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  • FIRST POST
    • Corbula
    • By Corbula 10th Mar 18, 3:01 PM
    • 26Posts
    • 2Thanks
    Corbula
    Should I keep investing into VLS?
    • #1
    • 10th Mar 18, 3:01 PM
    Should I keep investing into VLS? 10th Mar 18 at 3:01 PM
    I opened a Stocks and Shares ISA In Feb of last year with Charles Stanley Direct and put 12k into the Vanguard Lifestrategy 80. I've not put anything more into that since then.

    I'm also saving money for a house deposit and a new car in a couple of years. Mostly likely two to three years. So I've got a HTB ISA which I've been doing the maximum I'm allowed since I opened it and currently sits at around 5,500. I also have 3k in a Tesco account which gives 3% without any requirements. This will be going with the money in the HTB ISA for a house deposit in the next few years. Along with any other money I've got saved in my current account.

    I have a cash ISA which I could dip into to help with a house deposit should I need to but I plan to leave that as is.

    I've been thinking that I should be continuing to put money into my Stock and Shares ISA to get the most benefit rather than just leaving it for the next few years. Say 200 a month.

    Given my situation and goals would you say this would be a good idea medium to long term or would you advice something else?

    Also if I keeping investing into my Stocks and Shares ISA going forward would you recommend keeping investing in the Vanguard Lifestrategy 80 or another fund given how USA heavy the fund is at the moment?

    Thanks all.
Page 1
    • A_T
    • By A_T 10th Mar 18, 3:30 PM
    • 418 Posts
    • 273 Thanks
    A_T
    • #2
    • 10th Mar 18, 3:30 PM
    • #2
    • 10th Mar 18, 3:30 PM
    If anything VLS is light on the USA. America accounts for roughly 50% of the global stock market but VLS only gives about 35%.


    For me the problem with VLS is that it is overweight to the FTSE 100.
    • Alexland
    • By Alexland 10th Mar 18, 4:36 PM
    • 2,388 Posts
    • 1,789 Thanks
    Alexland
    • #3
    • 10th Mar 18, 4:36 PM
    • #3
    • 10th Mar 18, 4:36 PM
    VLS equities are 43% US.

    I am unclear if you are saying you might use the S&S ISA towards the house deposit in which case stock market investing (particularly in high volatility funds such as VLS80) should be done with at least a 5 years outlook preferably longer to reduce the chance of needing to sell when markets are low.

    Alex
    • Joe_Bloggs
    • By Joe_Bloggs 10th Mar 18, 5:07 PM
    • 4,441 Posts
    • 1,564 Thanks
    Joe_Bloggs
    • #4
    • 10th Mar 18, 5:07 PM
    • #4
    • 10th Mar 18, 5:07 PM
    Why not open an additional current account with Nationwide? Their Flexdirect pays 5% on up to 2500. You can also get a Regular Saver of up to 250 per month at 5%. They are also a significant mortgage lender.
    I should point out that I do not just favor Nationwide's accounts but also use Santander, Lloyds, Halifax and Tesco.
    J_B.
    Last edited by Joe_Bloggs; 10-03-2018 at 5:16 PM. Reason: corrected a typographical error
    • capital0ne
    • By capital0ne 10th Mar 18, 5:14 PM
    • 475 Posts
    • 236 Thanks
    capital0ne
    • #5
    • 10th Mar 18, 5:14 PM
    • #5
    • 10th Mar 18, 5:14 PM
    VLS equities are 43% US.
    Alex
    Originally posted by Alexland
    This is incorrect no where near 43%
    Vanguard LifeStrategy 80% Equity A
    (https://toolkit.financialexpress.net/eacs/factsheet/en-gb/commshare/?TypeCode=FUCDT&specialunittype=&priipproductcod e=)
    1 North American Equities 34.64%
    2 UK Equities 19.80%
    3 Global Fixed Interest 14.20%
    4 Europe ex UK Equities 9.99%
    5 Global Emerging Market Equities 6.60%
    6 Japanese Equities 5.63%
    7 Asia Pacific ex Japan Equities 3.14%
    8 UK Gilts 2.60%
    9 UK Index-Linked 1.80%
    10 UK Corporate Fixed Interest 1.60%
    • pinkllama
    • By pinkllama 10th Mar 18, 5:21 PM
    • 109 Posts
    • 50 Thanks
    pinkllama
    • #6
    • 10th Mar 18, 5:21 PM
    • #6
    • 10th Mar 18, 5:21 PM
    Each Lifestrategy fund has ~43% of its equities in the US, not 43% of the fund.
    E.g LS80 has 34.69% in the US. Minus 20% (bonds) from 43% and you get the 34.69%.
    • ColdIron
    • By ColdIron 10th Mar 18, 5:25 PM
    • 4,149 Posts
    • 5,234 Thanks
    ColdIron
    • #7
    • 10th Mar 18, 5:25 PM
    • #7
    • 10th Mar 18, 5:25 PM
    Depends how you measure it. North American equities make up 34.7 of the fund according to Vanguard's latest factsheet. However the VLS80 has 20% bonds so North American equities make up 43.3% of the the equity component which neatly matches the VLS100 factsheet
    • Corbula
    • By Corbula 10th Mar 18, 5:27 PM
    • 26 Posts
    • 2 Thanks
    Corbula
    • #8
    • 10th Mar 18, 5:27 PM
    • #8
    • 10th Mar 18, 5:27 PM
    Sorry, to clarify I'm not intending to use the Stocks and Share ISA towards a house deposit. That money is for later in life.

