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  • FIRST POST
    • Mango111
    • By Mango111 8th May 18, 12:27 PM
    • 4Posts
    • 0Thanks
    Mango111
    Vanguard
    • #1
    • 8th May 18, 12:27 PM
    Vanguard 8th May 18 at 12:27 PM
    Hi all

    I have read Ramit Sethi’s ‘I will make you rich’ and taken a lot of the advice onboard.

    I currently invest £4000 p/a into a LISA, with a government bonus of £1000.

    I am trying to be extremely frugal for the next few years, and have £500 a month to invest. My five year goal will be to put the money towards a house.

    Are target retirement funds the UK equivalent of lifecycle funds he mentions in the book, and are these suitable given my savings goal?

    With my existing LISA, should I aim for a more aggressive balance between stocks and bonds?

    Any advice offered would be hugely appreciated. Thanks
Page 1
    • fun4everyone
    • By fun4everyone 8th May 18, 12:40 PM
    • 999 Posts
    • 1,532 Thanks
    fun4everyone
    • #2
    • 8th May 18, 12:40 PM
    • #2
    • 8th May 18, 12:40 PM
    You are not aiming for retirement - those funds mostly have long glide paths (25,20,15 years etc) and readjust bond/stocks allocation as the target date becomes closer. Your goal is 5 years away and would not really benefit from such adjustments, you might as well have a fixed allocation now.

    As for what that fixed allocation might be you say
    should I aim for a more aggressive balance between stocks and bonds?
    5 years is not very long in stocks and there is a not insignificant chance to lose money over that period with them, so be careful with your spread.

    The £1000 a year bonus will help a lot with your returns so you could try looking at different spreads and seeing what the worst/best/average scenarios might be over 5 years and picking one you are comfortable with. Don't pick one where a worst case scenario would be unable to put the deposit you want down.
    • Prism
    • By Prism 8th May 18, 12:43 PM
    • 404 Posts
    • 315 Thanks
    Prism
    • #3
    • 8th May 18, 12:43 PM
    • #3
    • 8th May 18, 12:43 PM
    I am trying to be extremely frugal for the next few years, and have £500 a month to invest. My five year goal will be to put the money towards a house.
    Originally posted by Mango111
    Generally you shouldn't invest at all with money you need within 5 years. 10 years is about the minimum you are looking at for investments in equities and bond funds.
    • dunstonh
    • By dunstonh 8th May 18, 12:56 PM
    • 93,426 Posts
    • 60,948 Thanks
    dunstonh
    • #4
    • 8th May 18, 12:56 PM
    • #4
    • 8th May 18, 12:56 PM
    Are target retirement funds the UK equivalent of lifecycle funds he mentions in the book, and are these suitable given my savings goal?
    I havent read the book but these funds are a niche option that is unlikely to be suitable for the majority of people. They start off higher risk than the average UK consumer and end up lower risk than the average UK consumer. So, its not a case of using investments that fit you but instead you fitting the investments. That is not the way to invest. Plus, they are more expensive.

    On top of that, your objective does not seem consistent with risk reduction over the next 20-40 years.

    With my existing LISA, should I aim for a more aggressive balance between stocks and bonds?
    You have given us nothing to go on to be able to answer that question.

    Everyone has a personal view on investment risk. You have to consider knowledge, understanding, behaviour and capacity for loss. All those things influence the risk level that should be taken.

    Also, your timescale is on the higher risk side. An economic cycle is around 10 years. If you invest for a whole economic cycle, the chance of ending up with less money than invested is low. You are looking at 5 years with a regular contribution. So, the timescale is high risk as a starting point as most of the money will be invested for less than the ideal minimum of 5 years. Indeed, a good chunk of it will be invested less than the recovery period from a stockmarket crash. Regular contribution periods are typically better at 15 years.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Mango111
    • By Mango111 8th May 18, 1:29 PM
    • 4 Posts
    • 0 Thanks
    Mango111
    • #5
    • 8th May 18, 1:29 PM
    • #5
    • 8th May 18, 1:29 PM
    That!!!8217;s really useful thanks for the replies. I guess for shorter term (~5 Years) I!!!8217;m best spreading around the best available high street savings accounts? They all seem to offer more than any other ISAs
    • Mango111
    • By Mango111 8th May 18, 1:31 PM
    • 4 Posts
    • 0 Thanks
    Mango111
    • #6
    • 8th May 18, 1:31 PM
    • #6
    • 8th May 18, 1:31 PM
    (Apologies, not sure what happened with he formatting there, sent from my phone)
    • MallyGirl
    • By MallyGirl 8th May 18, 1:59 PM
    • 2,820 Posts
    • 7,825 Thanks
    MallyGirl
    • #7
    • 8th May 18, 1:59 PM
    • #7
    • 8th May 18, 1:59 PM
    (Apologies, not sure what happened with he formatting there, sent from my phone)
    Originally posted by Mango111
    it is a problem with Apple devices
    • bostonerimus
    • By bostonerimus 8th May 18, 2:15 PM
    • 2,030 Posts
    • 1,353 Thanks
    bostonerimus
    • #8
    • 8th May 18, 2:15 PM
    • #8
    • 8th May 18, 2:15 PM
    That!!!8217;s really useful thanks for the replies. I guess for shorter term (~5 Years) I!!!8217;m best spreading around the best available high street savings accounts? They all seem to offer more than any other ISAs
    Originally posted by Mango111
    I think this is a good plan. If you have money earmarked for spending in the next 5 years put it into something safe like saving accounts or National Savings. If you are sure you won't need it for 5 years you can lock it away and get a bit more interest.

    For longer term investing and retirement Life Cycle funds are ok as long as you understand how the asset allocation changes with time. But, I think you'd be a bit better using Vanguard LifeStrategy funds or just putting a portfolio together of tracker funds.
    Misanthrope in search of similar for mutual loathing
    • dunstonh
    • By dunstonh 8th May 18, 2:15 PM
    • 93,426 Posts
    • 60,948 Thanks
    dunstonh
    • #9
    • 8th May 18, 2:15 PM
    • #9
    • 8th May 18, 2:15 PM
    it is a problem with Apple devices
    Originally posted by MallyGirl
    And windows 10. In reality, its a problem with the site as they have configured it in a way that causes this and then look to blame Apple (despite it happening on PCs as well).
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • TBC15
    • By TBC15 8th May 18, 3:07 PM
    • 510 Posts
    • 259 Thanks
    TBC15
    Win7 too if you cut and paste.
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