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I just wanted to say thank you for all of your hard work. I hope you know how much we (the viewers) value content like this. Your insight and knowledge is very valuable to people like me trying to learn economics.
Well the topic "How I would invest 10.000 " is very popular on youtube, personally I have opened an ISA and split 10k in livesaving fund 40%equity and the other half in one 100% equities fund. How would you invest 10k?
What happens if a broker platform loses rights to a fund? Say Vanguard/ Fidelity lose the right to FTSE 100 say. What then happens to an investors money? Thanks and great channel.
Ben Graham insists (and I concur) that when stock prices fall they become LESS risky and so you should hold MORE stocks and less bonds. Therefore, I see the fixed allocation strategy as a positive.
In a down turn I would sell the vanguard 60/40 equity/bond fund and transfer it to a vanguard 100% equity fund, it doesn't matter of market timing as shares will increase in value over time. More than 30-40% drop you'll be doing fine. Your original 60/40 fund wont drop as much as the 100% fund so you'll be gaining there..
Really great video detailing all the risks and things to consider. I am 38 and have no pension whatsoever so I literally have no choice but to go for the maximum risk/maximum return equity funds in the hope that I might have enough to survive when I am too old work anymore!!
@@Pensioncraft if we invest in Accumulation funds (let say Lifestrategy 100) do we pay dividend tax? It seems like they are never reported on the platform when the funds are accumulation (if held into a GIA)
Thank you for taking time and resources to produce such a detailed video. Feeling a lot more confident about investing since I subscribed to your channel. Keep up the great work. 🙏 😊
Fantastic channel. I think this fills the gap because there needed to be some straight talking advice on investing. There isn't enough of an education on platforms and funds around and many people are subject to funds marketing strategy. I myself have invested in funds that charged way too much as a young investor (I started at 22 investing in costly equity funds, I am now 25). Keep posting, this content is fantastic! Adam
Thank you, Adam! I recently heard a talk by Larry Bates, a Canadian bond trader who is trying to help people understand the long-term impact of fees. He showed the shocking effects of fee compounding and created a T-Rex score which calculates how much return you keep. In this blog I created a spreadsheet which shows just how much fees erode returns: pensioncraft.com/why-fees-matter/ As you're now fee-aware at 25 you probably saved yourself a _lot_ of money. You just made my day.
I'm surprised you say fixed allocation isn't good. I thought the whole point of portfolio rebalancing is to sell high buy low. Also the US market represents 54pc of the world market. You'd have to invest a lot to be too exposed
Agreed. This is recommended in Tim Hale's "smarter investing", and he explains very clearly why rebalancing is ideal. Would like to hear PensionCraft's reasons as to why he thinks otherwise.
Thank you, Tahir! You can also support us on Patreon if you want to ask questions in our Live Q&A call and chat to us on Slack patreon.com/pensioncraft Thanks, Ramin.
I am about to invest in a life strategy fund 100%, It will be the new tax year and i can put the full 20k in, Am i right in thinking the 2 massive drops in the us stock market won't effect me as they dropped before i got the fund ?, But any future drops will effect my fund.
HI I liked the video and felt quite enthused about filling my annual ISA allocation with LifeStrategy 60% fund. However in your full blog version of the same subject you seemed very damming on the entire approach: ’Fixed asset allocation, as adopted by Vanguard LifeStrategy funds is simple. That's really the best that can be said about it. In short fixed allocation is a dumb strategy. So dumb, in fact, that we'd consider it a risk.’ So, sorry but I’ve ended up really confused as to whether LifeStrategy funds are worthy of lump sum investment, drip feed, or should form a major part of my portfolio. Thanks, Tony
Hi Tony, LifeStrategy _is_ simple and dumb. It is by no means perfect. However, for most people it does a very good job because the fees are very low and it is a very simple product. What many professional investors and money managers find surprising (and probably annoying) is that LifeStrategy outperforms many multi-asset macro hedge funds, pension funds and mutual funds over the long term. And given that LifeStrategy is dumb those active funds charging high fees for their expertise must be dumber. Thanks, Ramin.
Actually if you chose lifestrategy 60% Equity for example, when the fund rebalances it still remains 60% Equity & 40% bonds. It is actually doing what you need, buying equities when they're cheaper and selling bonds whem they are rising or vice versa. Sell high buy low, I don't understand how the fund could b increasing risk if it's just maintaining the equity, bond split when rebalancing. If you for example did your own portfolio surely you would be doing exactly the same when you do your yearly re-balance for example
rebalancing is for reducing risk as you approach your target date for moving out. For example, I am mostly holding LS100, but as I approach 2050 (my target retirement) I will switch to perhaps LS20 or LS40 instead.
Oh man... that bit at the end totally messed with my head. I thought fixed allocation strategies are good precisely because they buy when prices go down and sell when they go up - i.e. buy cheap and sell high! But here we're told that we should sell equities when prices are going down to reduce risk. After 15 years of doing this... I seem to know nothing!
I'm sorry, but I'm sticking with Benjamin Graham. During a crash/ bear market I am selling bonds and buying more shares - what you describe as fixed allocation - except I would vary the alocation in favour of equities. It worked very well after the Covid crash whilst everyone was running for the hills!
Hi ! Given this times of CORONAVIRUS Crisis do you recommend investing in Vanguard blended funds 100% stocks and shares or buying stocks and shares directly on apps like etorro, freetrade, Robinhood providing the prices have plummeted for most stocks and shares ? Love your channel ! Thanks !
Excellent Ramin. Love those two graphs at 7.50 and 10.15. They illustrate Risk/ Return and extended periods of downturns and upturns perfectly. I'm curious... what is your personal Asset Allocation? And your age if you are willing to reveal it?
Hi Murari, my portfolio is there for everyone to see in my video on how I invested my ISA ua-cam.com/video/mWhi157ljLw/v-deo.htmlm35s it's about 60% fixed income and 40% equity. I've avoided the US altogether. UK dividend yield and valuation looked attractive so my equity allocation is in the FTSE 250 tracker VMID and the Developed Europe ex-UK fund VERX. And I'm 50. But the cautious allocation is because of high valuations rather than simply my age as I say in that video.
Hi Murari thanks for that. I think I've owned some IUKD in the past. I avoid commodities because they offer no income and are therefore difficult to value, as you say. They also tend to be volatile. As rates rise gold and other wasting assets (=no income) look increasingly unattractive versus extremely safe assets that do have an income (e.g. US Treasuries earning about 3%). Also, commodities don't have the long-term upward drift of equities.
I’m going to be investing in a life strategy ISA in the next few days but I’m torn between the 100 and the 80. I’m 29 years old and don’t plan on touching it for the next 20 years. I will be depositing £200 a month and adding any bonus’s or extra money I have when I can. Which do you recommend. Great videos, really enjoy your Channel
Hi aaronhyland800 I don't provide recommendations, as you've probably seen in my videos. The considerations are your risk appetite (are you comfortable taking a loss when equity markets fall or would you do something crazy like sell your fund when its value falls?) risk capacity (would a fall in the market affect your quality of life, are you living hand-to-mouth?) and your investment horizon. It sounds like you're doing the right things: saving regularly and early in life, keeping your fees low, diversifying globally, thinking long-term rather than short-term. Whether it's 80% or 100% the long-term outcome will be good if the future resembles the past. Well done! Ramin.
Excellent video and analysis, as always. With bonds high and yields low, risk based allocation may prove less effective, and riding the waves with fixed allocations more be effective in the long terms?
Hey Ramin, thanks for yet another amazing video. Over the long term (10+ years) would Vanguard's LifeStrategy funds be in your top choices? Which LifeStrategy fund would it be - 100, 800 or 600? Or you recommend something else? Love your videos, keep up the good work. Dragosh
Awesome video .... again.... sorry if this is a silly question but are you saying that the maximum volatility in the 100% fund is 12.7 % , as In you couldn’t lose more than that in an investment in this portfolio ? Seems very good considering it’s quite an aggressive fund.
Hi Ken, volatility is simply the typical percentage price move. The losses and gains often exceed the volatility. Two standard deviation moves are less likely and three standard deviations less likely again. Thanks, Ramin.