    My HTB ISA, my Tesco one and what's in my current account at the time is going towards a house deposit and hopefully next car.

    For me, the accounts like the Nationwide Flexdirect aren't really worth the small return to me. As it's only on 2500 and that 5% is only for a year. Plus I don't know if I could keep putting 1000 in each and every month. I know a lot of people will disagree as any money is a bonus but 125 for a year and then having to move it again isn't worth it to me.
    • bostonerimus
    • By bostonerimus 10th Mar 18, 5:29 PM
    • 1,825 Posts
    • 1,169 Thanks
    bostonerimus
    • #9
    • 10th Mar 18, 5:29 PM
    • #9
    • 10th Mar 18, 5:29 PM
    Invest regularly and invest often. VLS are a good family of funds. Stop worrying about US weighting etc and make sure you are maximizing pension and ISA contributions into low cost sensible funds.....like VLS.
    Misanthrope in search of similar for mutual loathing
    • pjcox2005
    • By pjcox2005 10th Mar 18, 5:48 PM
    • 522 Posts
    • 579 Thanks
    pjcox2005
    I think key action would be to transfer help 2 buy into a LISA if you're not looking to buy in the next 12 months. Can save 1,600 more per year in it so that's 400 a year from the government that you're missing out on.

    If you have spare funds then I'd keep ploughing if in to stocks and shares and would keep it simple with VLS. Sounds like you have cash savings as a back up if needed rather than breaking the stocks and shares.

    Other option is to consider peer to peer lenders (ratesetter etc) and put money in those to get the sign up bonuses.
    • Alexland
    • By Alexland 10th Mar 18, 5:58 PM
    • 2,388 Posts
    • 1,789 Thanks
    Alexland
    This is incorrect no where near 43%
    Originally posted by capital0ne
    You are counting bonds in your numbers. That's not the right method to determine the geographic distribution of stocks.
    Last edited by Alexland; 10-03-2018 at 6:01 PM.
    • Corbula
    • By Corbula 10th Mar 18, 5:58 PM
    • 26 Posts
    • 2 Thanks
    Corbula
    I think key action would be to transfer help 2 buy into a LISA if you're not looking to buy in the next 12 months. Can save 1,600 more per year in it so that's 400 a year from the government that you're missing out on.

    If you have spare funds then I'd keep ploughing if in to stocks and shares and would keep it simple with VLS. Sounds like you have cash savings as a back up if needed rather than breaking the stocks and shares.

    Other option is to consider peer to peer lenders (ratesetter etc) and put money in those to get the sign up bonuses.
    Originally posted by pjcox2005
    The reason I haven't transferred my HTB into a LISA is because although I fully intend on buying a house, who knows what will happen in the next couple of years. So if I do and then something happens and I either can't or have no need to buy a house that money is then stuck there unless I take the penalty.

    They are spare funds but it would mean I would have less money for a deposit in a couple of years time.

    I thought though that to keep investing a little each month it would put that ISA in a better position long term.

    So I'm not sure what to do at the moment.
    • Bravepants
    • By Bravepants 10th Mar 18, 6:02 PM
    • 402 Posts
    • 435 Thanks
    Bravepants
    I believe Mr Money Mustache (www.mrmoneymustache.com) invests solely in US funds, and he seems to be doing OK!
    Last edited by Bravepants; 10-03-2018 at 7:07 PM.
    • Alexland
    • By Alexland 10th Mar 18, 6:06 PM
    • 2,388 Posts
    • 1,789 Thanks
    Alexland
    The reason I haven't transferred my HTB into a LISA is because although I fully intend on buying a house, who knows what will happen in the next couple of years. So if I do and then something happens and I either can't or have no need to buy a house that money is then stuck there unless I take the penalty.
    Originally posted by Corbula
    Even if you didn't buy a property having the money trapped in the LISA until 60 could still be useful in your retirement plan. We have LISAs for retirement investing (alongside pensions). Might be worth sticking 4k in this tax year if you have remaining ISA allowance?

