at 11:15AM

enthusiasticsaver wrote: »

my DH who shows no wish to manage his own financial affairs and says he will just go along with what I want to do. Helpful not.

I don't know what DH stands for but in the context i'm getting that it's basically your other half.

In which case i am in exactly the same boat as you.

I help/manage the finances of my wife, my siblings & my mother. This came about basically by me telling them just leaving everything in 1 bank account & 'staying loyal' to a bank wasn't doing them any good. Their response was could you do it for us. As i love to be able to help i said no problem.

They have no desire to learn these things because they have no interest in it. I know the response on here would be 1) yeah but i bet they're happy to pick up the interest though (yes, of course they are, who wouldn't be) 2) show them how to do it themselves (like i just said they have no interest to do that) 3) well just don't do it and let them deal with it themselves (like i said, i get enjoyment out of helping others when i can).
There's also other reasons for helping too. My wife - we're a team at the end of the day. My financial situation impacts hers as does hers mine. It's in both our interests for us to be at our best. My brother & sister - i don't want to see them making the mistakes i did & starting late in life. My mother - had my dad do everything for her as far as the money went & now he's no longer here she's on her own.

Slow and steady has always been my mantra. Not exciting but reliable.

Exactly. So long as i can be on track to retire at a decent age and be comfortable in retirement then i'm good. I don't really want to be working in to my 70s. I don't factor in the workplace pension in any calculations because my contributions to that are minimal (about £75-£80pm) and i treat it as a bonus to what i see as my pension - my SIPP.

andy001 wrote: »

Nice thread, Some great answers...

What should OP add to his vanguard 60 portfolio to diversify?

I'm wondering if you've confused me with someone?

JustAnotherSaver · 19 May 2019 at 11:20AM

dunstonh wrote: »

Nothing.

It is a multi-asset fund. It is diversified and follows a structure. If the OP believes they are a better investor than Vanguard then they wouldn't need to ask the question.

While i agree with your comment of nothing, the reason is a little different - on account of i don't actually hold VLS60, so can't add anything to a fund i don't own.

However even someone as clueless as me has spotted comments on this very message board about areas that VLS lack in, that it's not a perfect fund, so i understand the guy asking (for whoever he saw that owns VLS60). I don't know what area/s they lack in but i've certainly seen numerous comments over the past year or 2 i've been looking at investing where people are talking about additional funds to compliment VLS in areas they lack.

dunstonh · 19 May 2019 at 11:27AM

JustAnotherSaver wrote: »

While i agree with your comment of nothing, the reason is a little different - on account of i don't actually hold VLS60, so can't add anything to a fund i don't own.

However even someone as clueless as me has spotted comments on this very message board about areas that VLS lack in, that it's not a perfect fund, so i understand the guy asking (for whoever he saw that owns VLS60). I don't know what area/s they lack in but i've certainly seen numerous comments over the past year or 2 i've been looking at investing where people are talking about additional funds to compliment VLS in areas they lack.

Core and satellite is a valid approach to investing but it needs structure and understanding.

If you don't think VLS60 is the best fund for your risk level (and it isnt at the moment) and you dont like how it invests then there are other multi-asset funds. If none of those fit what you want then you either build a portfolio of single sector funds (more advanced option) or you use a core and satellite approach.

For those that want an invest and forget / lazy investor style approach, core and satellite is not a good approach. Nor is a portfolio of single sector funds. Sticking with the single multi-asset fund would be.

ColdIron · 19 May 2019 at 11:56AM

andy001 wrote: »

What should OP add to his vanguard 60 portfolio to diversify?

Lifestrategy is already a very diverse fund. There is all sorts of stuff you could add to it that would likely reduce its long term performance. Diversification for diversification's sake is not always a worthy goal

bostonerimus · 19 May 2019 at 4:49PM

enthusiasticsaver wrote: »

Believe me I have been to and fro on this. I have been told charges are not everything and sometimes other investments have outperformed the Vanguard lifestrategy funds even after the charges have been deducted and on a relatively large portfolio the setting up costs can be significant let alone 5 years of ongoing charges.

There is always a temptation to "maximise returns" or "optimise" a portfolio. I'd start by asking yourself if you currently have a portfolio that meets your needs. Does the risk/return of your investments serve the function of providing you with retirement income and is it part of a robust income plan that can survive some bad times. If it is, then why change anything?

It is true that many portfolios will outperform VLS and also that many will do worse. If you had the management of your money over to an advisor you will certainly be charged a fee, but whether you end up ahead of DIY is uncertain... and if that fee is 1% that will be about a quarter of a sensible annual withdrawal from your investments.