Really liked the clarity with which you explained the lifestrategy funds. You may wish to add further the Target Retirement funds which change the allocation every year as you approach your chosen retirement date.
Hi Ngawang, if you are investing for the long term then it's usually easier to get an accumulation fund. If you are retired and want to get a cash income from your investments you might prefer an income fund. The accumulation fund can reinvest the dividends more cheaply than you can. Also with an income fund you end up with small amounts of cash in your portfolio which you then have to reinvest which is a chore. Thanks, Ramin.
Hi Ramin, I’m just about to get into stocks and share and I’m considering doing the life strategy 80% over the course of 5-10 years. My question is do vanguard buy and sell your shares for you? Or do you have to sell and buy yourself? Great content by the way ☺️
Hi Andreas, if you buy a LifeStrategy fund the fund manager (Vanguard) buys and sells funds and keeps the weights at their fixed levels by rebalancing. From your point of view you simply buy the fund and that's it until you decide to sell the fund. Thanks, Ramin.
@@Pensioncraft Hi, so the percentage allocated between stocks/bonds will not change as I get older correct? For instance, if I invest in the LifeStrategy Growth Fund at age 30, the 80/20 stocks to bonds at age 30 will still be 80/20 when I'm 45 years old, right?
Thank you for your videos, it isn't easy to find videos in here about investing in uk and the ones from usa mostly talk about products we do not have access to. I am just wondering how changes in £ value could affect income from LIfeStrategy funds and other Vanguard funds, I am thinking about investing in S&P 500 index or ETF or LifeStrategy...could you help a bit?
Hi Paulina abc, That's a great question. I'll try and answer it here but if you want more detail you can call me. To see whether you're exposing yourself to currency fluctuations see if the title of the ETF has the word "currency hedged" in it. If it does the fund and, indirectly, you will be paying to remove currency movements. I can't see the word hedged for any of the 60% LifeStrategy portfolio (but some of the bond funds in their Target Retirement portfolios are currency hedged). www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-60-equity-fund-income-shares/portfolio-data Each LifeStrategy fund splits its investments across regions (US, UK, Japan...) and asset classes (shares, bonds...). As I say in the video there is a very heavy allocation to the US in both equity and bonds simply because the US share and bond markets are the biggest in the World so there's just more stuff there to buy. That means you also get a big dollar exposure: if the dollar strengthens vs sterling your investment will benefit and if the dollar weakens vs sterling your investment will lose value. The price of shares moves around a lot (20% per year is the typical annual percentage move). Bonds move around much less (depends but usually 5% per year, say). Currencies move around 10% per year. Bear with me... This means that it's only worth paying the insurance policy to remove currency fluctuations for bonds. The reason is that bond price movements would be drowned out by currency movements because currencies move more than bonds but less than shares. So you won't usually see the shares currency "hedged" but often you do see bond funds currency hedged. If you google "currency hedged ETF GBP" you'll see it's predominantly bond ETFs you get. But just stick S&P 500 in the search and you'll see you can get currency hedged equity funds. However, remember you will be paying a fee for that currency hedge i.e. the fee for a currency-hedged S&P 500 ETF will be greater than a non-currency-hedged S&P 500 ETF.
I played so much Doom but I find investing a lot less stressful! This is useful analysis. If you split your money 50:50 across the 80% and 60% funds you can create a 70% equities portfolio which would be my preference. If you go too heavily into equities you loose the benefit of rebalancing and so the returns can be lower. I also spotted the US weighting so it might be worth going for 90% in the 60% Life Strategy and side investing around 10% in an Asian and EM equity fund. It's also worth mentioning these funds do not hedge against the current sterling weakness. My Nutmeg risk 3/5 risk fixed portfolio (there are 10 managed and 5 lower fee fixed risk portfolios) is a 60% equities allocation and is so stable it barely moves each day and although that protects against loss I am investing to make gains... Also worth covering the Vanguard Target Retirement funds which can be used for any target lump sum withdrawal e.g saving for university. It's a tiny bit more expensive +0.02% but true fire and forget. Keep up the good work, Alex
Hey Alex - nice to know somebody got the Doom analogy! I guess you can construct any percentage equity you like as you say Alex. Is it worth the extra complexity to adjust the equity percentage to such a fine degree? Speaking to Shaun from Nutmeg and Adam from Scalable they say that they want to avoid people fiddling with risk - dialling it up during rallies (now) and down in falling markets (later) because this is a behavioural investment no-no. We tend to time things badly and this hurts long-term return. Vanguard Retirement funds are on my list!
I do the opposite and try an increase my equities exposure when they are cheap - moving the dial to 80pc! But my goals are so long term I am ok to ride the storms.
Hi Ramin, Just signed up to your weekly newsletter. Really interesting. I am currently all in on Vanguard's 80% strategy fund. Given the current climate, would it make sense to transfer that down to 60% or even 40%. After such a bull run these past 10 years , plus covid/brexit etc, should we expect a correction? I am 36 btw, just in case my age will alter your opinion. Your thoughts would be much appreciated?
Hi @Karim J it's almost impossible to try and time these things so for most people it's best not to try. Just stick with it for as long as you can. The only reason to cut your equity allocation would be if your risk capacity (ability to take a temporary loss without suffering an impact on your quality of life) or risk appetite (willingness to live with risk) change. For example if your investment horizon shortens due to a critical illness, or a large expense is looming that might change your risk capacity. The more equity volatility you can tolerate the better your long-term outcome but you have to be prepared for large corrections and not sell when that happens. Thanks, Ramin.
Hi Ramin. Great channel! Although i don't understand all of the content i am still learning. I have just started to invest in a Vanguard LS80 as a result of the paltry interest offered on my Cash ISA. Should i invest all of my £20000 allowance all at once or drip feed it in throughout the rest of the year? Looking to leave it for at 10 years. The unit cost seems high at the moment, hence the question. Looking forward to your reply. Many thanks.
Hi David, you're right, it's difficult but over the long term it's best to buy why equities are cheap. I guess if you're drip-feeding money into your savings you are always buying. The key thing is not to sell during a market crash. Thanks, Ramin.
Hi x x I think the credit spread for US investment-grade credit is tiny at the moment and if we ar late-cycle that might be cause for concern. But I do like the higher yield for US government bonds and IG credit. VUCP isn't currency-hedged so if you think sterling is going to rally (maybe because of a trade deal) that could be a problem. But the effect of the Fed easing is already priced in so I wouldn't buy on that basis. Thanks, Ramin.
What do you think of the more balanced Global All Caps Fund compared with Lifestrategy? I'm 30-years old, so how would I balance it with bonds over time? Would I just gradually start to buy more assets/bonds over the years, and then increase my bonds percentage whilst decreasing my stock percentage as I get into my mid-40s-50s? Not looking for financial advice, just thoughts 😊
Hi Peter if you buy Global All Caps that's pure equity so if you want some bonds in your portfolio you'd have to buy one or more bond funds to go with it. I've done a video on how to build a two fund portfolio that you might find useful pensioncraft.com/how-to-build-two-stock-portfolio/ Thanks, Ramin.
I hold both global balanced (though it recently changed to SustainableLife 60-70) as well as LS100, and LS100 has been the better performer so far in my experience. Not sure how much this helps. I plan to reduce to LS40 or LS20 as I approach my retirement target age.
Brilliant channel and content Ramin! This one has me thinking now though, because of what you say regarding the fixed allocation strategy being a dumb strategy (on your blog). I am currently mostly in an 80% LS, and I do feel like the US market is high risk at the moment as you mention. Does Vanguard UK offer anything that follows a more risk based approach? I previously had it in my head that the fixed allocation was good because it would buy more equity when prices are falling (buy when others are fearful right?), and when our psychology might stop us from doing so!
Hi Ben they offer a minimum volatility gobal equity fund VMVL which I used as part of my 2019 allocation and which I discuss i that video. I also discuss it in my review of factor funds. Thanks, Ramin.
Hi Ramin. Your content is simply amazing for someone who, like myself, is just starting with investing. Life Strategy funds look very diversified. They are actually so diversified then it is hard for me to think of what else I could add to my portfolio in order to achieve even larger diversification. Does it make sense to add to portfolio another fund(s) as various online sources suggest? If yes then what could it be for example? Many thanks in advance. John.