    Alex
    Last edited by Alexland; 10-03-2018 at 9:12 PM. Reason: Added pension comment
    • Corbula
    • By Corbula 10th Mar 18, 8:42 PM
    • 26 Posts
    • 2 Thanks
    Corbula
    I still have allowance, other than what's gone into my help to buy I haven't used any. If I paid into a LISA for retirement then I would be able to keep contributing to my stocks and shares isa as well. Personally I don't think a LISA will do better when I get to retire. I have my doubts that a LISA will still be around when I get to retire either.
    • bostonerimus
    • By bostonerimus 10th Mar 18, 8:59 PM
    • 1,825 Posts
    • 1,169 Thanks
    bostonerimus
    I believe Mr Money Mustache (www.mrmoneymustache.com) invests solely in US funds, and he seems to be doing OK!
    Originally posted by Bravepants
    That's probably ok of someone living in the USA, but it is not a recommended asset allocation for US residents and is definitely not a sensible allocation for non-US residents.
    Misanthrope in search of similar for mutual loathing
    • bowlhead99
    • By bowlhead99 10th Mar 18, 9:02 PM
    • 7,830 Posts
    • 14,302 Thanks
    bowlhead99
    If I paid into a LISA for retirement then I would be able to keep contributing to my stocks and shares isa as well. Personally I don't think a LISA will do better when I get to retire. I have my doubts that a LISA will still be around when I get to retire either.
    Originally posted by Corbula
    Maybe you misunderstand how a LISA works.

    It works the same as an ISA except you get 25% on top of your own money that you contributed to it between ages 18 and 50 (up to 4k a year), for free. That money is invested in whatever you like, and you can take it out, penalty-free, once you are age 60.

    So, it seems a bit strange to doubt that it will do better than a regular ISA. Between now and age 50 your contributions will literally give you 25% more money to invest than a 'normal' ISA, and it can be invested in the same things as a normal ISA. Investing 125 into the same funds, giving the same percentage return, as investing only 100 in those funds... gives you more money.
    • Alexland
    • By Alexland 10th Mar 18, 9:29 PM
    • 2,388 Posts
    • 1,789 Thanks
    Alexland
    I still have allowance, other than what's gone into my help to buy I haven't used any. If I paid into a LISA for retirement then I would be able to keep contributing to my stocks and shares isa as well. Personally I don't think a LISA will do better when I get to retire. I have my doubts that a LISA will still be around when I get to retire either.
    Originally posted by Corbula
    Sure you could continue with the S&S ISA provided all your types of ISA contributions don't exceed the 20k annual limit.

    It might be worth starting with a LISA in cash with Skipton while you are saving for a property and then, if you determine this will never happen or after your property purchase, transfering across to a s&s LISA provider to continue accumulating money for retirement.

    If using a LISA for retirement saving they are complementary to a workplace pension which can offer higher rate tax relief (for high earners) and matched employer contributions. Still the main benefit of a LISA is the 25% bonus and, unlike a pension, is untaxed on withdrawal.

    Even if you are not confident that the LISA product will continue there are over a hundred thousand customers now and growing by the day so the government would be under pressure to provide a roadmap to a replacement product (as they have done with HTB ISAs). As the ability to open a HTB ISA is time limited more financial institutions will have to offer the LISA to attract the target FTBer customers.

    Alex
    Last edited by Alexland; 10-03-2018 at 9:45 PM. Reason: Typo
    • Bravepants
    • By Bravepants 10th Mar 18, 10:12 PM
    • 402 Posts
    • 435 Thanks
    Bravepants
    That's probably ok of someone living in the USA, but it is not a recommended asset allocation for US residents and is definitely not a sensible allocation for non-US residents.
    Originally posted by bostonerimus
    Indeed, but there is a definite contradictory thought process going on when someone buys a so called one-stop fund like VLS, and then decides, "Oh hang on, it's a bit heavily weighted in this or a bit light on that". The idea is "fire and forget", otherwise the aim of purchasing it is defeated.

    I'm not suggesting anyone should solely buy US equities/bonds etc. Global is the way to go. But I wanted to point out that some people aren't too bothered about those sorts of details like geographical diversification, even to the extreme.
    Last edited by Bravepants; 10-03-2018 at 10:14 PM.
    • Joe_Bloggs
    • By Joe_Bloggs 11th Mar 18, 2:56 PM
    • 4,441 Posts
    • 1,564 Thanks
    Joe_Bloggs
    Corbula wrote:-
    For me, the accounts like the Nationwide Flexdirect aren't really worth the small return to me. As it's only on 2500 and that 5% is only for a year. Plus I don't know if I could keep putting 1000 in each and every month. I know a lot of people will disagree as any money is a bonus but 125 for a year and then having to move it again isn't worth it to me.
    You do not have to keep the additional 1000 per month inside the Flex Direct account for any minimum time. Multiple smaller faster payments in and out all contribute to the total through.

    If you take out the Regular saver account of 250 per month (239.80 using the Flex Direct Interest on 2500) you will have a regular savings lump of 3032.40. With this you can do any further investment strategy you like. You can chop and change at any time during the year.

    Building a reputable financial relationship with a prospective future lenders is probably a good thing. Making 5% on your money at the same time makes good sense.

    I chose to invest the proceeds of a 0.75% cash ISA into an ISA for VLS60 and VLS80. I am close to breaking even after 6 months. This investment was done out of despair at the alternatives once all the regular savings and current account rates were taken. I have no regrets about my decision. It seems that whenever Theresa May or Donald Trump says something about the economy the value falls.
    J_B.
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