Mixing Vanguard Life Strategy funds?

Crashy_Time wrote: »

Do you have enough cash for 3-6 months (full) living expenses (I prefer at least 12 months although some people say this is too much) in a safe cash account before your money even thinks about touching the stock market?

bowlhead99 wrote: »

As you might have already figured out, though perhaps it hasn't been literally spelled out, the management fees per pound invested are exactly the same whether you choose for your next pound invested to be in the 60 or 80 or 100 fund.

Your original thought that if you sold out of 100 and bought into 60, you could be paying more fees than needed for essentially the same thing, is flawed. A pound in VLS60 costs you no more than that pound being in 100, and the underlying assets are not really the same thing, they are fewer equities and more bonds.

Whether you construct your portfolio from a mix of 100 and 60, or mostly 80 and a bit of 60 and a bit of 100, you can generally get to the same overall target percentages. If your ideal mix is 60% or 80% equity, you could get rid of the others and just buy the one you want. Whereas if you have decided you need some hyper-specific percentage like 76.45% equities or 68.3% equities, you are going to need to stick a bit of each of two or more funds in a blender to create your cocktail. Though when you think about, it is unlikely that 68 3% is exactly right and 60 or 80 are both very wrong, because your goal of growing money over the long term without having too big of a shock in a crash, is far too general for you to know that 68.3% will be exactly perfect

With only £26k (ie, not many more tens of thousands) presumably this is in an ISA, or if it's not in an ISA the dividends you might receive from it are within your annual dividend allowance. So not much of an income tax issue either way. Hence the dividend date would not seem particularly relevant.

Why do you want to put more money at a cost which includes the value of the dividend, and shortly thereafter, have the dividend given back to you so you can invest it again. Pre/post dividend is often a red herring unless you are aiming for some specific tax planning objective.


You are right that the overall mix will generally be subject to a lower risk of a sharp stock market decline, if your mix is skewed away from equities and towards bonds. If you have £22k in 80 and £4k in 100 and then add £10k in 60, your blended ratio of equities to bonds will reduce from its current 83% to a lower ratio of the grand total £36k. So if the equity markets decline, you will feel like you haven't lost as severely.

But of course you will have more in the markets generally, and if you keep the £22k and £4k in the funds that they are currently in (while simply adding the 60 as an additional fund on the side), those £22k and £4k chunks will still have the same risk that they have today, and still lose just as much of their value in pounds, when there's a crash. The percentage loss on the whole portfolio will be lower than it would have been, but it's a bigger portfolio. If you know a crash is coming, maybe instead keep your spare money on the sidelines in cash rather than buying a load of bonds and equities with it, and move some of your 100 money into the 80 or 60.. but if course you don't know when this crash will happen.
Quite possibly you are over complicating it. If you are concerned that markets will perform less strongly over the next five to ten years then the last, you have two choices:

- increase your exposure to equities to make up for the fact that they are not going to deliver as much growth going forward as they have given in recent years, and you want to get growth from somewhere - that's fine as long as don't mind riding out the rough times.

- decrease your exposure to equities because you feel there will be opportunities to add at lower prices and you want to defend against potential losses - that's fine as long as you don't mind missing out on the upside of the asset mix you currently have.

bostonerimus wrote: »

You're basically wrestling with your asset allocation between bonds and equities here. So take a step back and think strategically...don't worry about what might or might not happen in the next year. Make sure you have a good emergency fund of maybe 6 months spending in cash, pay off all your high interest debt and then think how a 30 year old should be invested for the long term. Right now with VLS100 and VLS80 I think you are in a very good place, probably far better than many people. I would just keep using VLS80 and revisit this in your 40s.