Hi John, you can have other funds but they just tilt your exposure. For example if you wanted more emerging markets exposure you could also hold an EM equity fund, or if you wanted more safety you could buy a government bond fund (UK gilts or US Treasuries hedged into your local currency). In fact, we recently discussed exactly that question on our Sunday evening call for Patreon supporters patreon.com/pensioncraft Thanks, Ramin.
I really like the video and would like to sign up for one of your courses please. Since Covid, the markets have been remarkably resilient. However, for how long... things could change and if interests rates rise this places existing Bonds at risk. Not easy for investers! Vanguard are excellent because they have so many funds, but you are right to point out there exposure to US markets. The US market is about 60% globally, this explains why, so I am not too concerned.
@@Pensioncraft Many thanks, I will be signing up. I have learnt so much over the past 6 months, wished I had this knowledge when I was at school and started work, but never too late to learn!
I have a simple view time is kind to the stock market This is my thinking Life Stragy 100 Lets say i invest 100k and i take 5% withdrawal each year the fund will grow each year around 8% Just buy and forget me clicking every month to see what its worth is pointless I just take the money every year and enjoy it I think i am right in saying only 1 in 10 fund managers beat the market Low priced tracker in an ISA is the way no where is my next cruise where shall i eat out Life is too short to worry Thats my take enjoy your life
Great video. My question is how do Risk Based Allocation Funds out perform Fixed Allocation Funds? You say FA funds will buy more shares in an economic downturn, while the shares are cheap, meaning that when the market recovers, you will be in a better place. Meanwhile in a RBA fund, less shares will be bought while they are cheap. Surely buying a higher proportion of shares is better while they are cheap? I don’t understand how a RBA Fund would out perform a FA fund long term. I would really appreciate your response, thanks.
I'm new to investing, and was considering the 80%. However, now I'm thinking perhaps splitting my monthly (annoyingly small) investment over 2 funds, the 60% or even 40% (for more caution) and an active, like the Lindsell Train, Bailiie Gifford Managed, etc. Not sure what to do! :)
Hi markonlife, it's not easy to choose. Personally, I start with risk and then work back to the funds I like (using my Scooby Doo correlation tree) pensioncraft.com/how-i-invested-20k/ In terms of funds, I go for very low fee passive funds or low fee factor funds which are active but rely on peer-reviewed research to find shares that beat the overall market and don't depend on the choices of a fund manager. I review some factor funds and explain how they work here ua-cam.com/video/U0wnrUIgwVM/v-deo.html Thanks, Ramin.
Because they invest heavily in US stocks UK based investors are subject to currency variations which is why my Lifestrategy fund dropped about 1% yesterday while NYSE was broadly flat.
I have around £5,000.00 invested in the Vanguard 60% life strategy fund. I want to move over to the 80% life strategy fund. Am I best selling the 60% and investing it in the 80%, or leave the £5,000.00 where it is, and investing in the 80% life strategy from fresh?
Maybe a daft question but the LifeStrategy funds have an Ongoing charge (OCF) of 0.22%. But as they are effectively a fund of funds are you not paying in reality a much higher fee as are you not paying indirectly a fee on each of the LifeStrategy held funds. For example, you pay the 0.22% for the LifeStrategy 60% Equity Fund, this is made up of amongst others the Global Bond Index Fund - Hedged Accumulation which charges an OCF of 0.15% if you were to buy this fund directly outside of the LSF60%. This fund makes up 19.4% of the LSF60%, so if you had £10,000 invested in the LSF60% you would pay the 0.22% OCF = £22. Of the £10,000 invested in the LSF60% you have £1,940 in the Global Bond Index Fund so would your returns of this part of your investment be reduced by £2.91 = 0.15% OCF of the £1,940. It may not show up as being a charge but is it 'hidden' within the returns. So it appears you are only paying the LSF 0.22% OCF but inreality you are also paying a fee on all of the constituents as well. Or is it that you get to invest in all of these funds that make up the LSF's without 'paying' each funds OCF. To avoid effectively being double charged OCF's? I have been unable to find any answers on this, hopefully I have explained what I mean well enough and would really appreciate any answers.
I know this is a late tell reply, but this is the reason I don't use the life strategies and buy the funds I think make it nice and diversified myself at lower fees, then drip feed smaller amounts in monthly. Perhaps one reason to use lifestrategy is the £500 minimum on all the funds. I think the main reason is that you are paying for a value added service a bit like buying sliced carrots in a supermarket at a higher price for the convenience (you could call it being lazy).
Hi enjoyed your video, just to clear up things, I am thinking about moving from Halifax investment isa to Vanguard. They state a minimum per fund monthly investment of £100, I currently have four funds with Halifax so to replicate with Vanguard it would cost £400.
Hi Ken, the only minimum investment for the Vanguard ISA is the price of each fund i.e. you can't buy half a share. If VUSA is trading at a price of £40 then you have to invest at least £40 to buy it but you're not obliged to buy more per month of that fund or any other fund. The other minimum is the amount you put in your ISA. Their site says "For single investments, you can start at £500. If you'd rather invest in monthly instalments, these start at £100 per month." www.vanguardinvestor.co.uk/need-help/answer/whats-the-minimum-investment-amount Someone asked me whether they would still have to put £100 per month into their ISA if they lost their job. Vanguard support replied: "To open an account you can either do this by a lump sum payment from £500 or set up a direct debit starting from £100. If you chose to open the account by the direct debit option, once the initial payment of £100 has been made you are able to amend or cancel the direct debit if need be due to circumstances changing." What they're trying to avoid is thousands of accounts with a few hundred pounds in them because this would lose them money. The more you hold in your account the more they make (0.15% of the invested amount per year up to a maximum of £375). Thanks, Ramin.
hi, thanks for pointing out that S&P yeild is much more higher than LS 100%. whats the best fund for S&P ? there are so many options such as VUSA, IUSA, SPXP, CSP1, HSPX
I am looking to transfer cash isa to Vanguard. Once i have completed the transfer can i hold the money in vanguard cash isa account and drip feed into life strategy fund as an when rather than doing a lum sum or the monthly feed? Also, holding cash in the vanguard isa account do they charge annnual fee like the funds? Thanks
Once you have transferred the cash into your Vanguard ISA account you can buy funds whenever you want. You will be charged the platform fee (which I believe is 0.15%) for holding cash. Even on a 20K annual maximum ISA deposit that only amounts to £30 per year.
Hello, I have just discovered your channel (great content!).and was considering the Vanguard LS Funds, I'm in my fifties and have another 10-12 years to retirement, what are your thoughts on the Bonds within the LS range? As Bonds are not really delivering much it seems atm which is a concern. With this in mind, do you think I would be better off with the VRWL + All Cap instead? What are your thoughts on going for a high yield dividend portfolio vs the V LS range? Thanks in advance, Jamie (UK).
Hi Jamie Y the bonds are there to provide capital protection in case of an equity market selloff and a small safe source of income. The time you'll be glad of them isn't during an equity market rally such as the one we're seeing currently. You'll be glad of them during an equity market correction. See my two fund portfolio video pensioncraft.com/how-to-build-two-stock-portfolio/ which shows how to do what you're suggesting. The bond funds in LifeStrategy are very boring, just as they are designed to be. Thanks, Ramin.
@@Pensioncraft Thanks for your response Ramin, yes the LS range are simple set and forget type funds (steady as she goes). I will take a look at your other suggested videos. I still have a number of years to go so I am considering the LS 60/40 (Risk 4) option which looks to be medium risk. All the best, Jamie (new sub!}.
I have both 20% and 40% Lifestartegy funds in my portfolio. I don't undestand why the (sholud be) less risky one is loosing more than the other one...... It should just be the opposite
Not sure if you'll respond or if I'll even be notified if you do, but when you show the graph of S&P 500, even though there are dips because of recessions and the 2008 crash for example, is it not a safe bet to still invest despite this? If I'm not going to touch my money for 20+ years, looking at previous data, the graph does seem to just be trending upwards so eventually you'd expect a higher return?