I'm in a similar situation to you with income from a DB pension and other DC and regular investments. I DIY and have most of it in a few low cost Vanguard funds. It's simple and ticks along at around 8.5% a year on average. I don't mind about down years as I have a DB pension to rely on. I will largely miss out of the highs of China and emerging markets etc, but I will also miss the lows.

enthusiasticsaver · 19 May 2019 at 5:11PM

bostonerimus wrote: »

There is always a temptation to "maximise returns" or "optimise" a portfolio. I'd start by asking yourself if you currently have a portfolio that meets your needs. Does the risk/return of your investments serve the function of providing you with retirement income and is it part of a robust income plan that can survive some bad times. If it is, then why change anything?

It is true that many portfolios will outperform VLS and also that many will do worse. If you had the management of your money over to an advisor you will certainly be charged a fee, but whether you end up ahead of DIY is uncertain... and if that fee is 1% that will be about a quarter of a sensible annual withdrawal from your investments.

I'm in a similar situation to you with income from a DB pension and other DC and regular investments. I DIY and have most of it in a few low cost Vanguard funds. It's simple and ticks along at around 8.5% a year on average. I don't mind about down years as I have a DB pension to rely on. I will largely miss out of the highs of China and emerging markets etc, but I will also miss the lows.

I agree whole heartedly with this and we are in a similar position to you with DB pensions covering the majority if not all of our living expenses so we can afford to be a little complacent with our investments and hold a little too much in cash. The investments tick along and I don't need to worry too much about them. The IFA we are seeing at the moment is a financial life planner. He tells us essentially how much we can spend annually and where from or if we will run out of money and has obviously more extensive investment and tax knowledge. He is not cheap though.

He says our affairs are too complicated and he can help simplify it but I would not necessarily agree with that but as I say we have yet to see his recommendations. We have one DB pension each paying out at the moment and one further one due to kick in early next year for me. I have a SIPP and DH has a DC pot with links to his DB pension due to AVCs and protected rights. We both have a stocks and shares ISA each invested wholly into Vanguard LS60 as is my SIPP. My DHs DC pot is invested in his old company occupational scheme and is already crystallised as his TFLS came from there. We have an interest bearing current account and an internet saver for our cash. Both of us will have full state pensions within the next seven years. Is that unnecessarily complicated?

enthusiasticsaver · 19 May 2019 at 5:33PM

JustAnotherSaver wrote: »

I don't know what DH stands for but in the context i'm getting that it's basically your other half.

In which case i am in exactly the same boat as you.

Yes DH is my husband and he has always left managing finances to me. He listened to my advice more than 30 years ago when he joined his company pension scheme, then a final salary one with a booster scheme for those wanting early retirement and I encouraged him to put in the most we could afford. I knew then the advantages of saving early for retirement and as my dad had recently died at a relatively young age I knew I wanted us both to have the option to retire early as my dad had no retirement to speak of. We increased the percentage gradually and at one point 30% of his salary was going into his pension. That is the sole reason we have been able to retire in our fifties as my salary and saving potential was limited due to us having children.
I help/manage the finances of my wife, my siblings & my mother. This came about basically by me telling them just leaving everything in 1 bank account & 'staying loyal' to a bank wasn't doing them any good. Their response was could you do it for us. As i love to be able to help i said no problem.

They have no desire to learn these things because they have no interest in it. I know the response on here would be 1) yeah but i bet they're happy to pick up the interest though (yes, of course they are, who wouldn't be) 2) show them how to do it themselves (like i just said they have no interest to do that) 3) well just don't do it and let them deal with it themselves (like i said, i get enjoyment out of helping others when i can).
There's also other reasons for helping too. My wife - we're a team at the end of the day. My financial situation impacts hers as does hers mine. It's in both our interests for us to be at our best. My brother & sister - i don't want to see them making the mistakes i did & starting late in life. My mother - had my dad do everything for her as far as the money went & now he's no longer here she's on her own.

I agree with you that managing your wife's affairs makes sense as you are a team and I also look after my mums as she thinks I am the most financially astute out of her children and as I say my dad died relatively young so she has needed some support over the years.

Exactly. So long as i can be on track to retire at a decent age and be comfortable in retirement then i'm good. I don't really want to be working in to my 70s. I don't factor in the workplace pension in any calculations because my contributions to that are minimal (about £75-£80pm) and i treat it as a bonus to what i see as my pension - my SIPP.

The only answer I would give to your last statement is don't underestimate your company pension scheme. Obviously your SIPP will have the same tax advantages as your company scheme but are you maximising the employers contribution? Presumably it is a DC pot as most are these days but usually your employer will match your contribution so upping it may be worthwhile. Depends on terms of the scheme though.

I get the impression you are still relatively young so you are doing all the right things in saving for retirement presumably with a higher equity level than us ( VLS 80 or 100?) I did a spreadsheet for all our income streams in retirement and luckily for us underestimated the value of compound returns so in fact we could have retired several years earlier and have ended up more comfortable than we needed to be. Are you also using stocks and shares isas just in case the pension rules change on when you can access your SIPP?

Well done on giving this your attention from relatively young. I have tried to drum the same message into our daughters and son in law and they are taking it on board.

Is 'Vanguard LifeStrategy' enough in your portfolio?

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