evestor concern?

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  • Aylesbury_Duck
    Aylesbury_Duck Posts: 14,005 Forumite
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    tel_ wrote: »
    I was looking at the Vanguard site earlier myself. I started to jot-down some of the Lifestrategy funds I was interested in, but what about the others? UK Bonds & Gilts (Risk 4-5), US Bonds (3), Emerging market bonds (4).

    If I had say £500 a month to invest, should I spread it between these as well, or just stick to the Lifestrategy funds?

    All thoughts welcome!
    I am a novice so not really well placed to give advice, many others on here are much more knowledgeable, but I have stuck with the Lifestrategy funds. It's a big step to leap from evestor-type do-it-for-me to what you're suggesting.
  • tel_
    tel_ Posts: 310 Forumite
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    masonic wrote: »
    Lifestrategy is designed to be a single fund portfolio. It can work as a core where you put other, more esoteric investments around it, but there's no need to do so. Pick the one with an appropriate amount of bond exposure for your risk-tolerance and you shouldn't need to add more bond funds.

    Thanks for that masonic. Is it more wiser with £500+ to split the monthly payments between more than one Lifestrategy fund like Aylesbury Duck suggests he/she would do, e.g 40/60/80/100? That works out at 70% equity (or am I talking nonsense?) 40+60+80+100 (divided by 4) = 70.

    If you was only investing £100 a month, it wouldn't be worth splitting it between different Lifestrategy funds I guess?
  • Aylesbury_Duck
    Aylesbury_Duck Posts: 14,005 Forumite
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    masonic wrote: »
    Lifestrategy is designed to be a single fund portfolio. It can work as a core where you put other, more esoteric investments around it, but there's no need to do so. Pick the one with an appropriate amount of bond exposure for your risk-tolerance and you shouldn't need to add more bond funds.
    That suggests I'm over-complicating things by spreading my monthly £1,000 across four funds? Is it better to just pick one of the LS funds? Am I correct to think that, as a rough example, splitting my money half in LS80 and half in LS100 I've effectively created an LS90 ? Spreading it over LS40, 60, 80 and 100 is effectively a LS70 ?
  • masonic
    masonic Posts: 23,279 Forumite
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    tel_ wrote: »
    Thanks for that masonic. Is it more wiser with £500+ to split the monthly payments between more than one Lifestrategy fund like Aylesbury Duck suggests he/she would do, e.g 40/60/80/100? That works out at 70% equity (or am I talking nonsense?) 40+60+80+100 (divided by 4) = 70.

    If you was only investing £100 a month, it wouldn't be worth splitting it between different Lifestrategy funds I guess?
    Yes, you are correct that combining different funds will leave you with the average exposure to equities of the funds chosen and their proportions. If you really want 70% and not 60% or 80% equities, then the best way to achieve that it with equal portions of 60 and 80. But most people could simply pick one or the other.

    One reason to pick two funds, one low risk and one high risk, is if you need to access some of the funds in, say 5 years, and the rest is to be invested for the long term. If stockmarkets are performing well at the time you need the money, you can take it from the high risk fund, but if you are unlucky and need the money during a downturn you have the low risk fund to fall back on so that you don't sell at a significant loss (for this purpose the 'middle' funds aren't all that helpful).

    If you are simply investing for the long term (and have a cash buffer that meets your short-term needs), then there isn't a need to pick more than one (or possibly two) variants - you can always adapt your plan to changing circumstances.
  • masonic
    masonic Posts: 23,279 Forumite
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    Aylesbury_Duck wrote: »
    That suggests I'm over-complicating things by spreading my monthly £1,000 across four funds? Is it better to just pick one of the LS funds? Am I correct to think that, as a rough example, splitting my money half in LS80 and half in LS100 I've effectively created an LS90 ? Spreading it over LS40, 60, 80 and 100 is effectively a LS70 ?
    I think you have a valid reason for holding two funds - 40 and 100, since you want to be able to sell the low risk fund without crystallising a loss in the higher risk investments should there be a market crash around the time you need to access. I'd personally choose LS20 and 100 to achieve this objective because 40% equities is still somewhat exposed to losing money over a 5 year timescale (about a 1 in 5 chance). I don't see any value in holding 60 and 80 as you can rebalance between 40 (or 20) and 100 to maintain your overall balance between bonds and equities. In fact, holding 4 funds just means more complicated maths.
  • Aylesbury_Duck
    Aylesbury_Duck Posts: 14,005 Forumite
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    That's really helpful, masonic, thanks. We have a decent cash buffer. In fact, it's too much, which is one reason for putting £1k per month (each - the Mrs and me) in, to redress the balance of our savings which are heavily cash-based. We're 46 and making good pension contributions from our cash too so I don't envisage needing to touch this money for at least five years and probably more than that. I like your reasoning on the two-fund split and can see that the middle funds could leave us stuck in certain circumstances. Thanks again.
  • tel_
    tel_ Posts: 310 Forumite
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    All this makes interesting reading, and I've learned a lot today - thanks to both masonic & Aylesbury Duck!

    Based on the views above, I feel a little more confident in choosing a S&S ISA soon.

    These forums do help a lot :T
  • Aylesbury_Duck
    Aylesbury_Duck Posts: 14,005 Forumite
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    Just had an email from evestor. They apologise for their reduced functionality over the last two weeks and apparently by the end of this week it will all be restored. They have moved provider and where direct debits were once labelled "Greyfriars LLP" they will now appear as "Gaudi", with new Ts and Cs in place.

    Too late for me. I got concerned with their lack of assurance and have initiated a transfer to Vanguard.
  • londoninvestor
    londoninvestor Posts: 1,350 Forumite
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    masonic wrote: »
    during a downturn you have the low risk fund to fall back on so that you don't sell at a significant loss

    And vice versa - if your investment isn't in a tax wrapper, it can be useful for CGT purposes to be able to take some cash without selling at a significant realised gain.

    Actually that's one thing to be said for holding four funds - more flexibility in how you realise your gains to manage around your CGT allowance.
  • londoninvestor
    londoninvestor Posts: 1,350 Forumite
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    Aylesbury_Duck wrote: »
    where direct debits were once labelled "Greyfriars LLP" they will now appear as "Gaudi"

    Ah, yes, Gaudi, a name richly redolent of **checks notes** bringing new structures quickly to completion?
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