I find your videos very informative but have always wondered due to the fluctuation of stock/fund prices how dividends are actually calculated? and how often would any gains be reinvested into a fund like this. Thanks, subbed.
Dividends, when applicable, are paid per share. The share price is irrelevant. The company decides how much dividend to pay, if any. Many things impact the decision including earnings, reinvestment strategy, cash flow, overall strategy, etc. Not all companies pay dividends at a given time.
Hi xx I'd ignore the level of stock prices. What really matters is how well stock prices keep track with earnings. If earnings aren't rising enough to warrant a rise in share prices then it would take a surge of "animal spirits" to push equities up further. The state of the global economy is one of weakening growth and the Trade War's not helping sentiment either. To see what I mean about earnings take a look at this earnings report from Factset for July 3rd 2019: "For Q2 2019, the estimated earnings decline for the S&P 500 is -2.6%. If -2.6% is the actual decline for the quarter, it will mark the first time the index has reported two straight quarters of year-over-year declines in earnings since Q1 2016 and Q2 2016". This is the kind of thing which I discuss each week in my Weekly Roundup (sign up for free here pensioncraft.com/newsletter/ ). Thanks, Ramin.
So would you say 60% equity is better than the 80% equity as its slightly more diverse and a bit safer? been looking into this but not alot to invest right now but looking to grow my pot over long term
Hi Charlie, I can't advise you Charlie but I would say the following depending on your views: - If you don't mind a high US allocation then you wouldn't need to do anything outside the LifeStrategy fund - If you have both a LifeStrategy fund and other regional equity index funds to even out the heavy US exposure make sure you calculate the correlation of those funds to LifeStrategy otherwise you could be doubling up your risk. - If you want to construct your own LifeStrategy fund from single funds, but with a lower US weight, be ready to rebalance the portfolio regularly as the weights get out of line with the LifeStrategy weights. One of the benefits of the LifeStrategy fund is that it does all the rebalancing for you. Rebalancing isn't difficult, it's just a chore and it will cost you more than it costs Vanguard. If you want a hand with the correlation calculation between the LifeStrategy and other funds give me a call. My contact details are on the pensioncraft.com website. I won't charge you. Ramin
Your videos are great and they go really in-depth, compared to other ones out there. Since I've never invested before, I would like you to confirm something about investing, if you can. For example. if I make an initial investment of $2,000 and then invest a further $200 every month for two years, I will have invested $6,800 in total. If during the 3rd year, there's a financial crisis that doesn't start to recover until year 4, does that mean that I lose my money during that crisis or does it mean that the value of my money has decreased, but it has the potential to rise again with the recovering market? What I'm trying to ask is, will I still have the money invested and have less value or will I completely lose it and then have to reinvest? Thank you very much for taking the time to read my question! Looking forward to your reply!
Hi Marius, thank you, I'm glad you find the videos useful. To answer your question the value of your money has decreased but has the potential to rise again as the market recovers (as it _always_ has in the past). The way to lose money is to sell when markets have fallen sharply. If you buy single stocks and the company goes bankrupt you could lose all your money. However, if you buy a whole market through an index tracker (e.g. S&P 500 tracker, FTSE 250 tracker etc.) they don't go bust so they will always recover eventually, but it might take patience. Thanks, Ramin.
Hi Ramin, new to the channel and just Subbed. Question if I may. Due to inflated US equity, I am hesitant to jump into the VLS100 until after the market had corrected itself. But I don't want to waste my ISA allowance. Can I use this years allowance too buy say a the VLS20, wait for the correction and then move across to 100 equity as soon as that happens? Would there be any costs later to make that move? Am I missing anything? Your wisdom is much appreciated.
Hi David, personally I remain invested if there's a selloff, because I know that eventually markets will recover and I can't time markets short-term, as I think you're suggesting? I guess the question is low relative to what price? If you're 10% into a 50% bear market then it wouldn't be so silly. If the selloff reverses then it would be silly. Unfortunately, we never know which scenario we're in unless we have the benefit of hindsight. Thanks, Ramin.
Really good video! Do you have any tools that will give an illustration of what returns (and fees) you get if you invest a certain amount initially, then a certain amount each month over the course of a few years? i.e. if I opened an account in 2015 with £5k, then invest £500, then emptied my account - what would I have? What's the total fees/tax would I be ellibile to pay etc., and how much would I have? Been trying to put together a spreadsheet on this, but getting the right information is vague (or American :))
Hi readikus, this is fairly easy with a spreadsheet with the invested amount in column A, and one row per quarter. Vanguard charges me for May-August, August-November, November-Feb and Feb-May. Then in column B multiply the amount in the account at the end of the period by the platform fee (0.15%) and divide by 4 (because it's quarterly). If the amount is more than £93.75 then cap it at that amount (due to the £375 annual fee cap). Thanks, Ramin.
Another great video. I invested in the LS 60 and 100; and sold half my holdings in LS100; gaining around 15%(over a year- I am happy with this). I have noticed that the LS60 goes up and down by roughly half as much as the LS100; which goes along with the reduced volatility. I would like to de-risk out of the LS100 into maybe the LS40; however I am worried that the returns from bonds are fairly minimal and the fund will still have risk from its equity exposure especially if there is a large correction. What returns could the bond/fixed income portion of the portfolio give? Maybe 1-5%?
Hi AP, as part of my "Almost Everything You Need To Know About Finance from Robert Shiller’s Data" course pensioncraft.com/register/know-finance-from-shiller-data/ I construct a total return index for US Treasuries and equities. Over the last 65 years the real (inflation subtracted) return for equities was 4.3% and for US ten year Treasuries was 2.3%. Just add about 2% for nominal (not inflation adjusted) return. That puts the recent very strong equity rally into perspective. Another useful source of information is Vanguard's ten-year outlook www.vanguard.co.uk/adviser/adv/articles/research-commentary/markets-economy/vanguard-economic-outlook-2018-and-beyond.jsp?lang=en take a look at the bottom of pages 24 and 25 (and pay attention to the large error bars!). Call me if you want to discuss, happy to chat ramin.as.me. Thanks, Ramin.
Good video. So, if you use a robo advisor they would change the allocation of the funds if they see the markets the funds are invested is going down? Even if you choose a riskier strategy? I thought, since Life Strategy funds are diversified that would minimise the risk... But now I'm not sure. If there's a crisis and my money is going to worth less than what it used to for 5 years and then I need to use it I'm screwed. I started with index funds about 3 months ago with Moneybox, but recently realised the fees are high compared to other services. So I opened an investment account with Vanguard to try it out. Would you recommend Nutmeg (using a risky strategy) instead? Thanks.
Hi Ramin. At the time your content is possibly the best on YT for UK based retail investor, so thank you very much for sharing with us. I've started to look into different investment alternatives (such as funds) because interest rates from traditional bank savings are so low these days that I thought the worst I can do now is sit idle on my spare cash. After some research, I was thinking about opening stock and shares ISA with Vanguard , where I would invest whole ISA allowance for 2018/2019 into Vanguard LS60 fund. The plan would be to not touch this investment for the next 20 years (I am 38 by the way). Do you think this would be rational approach? Could I do anything better to improve my plan? For example consider LS80 instead LS60 since my plan is to not access the money for next 20 years, so higher risk fund should do well over such period of time? Is having just one fund like LS60/LS80 would provide enough divesification? In case it would not, what would be the way to intorduce even more diversification into my plan? Many thanks, Piotr.
Hi Piotr I don't give financial advice, just financial education so that you are in a position to make up your own mind what to buy and sell. However to answer your question about LifeStrategy diversification it is already diversified across asset types and across regions, so you don't need to diversify it any more. Thanks, Ramin.
I'm wondering if Vanguard has any passive fund (and do you have any guide on that)? I went searching on their website but couldn't find any. Thanks for the extremely helpful content.
Hi BearTheMusic, Most Vanguard funds are passive as they simple track an index. I have a free booklet that you can sign up for that goes through 18 of them which you can access here....pensioncraft.com/how-i-invested-20k/ Cheers Ramin
Many thanks for the videos that are hugely informative and helpful. By way of background, I am a new to investing in the UK and trying to assess potential routes to start my investment journey. I can invest a reasonable sum every month and I am contemplating using robo-advisors and/or platforms such as Vanguard to begin with. My question is: from a diversification standpoint, does it merit spreading the monthly sum between say two robo-advisors (ideally in the same risk category in both platforms); or spreading between a robo-advisor and Vanguard? The reasoning from my perspective is not to put all eggs in one basket, but if the underlying exposure is broadly similar then perhaps cost on fees becomes important in which case investing in one platform only makes sense. Many thanks.
I am 39 and have nothing in the way of saving, I am starting very late but I want to try and secure something for my future as its looking quite bleak lol With the threat of state pension goal posts moving again to 75 .. I have around £100 a month I can invest and was thinking of a life strategy fund. I know your cannot give financial advice but do you think a middle to high risk would somewhat push me in the right direction to have something by the time I am 55 say 15 years time?
Hi Darren for a fifteen year period a middle-to-high (say LifeStrategy 60 or at a push LifeStrategy 80) would be okay if you're happy with that level of risk. The thing to avoid is selling when equities fall. So make sure you're strict with yourself and that the level of risk is in line with what loss you're willing to bear. For example if equities fall 50% for LifeStrategy 80 the equity component would drag down your LS fund by 40%, for LS 60 the fall would be 30% (assuming the bonds didn't rally, which they probably would). Thanks, Ramin.
IF you have already one of their Life Strategy Funds (such as the 80/20) it seems very very difficult to find your next Vanguard index fund to invest in? They seem to cover everything. Any tip which funds to look out for if you have already a highly diverse fund (such as the 80/20 Life strategy one)? Even if you do the correlation calculation you suggested its really tricky. Thanks for the amazing videos ..
Hi Cey, you're right but in a sense, that's the point of LifeStrategy. It's self-contained and you don't really need anything else in a portfolio. Some people take a "core-satellite" approach i.e. the core of the portfolio is a diversified set of funds like LifeStrategy, and they take a small punt with a few higher risk investments (the satellite). Thanks, Ramin
Hi Deo income funds pay your dividend as cash into your brokerage account whereas accumulation funds re-invest the dividend back into your fund. You gain either way. Usually people buy income funds before retirement because it's a pain to reinvest the little cash payments that start accumulating in your account, and it can be expensive if you have to pay trading costs. Thanks, Ramin.
Hi Ramin, I have invested in lifestrategy 60 over recent months. I had hoped to have a fair proportion of the equity element to be exposed to the US market but I have just noticed that it is largely UK based....I appreciate I can just buy an S&P tracker but that of course is 100% equity.....can you steer me to a balanced etf type fund with a US bias???
Hi, would a Lifestrategy 100 on a 15+ years timeline for someone who's 31 years old (and commits to strap himself to the seat and not jump out when the sh*t hits the fan) be a sensible approach? Or given my age should I instead go for 80-20 in stocks and bonds? Thanks!
I am not sure of what to invest if in the Life Strategy or Global balanced Fund!! I have read the diferences ,comparisons.. breakdowns . What would be the pros and con? they are a bit similar! differences in perhaps the concentration on what they focus ( industry).
Hi Gwendoline, I recommend having a look at my fundbuyer's checklist pensioncraft.com/fundbuyers-checklist/ Both are global multi-asset funds but Global Balanced is an active fund which means you pay about 3 times as much for it in fees (0.6% versus 0.22%). Also, LifeStrategy comes in different risk categories varying the percentage in equity (20%, 40%, 60%, 80% and 100%) whereas Global Balanced is 60% equity and 40% bonds. Call me if you have any other questions: ramin.as.me Thanks, Ramin.
Hi can anyone please answer this ? say you are investing in lifestragy 100% then after 13 years u want to go to 60% or split that money somewhere else , do u just sell all the 100% then reinvest it to 60% lifestragy , but would this break the isa 20,000 a year rule or will that only apply to new cash input , but you can move the cash around easily ? sorry if unclear thanks mat
Hi Mathew, the ISA £20,000 limit only applies to _new_ money that you put into your ISA. Once the money is in the ISA you can buy and sell to your heart's content. You can even transfer it onto a new ISA platform. This article may help pensioncraft.com/how-many-isas-can-i-have/ Thanks, Ramin.
That's great, thank you Mathew! If you support us on Patreon for $5 + VAT you can join our weekly live call and our Slack channel patreon.com/pensioncraft Thanks, Ramin.
Hi Ramin, I was thinking of investing on life stragety 100 .So, do you think investing in Vanguard stragety 100 would be a bad idea even if i am thinking of investing for 10 years or more? just because of fixed allocation?
new to your channel, just had a few questions im trying to save up long term if i open a Roth ISA can i access the funds anytime in the long run or would they be a penalty, 2. if i do open a account of anything not necessarily isa but would it be managed by vanguard or i would need to do the investing manually and would i be charged for them managing it rather then me self managing it if yes what % would they charge lastly can uk citizens open a roth isa with vanguard?
Hi Darkskysz storm are you a UK resident? Tax wrappers are usually only available to people who are resident in a particular country. For example UK citizen face restrictions on ISA contributions if they live abroad www.gov.uk/individual-savings-accounts/if-you-move-abroad The US has Roth Individual Retirement Accounts (IRA) but these would not be available for UK citizens. And UK ISAs would not be available for US citizens. In terms of management the tax wrapper and how the account is managed are totally separate. So you can get a managed account e.g. a robo adviser with an ISA wrapper so it's free of income and capital gains tax. Or you can get a Stocks & Shares ISA where you can manage the whole thing as I show in this video. For more information comparing ISAs and SIPPs take a look here: ua-cam.com/video/aYhGjewV_LA/v-deo.html Call me if you want a quick chat ramin.as.me Thanks, Ramin.
Great idea Phillip! To be honest I was quite shocked when I saw the article in Citywire talking about Evestor's comparison. Okay, this was obviously designed to paint Evestor in a good light, so hardly impartial, but still interesting: twitter.com/PensionCraft/status/971713245466767360 I'll add this to my todo list, Thanks, Ramin.
PensionCraft thanks. I’ve switched from HL to interactive investor and cannot see what the difference is apart paying far less and not having any fancy web graphics. On my calculations this switch is going to save me tens of thousands, but can’t quite believe it’s true. Very much Looking forward to your presentation.
Hi Phillip, I took a look at the fees page at Hargreaves Lansdown and they say their fee is 0.45% per year for shares (including ETFs) and they cap the Stocks & Shares ISA fee at £45 per year. Is that cap per share or overall? If it's overall then it seems quite competitive. The page where I found this information is here: www.hl.co.uk/investment-services/isa/savings-interest-rates-and-charges
PensionCraft interactive investor charge a flat rate while HL charge a %. So £250k invested with ii costs £220/year and in HL cost £969/year. www.google.co.uk/amp/s/www.telegraph.co.uk/investing/sipps/in-tables-the-cheapest-sipp-firms--whether-youre-investing-5000/amp/
Hi Shel DeMax, if you are willing to spend a _bit_ of time on your investments then a cheap platform (Vanguard is one of several) where you invest yourself is much cheaper than a robo adviser like Nutmeg. I'd strongly recommend a look at the second video in my introduction to investment playlist ua-cam.com/play/PLlqeAQqQK7TcG9QNlRJ_QjI8iX_q_I8jo.html called "Do It Yourself or Do It For Me?". Thanks, Ramin.
I’m 18 and been looking into creating an investment isa, best to start young. However would you recommend creating one with coronavirus hammering the economy?
@@ssc3360 Even if you can save a small amount the effect of compounding the annual returns over many years will be spectacular. I wish I had been as on the ball with investing at 18 as you guys seem to be!
If you're interested in learning more about investing then why not become a PensionCraft member? Pensioncraft.com members can enjoy lots of benefits, so to find out more about these and how to join our friendly community please click here www.pensioncraft.com/investor-education/membership/
I just wanted to say thank you for all of your hard work. I hope you know how much we (the viewers) value content like this. Your insight and knowledge is very valuable to people like me trying to learn economics.
My pleasure - I am happy to help and glad you find it helpful
This channel deserves more subs, the information presented here is so value.
Thank you M4Nu1337, let me know if there's any topic you would like me to cover.
Well the topic "How I would invest 10.000 " is very popular on youtube, personally I have opened an ISA and split 10k in livesaving fund 40%equity and the other half in one 100% equities fund. How would you invest 10k?
Great suggestion, that one is in the pipeline...
What happens if a broker platform loses rights to a fund? Say Vanguard/ Fidelity lose the right to FTSE 100 say. What then happens to an investors money? Thanks and great channel.
Well your money is being held with them, so they'd have an obligation to give to you I believe
Ben Graham insists (and I concur) that when stock prices fall they become LESS risky and so you should hold MORE stocks and less bonds. Therefore, I see the fixed allocation strategy as a positive.
In a down turn I would sell the vanguard 60/40 equity/bond fund and transfer it to a vanguard 100% equity fund, it doesn't matter of market timing as shares will increase in value over time. More than 30-40% drop you'll be doing fine. Your original 60/40 fund wont drop as much as the 100% fund so you'll be gaining there..
Really great video detailing all the risks and things to consider. I am 38 and have no pension whatsoever so I literally have no choice but to go for the maximum risk/maximum return equity funds in the hope that I might have enough to survive when I am too old work anymore!!
What's the risk though, the market isn't going to stop functioning
Your videos are very very helpful thank you for taking the time to make them!
Hi CryptoJack, thank you. If you want to support us and ensure we continue making helpful videos our Patreon page is patreon.com/pensioncraft
@@Pensioncraft if we invest in Accumulation funds (let say Lifestrategy 100) do we pay dividend tax? It seems like they are never reported on the platform when the funds are accumulation (if held into a GIA)
Thank you for taking time and resources to produce such a detailed video. Feeling a lot more confident about investing since I subscribed to your channel. Keep up the great work. 🙏 😊
Thank you Jack, that's made my day I'm delighted you find the videos useful. In fact I'm just editing the next one...
Fantastic channel. I think this fills the gap because there needed to be some straight talking advice on investing. There isn't enough of an education on platforms and funds around and many people are subject to funds marketing strategy.
I myself have invested in funds that charged way too much as a young investor (I started at 22 investing in costly equity funds, I am now 25).
Keep posting, this content is fantastic!
Adam
Thank you, Adam!
I recently heard a talk by Larry Bates, a Canadian bond trader who is trying to help people understand the long-term impact of fees. He showed the shocking effects of fee compounding and created a T-Rex score which calculates how much return you keep. In this blog I created a spreadsheet which shows just how much fees erode returns:
pensioncraft.com/why-fees-matter/
As you're now fee-aware at 25 you probably saved yourself a _lot_ of money. You just made my day.
Subscribed solely on the Doom reference - nice analogy and videos
Thank you, James.
I'm surprised you say fixed allocation isn't good. I thought the whole point of portfolio rebalancing is to sell high buy low.
Also the US market represents 54pc of the world market. You'd have to invest a lot to be too exposed
Agreed. This is recommended in Tim Hale's "smarter investing", and he explains very clearly why rebalancing is ideal. Would like to hear PensionCraft's reasons as to why he thinks otherwise.
Subscribed! Really great to discover a source of intelligent and well-informed investment analysis.
Thank you, Tahir! You can also support us on Patreon if you want to ask questions in our Live Q&A call and chat to us on Slack patreon.com/pensioncraft Thanks, Ramin.
I am about to invest in a life strategy fund 100%,
It will be the new tax year and i can put the full 20k in,
Am i right in thinking the 2 massive drops in the us stock market won't effect me as they dropped before i got the fund ?,
But any future drops will effect my fund.
HI
I liked the video and felt quite enthused about filling my annual ISA allocation with LifeStrategy 60% fund. However in your full blog version of the same subject you seemed very damming on the entire approach:
’Fixed asset allocation, as adopted by Vanguard LifeStrategy funds is simple. That's really the best that can be said about it.
In short fixed allocation is a dumb strategy. So dumb, in fact, that we'd consider it a risk.’
So, sorry but I’ve ended up really confused as to whether LifeStrategy funds are worthy of lump sum investment, drip feed, or should form a major part of my portfolio.
Thanks, Tony
Hi Tony, LifeStrategy _is_ simple and dumb. It is by no means perfect. However, for most people it does a very good job because the fees are very low and it is a very simple product. What many professional investors and money managers find surprising (and probably annoying) is that LifeStrategy outperforms many multi-asset macro hedge funds, pension funds and mutual funds over the long term. And given that LifeStrategy is dumb those active funds charging high fees for their expertise must be dumber. Thanks, Ramin.
Absolutely loved the doom reference.
Pretty perfect in terms of analogy, good one Ramin.
Actually if you chose lifestrategy 60% Equity for example, when the fund rebalances it still remains 60% Equity & 40% bonds. It is actually doing what you need, buying equities when they're cheaper and selling bonds whem they are rising or vice versa. Sell high buy low, I don't understand how the fund could b increasing risk if it's just maintaining the equity, bond split when rebalancing. If you for example did your own portfolio surely you would be doing exactly the same when you do your yearly re-balance for example
I was surprised when you said risk based out performs fixed. I thought the whole point of rebalancing is that it's good for long term returns?
rebalancing is for reducing risk as you approach your target date for moving out. For example, I am mostly holding LS100, but as I approach 2050 (my target retirement) I will switch to perhaps LS20 or LS40 instead.
Your voice is very soothing. Have you ever considered doing audio books recording?
Hi MyKkata thank you! In fact, someone just asked me to do a voice-over for their video. Thanks, Ramin.
Oh man... that bit at the end totally messed with my head. I thought fixed allocation strategies are good precisely because they buy when prices go down and sell when they go up - i.e. buy cheap and sell high! But here we're told that we should sell equities when prices are going down to reduce risk. After 15 years of doing this... I seem to know nothing!
I'm sorry, but I'm sticking with Benjamin Graham. During a crash/ bear market I am selling bonds and buying more shares - what you describe as fixed allocation - except I would vary the alocation in favour of equities. It worked very well after the Covid crash whilst everyone was running for the hills!
Thanks for the video, hopefully i'll be buying into this fund soon considering the current market.
Hi ! Given this times of CORONAVIRUS Crisis do you recommend investing in Vanguard blended funds 100% stocks and shares or buying stocks and shares directly on apps like etorro, freetrade, Robinhood providing the prices have plummeted for most stocks and shares ? Love your channel ! Thanks !
Great question!
Excellent Ramin. Love those two graphs at 7.50 and 10.15. They illustrate Risk/ Return and extended periods of downturns and upturns perfectly. I'm curious... what is your personal Asset Allocation? And your age if you are willing to reveal it?
Hi Murari, my portfolio is there for everyone to see in my video on how I invested my ISA ua-cam.com/video/mWhi157ljLw/v-deo.htmlm35s it's about 60% fixed income and 40% equity. I've avoided the US altogether. UK dividend yield and valuation looked attractive so my equity allocation is in the FTSE 250 tracker VMID and the Developed Europe ex-UK fund VERX. And I'm 50. But the cautious allocation is because of high valuations rather than simply my age as I say in that video.
Hi Murari thanks for that. I think I've owned some IUKD in the past. I avoid commodities because they offer no income and are therefore difficult to value, as you say. They also tend to be volatile. As rates rise gold and other wasting assets (=no income) look increasingly unattractive versus extremely safe assets that do have an income (e.g. US Treasuries earning about 3%). Also, commodities don't have the long-term upward drift of equities.
I’m going to be investing in a life strategy ISA in the next few days but I’m torn between the 100 and the 80. I’m 29 years old and don’t plan on touching it for the next 20 years. I will be depositing £200 a month and adding any bonus’s or extra money I have when I can. Which do you recommend. Great videos, really enjoy your Channel
Hi aaronhyland800 I don't provide recommendations, as you've probably seen in my videos. The considerations are your risk appetite (are you comfortable taking a loss when equity markets fall or would you do something crazy like sell your fund when its value falls?) risk capacity (would a fall in the market affect your quality of life, are you living hand-to-mouth?) and your investment horizon. It sounds like you're doing the right things: saving regularly and early in life, keeping your fees low, diversifying globally, thinking long-term rather than short-term. Whether it's 80% or 100% the long-term outcome will be good if the future resembles the past. Well done! Ramin.
Excellent video and analysis, as always. With bonds high and yields low, risk based allocation may prove less effective, and riding the waves with fixed allocations more be effective in the long terms?
Hey Ramin, thanks for yet another amazing video. Over the long term (10+ years) would Vanguard's LifeStrategy funds be in your top choices? Which LifeStrategy fund would it be - 100, 800 or 600? Or you recommend something else? Love your videos, keep up the good work. Dragosh
Thank you for your content! Really appreciate all the works you've put in to come up with informative video like this!
My pleasure - I am glad you found it helpful Alan
Awesome video .... again.... sorry if this is a silly question but are you saying that the maximum volatility in the 100% fund is 12.7 % , as In you couldn’t lose more than that in an investment in this portfolio ? Seems very good considering it’s quite an aggressive fund.
Hi Ken, volatility is simply the typical percentage price move. The losses and gains often exceed the volatility. Two standard deviation moves are less likely and three standard deviations less likely again. Thanks, Ramin.
Ramin, thank you ever so much for such wonderful content!
Really liked the clarity with which you explained the lifestrategy funds. You may wish to add further the Target Retirement funds which change the allocation every year as you approach your chosen retirement date.
Hi Hiro, I've done a blog and video on Target Retirement funds: pensioncraft.com/review-vanguard-target-retirement-funds/ Thanks, Ramin.
I wish we could have a life strategy fund 100 in the states. The most equities we have is 80%. I wonder why Vanguard doesn't offer it.
Haven’t even finished the video yet but already the best risk description ever - never did complete nightmare mode on Doom 😂
Glad you enjoyed it @SAM ROBERTS
Hi Ramin
Re Vanguard Life strategy funds - would you recommend income or accumulation funds
Thanks
Hi Ngawang, if you are investing for the long term then it's usually easier to get an accumulation fund. If you are retired and want to get a cash income from your investments you might prefer an income fund. The accumulation fund can reinvest the dividends more cheaply than you can. Also with an income fund you end up with small amounts of cash in your portfolio which you then have to reinvest which is a chore. Thanks, Ramin.
Consistently informative and to the point. Thank you
Glad it was helpful matthew mcdougal :)
Hi Ramin,
I’m just about to get into stocks and share and I’m considering doing the life strategy 80% over the course of 5-10 years.
My question is do vanguard buy and sell your shares for you? Or do you have to sell and buy yourself?
Great content by the way ☺️
Hi Andreas, if you buy a LifeStrategy fund the fund manager (Vanguard) buys and sells funds and keeps the weights at their fixed levels by rebalancing. From your point of view you simply buy the fund and that's it until you decide to sell the fund. Thanks, Ramin.
@@Pensioncraft Hi, so the percentage allocated between stocks/bonds will not change as I get older correct? For instance, if I invest in the LifeStrategy Growth Fund at age 30, the 80/20 stocks to bonds at age 30 will still be 80/20 when I'm 45 years old, right?
Hi @@r3lvly that's right, the bond/equity allocation is fixed forever. Thanks, Ramin.
Superb video - clear and informative. Thanks!
Glad you enjoyed it!
Extremely useful content, your explanation is very clear and descriptive - thank you! Subscribed ✔️
Thanks and welcome.
Thank you for your videos, it isn't easy to find videos in here about investing in uk and the ones from usa mostly talk about products we do not have access to.
I am just wondering how changes in £ value could affect income from LIfeStrategy funds and other Vanguard funds, I am thinking about investing in S&P 500 index or ETF or LifeStrategy...could you help a bit?
Hi Paulina abc,
That's a great question. I'll try and answer it here but if you want more detail you can call me. To see whether you're exposing yourself to currency fluctuations see if the title of the ETF has the word "currency hedged" in it. If it does the fund and, indirectly, you will be paying to remove currency movements. I can't see the word hedged for any of the 60% LifeStrategy portfolio (but some of the bond funds in their Target Retirement portfolios are currency hedged).
www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-60-equity-fund-income-shares/portfolio-data
Each LifeStrategy fund splits its investments across regions (US, UK, Japan...) and asset classes (shares, bonds...). As I say in the video there is a very heavy allocation to the US in both equity and bonds simply because the US share and bond markets are the biggest in the World so there's just more stuff there to buy. That means you also get a big dollar exposure: if the dollar strengthens vs sterling your investment will benefit and if the dollar weakens vs sterling your investment will lose value.
The price of shares moves around a lot (20% per year is the typical annual percentage move). Bonds move around much less (depends but usually 5% per year, say). Currencies move around 10% per year. Bear with me...
This means that it's only worth paying the insurance policy to remove currency fluctuations for bonds. The reason is that bond price movements would be drowned out by currency movements because currencies move more than bonds but less than shares. So you won't usually see the shares currency "hedged" but often you do see bond funds currency hedged. If you google "currency hedged ETF GBP" you'll see it's predominantly bond ETFs you get. But just stick S&P 500 in the search and you'll see you can get currency hedged equity funds. However, remember you will be paying a fee for that currency hedge i.e. the fee for a currency-hedged S&P 500 ETF will be greater than a non-currency-hedged S&P 500 ETF.
I played so much Doom but I find investing a lot less stressful!
This is useful analysis. If you split your money 50:50 across the 80% and 60% funds you can create a 70% equities portfolio which would be my preference. If you go too heavily into equities you loose the benefit of rebalancing and so the returns can be lower.
I also spotted the US weighting so it might be worth going for 90% in the 60% Life Strategy and side investing around 10% in an Asian and EM equity fund. It's also worth mentioning these funds do not hedge against the current sterling weakness.
My Nutmeg risk 3/5 risk fixed portfolio (there are 10 managed and 5 lower fee fixed risk portfolios) is a 60% equities allocation and is so stable it barely moves each day and although that protects against loss I am investing to make gains...
Also worth covering the Vanguard Target Retirement funds which can be used for any target lump sum withdrawal e.g saving for university. It's a tiny bit more expensive +0.02% but true fire and forget.
Keep up the good work, Alex
Hey Alex - nice to know somebody got the Doom analogy!
I guess you can construct any percentage equity you like as you say Alex. Is it worth the extra complexity to adjust the equity percentage to such a fine degree?
Speaking to Shaun from Nutmeg and Adam from Scalable they say that they want to avoid people fiddling with risk - dialling it up during rallies (now) and down in falling markets (later) because this is a behavioural investment no-no. We tend to time things badly and this hurts long-term return.
Vanguard Retirement funds are on my list!
I do the opposite and try an increase my equities exposure when they are cheap - moving the dial to 80pc! But my goals are so long term I am ok to ride the storms.
Hi Ramin, Just signed up to your weekly newsletter. Really interesting. I am currently all in on Vanguard's 80% strategy fund. Given the current climate, would it make sense to transfer that down to 60% or even 40%. After such a bull run these past 10 years , plus covid/brexit etc, should we expect a correction? I am 36 btw, just in case my age will alter your opinion. Your thoughts would be much appreciated?
Hi @Karim J it's almost impossible to try and time these things so for most people it's best not to try. Just stick with it for as long as you can. The only reason to cut your equity allocation would be if your risk capacity (ability to take a temporary loss without suffering an impact on your quality of life) or risk appetite (willingness to live with risk) change. For example if your investment horizon shortens due to a critical illness, or a large expense is looming that might change your risk capacity. The more equity volatility you can tolerate the better your long-term outcome but you have to be prepared for large corrections and not sell when that happens. Thanks, Ramin.
Hi Ramin. Great channel! Although i don't understand all of the content i am still learning. I have just started to invest in a Vanguard LS80 as a result of the paltry interest offered on my Cash ISA. Should i invest all of my £20000 allowance all at once or drip feed it in throughout the rest of the year? Looking to leave it for at 10 years. The unit cost seems high at the moment, hence the question. Looking forward to your reply. Many thanks.
it is critical to buy during serious slumps
Hi David, you're right, it's difficult but over the long term it's best to buy why equities are cheap. I guess if you're drip-feeding money into your savings you are always buying. The key thing is not to sell during a market crash. Thanks, Ramin.
Hi Ramin, what you do you think of the vanguard US corporate bond fund, VUCP, now that the fed as decreased the interest rate? Potential good buy?
Hi x x I think the credit spread for US investment-grade credit is tiny at the moment and if we ar late-cycle that might be cause for concern. But I do like the higher yield for US government bonds and IG credit. VUCP isn't currency-hedged so if you think sterling is going to rally (maybe because of a trade deal) that could be a problem. But the effect of the Fed easing is already priced in so I wouldn't buy on that basis. Thanks, Ramin.
What do you think of the more balanced Global All Caps Fund compared with Lifestrategy? I'm 30-years old, so how would I balance it with bonds over time? Would I just gradually start to buy more assets/bonds over the years, and then increase my bonds percentage whilst decreasing my stock percentage as I get into my mid-40s-50s? Not looking for financial advice, just thoughts 😊
Hi Peter if you buy Global All Caps that's pure equity so if you want some bonds in your portfolio you'd have to buy one or more bond funds to go with it. I've done a video on how to build a two fund portfolio that you might find useful pensioncraft.com/how-to-build-two-stock-portfolio/ Thanks, Ramin.
I hold both global balanced (though it recently changed to SustainableLife 60-70) as well as LS100, and LS100 has been the better performer so far in my experience. Not sure how much this helps. I plan to reduce to LS40 or LS20 as I approach my retirement target age.
Absolutely loving the Doom analogy….. thanks as always.
Glad to hear it!
I am not liking the fact that he described LS100 (my biggest holding) as 'Nightmare mode' though xD
Brilliant channel and content Ramin! This one has me thinking now though, because of what you say regarding the fixed allocation strategy being a dumb strategy (on your blog). I am currently mostly in an 80% LS, and I do feel like the US market is high risk at the moment as you mention. Does Vanguard UK offer anything that follows a more risk based approach? I previously had it in my head that the fixed allocation was good because it would buy more equity when prices are falling (buy when others are fearful right?), and when our psychology might stop us from doing so!
Hi Ben they offer a minimum volatility gobal equity fund VMVL which I used as part of my 2019 allocation and which I discuss i that video. I also discuss it in my review of factor funds. Thanks, Ramin.
Hi Ramin. Your content is simply amazing for someone who, like myself, is just starting with investing. Life Strategy funds look very diversified. They are actually so diversified then it is hard for me to think of what else I could add to my portfolio in order to achieve even larger diversification. Does it make sense to add to portfolio another fund(s) as various online sources suggest? If yes then what could it be for example? Many thanks in advance. John.
Hi John, you can have other funds but they just tilt your exposure. For example if you wanted more emerging markets exposure you could also hold an EM equity fund, or if you wanted more safety you could buy a government bond fund (UK gilts or US Treasuries hedged into your local currency). In fact, we recently discussed exactly that question on our Sunday evening call for Patreon supporters patreon.com/pensioncraft Thanks, Ramin.
I have a question, I am 20 years old and was wondering, is it better to invest in a high risk fund, or a low risk fund over a long term?
Hi Ramin. I’d be interested to know if you invest in a LifeStrategy fund yourself and if so which one.
I really like the video and would like to sign up for one of your courses please. Since Covid, the markets have been remarkably resilient. However, for how long... things could change and if interests rates rise this places existing Bonds at risk. Not easy for investers! Vanguard are excellent because they have so many funds, but you are right to point out there exposure to US markets. The US market is about 60% globally, this explains why, so I am not too concerned.
I am glad you enjoyed the video @MadderPrinciple. If you would like to sign up to a course you can find them here - pensioncraft.com/courses-we-offer/
@@Pensioncraft Many thanks, I will be signing up. I have learnt so much over the past 6 months, wished I had this knowledge when I was at school and started work, but never too late to learn!
I have a simple view time is kind to the stock market This is my thinking Life Stragy 100 Lets say i invest 100k and i take 5% withdrawal each year the fund will grow each year around 8% Just buy and forget me clicking every month to see what its worth is pointless I just take the money every year and enjoy it I think i am right in saying only 1 in 10 fund managers beat the market Low priced tracker in an ISA is the way no where is my next cruise where shall i eat out Life is too short to worry Thats my take enjoy your life
Great video. My question is how do Risk Based Allocation Funds out perform Fixed Allocation Funds? You say FA funds will buy more shares in an economic downturn, while the shares are cheap, meaning that when the market recovers, you will be in a better place. Meanwhile in a RBA fund, less shares will be bought while they are cheap. Surely buying a higher proportion of shares is better while they are cheap? I don’t understand how a RBA Fund would out perform a FA fund long term. I would really appreciate your response, thanks.
I'm new to investing, and was considering the 80%. However, now I'm thinking perhaps splitting my monthly (annoyingly small) investment over 2 funds, the 60% or even 40% (for more caution) and an active, like the Lindsell Train, Bailiie Gifford Managed, etc. Not sure what to do! :)
Hi markonlife, it's not easy to choose. Personally, I start with risk and then work back to the funds I like (using my Scooby Doo correlation tree) pensioncraft.com/how-i-invested-20k/ In terms of funds, I go for very low fee passive funds or low fee factor funds which are active but rely on peer-reviewed research to find shares that beat the overall market and don't depend on the choices of a fund manager. I review some factor funds and explain how they work here ua-cam.com/video/U0wnrUIgwVM/v-deo.html Thanks, Ramin.
LS100 if you have like 15+ years as a target
Because they invest heavily in US stocks UK based investors are subject to currency variations which is why my Lifestrategy fund dropped about 1% yesterday while NYSE was broadly flat.
I have around £5,000.00 invested in the Vanguard 60% life strategy fund. I want to move over to the 80% life strategy fund. Am I best selling the 60% and investing it in the 80%, or leave the £5,000.00 where it is, and investing in the 80% life strategy from fresh?
Maybe a daft question but the LifeStrategy funds have an Ongoing charge (OCF) of 0.22%. But as they are effectively a fund of funds are you not paying in reality a much higher fee as are you not paying indirectly a fee on each of the LifeStrategy held funds.
For example, you pay the 0.22% for the LifeStrategy 60% Equity Fund, this is made up of amongst others the Global Bond Index Fund - Hedged Accumulation which charges an OCF of 0.15% if you were to buy this fund directly outside of the LSF60%.
This fund makes up 19.4% of the LSF60%, so if you had £10,000 invested in the LSF60% you would pay the 0.22% OCF = £22. Of the £10,000 invested in the LSF60% you have £1,940 in the Global Bond Index Fund so would your returns of this part of your investment be reduced by £2.91 = 0.15% OCF of the £1,940. It may not show up as being a charge but is it 'hidden' within the returns. So it appears you are only paying the LSF 0.22% OCF but inreality you are also paying a fee on all of the constituents as well.
Or is it that you get to invest in all of these funds that make up the LSF's without 'paying' each funds OCF. To avoid effectively being double charged OCF's?
I have been unable to find any answers on this, hopefully I have explained what I mean well enough and would really appreciate any answers.
I know this is a late tell reply, but this is the reason I don't use the life strategies and buy the funds I think make it nice and diversified myself at lower fees, then drip feed smaller amounts in monthly.
Perhaps one reason to use lifestrategy is the £500 minimum on all the funds.
I think the main reason is that you are paying for a value added service a bit like buying sliced carrots in a supermarket at a higher price for the convenience (you could call it being lazy).
Hi enjoyed your video, just to clear up things, I am thinking about moving from Halifax investment isa to Vanguard. They state a minimum per fund monthly investment of £100, I currently have four funds with Halifax so to replicate with Vanguard it would cost £400.
Hi Ken, the only minimum investment for the Vanguard ISA is the price of each fund i.e. you can't buy half a share. If VUSA is trading at a price of £40 then you have to invest at least £40 to buy it but you're not obliged to buy more per month of that fund or any other fund.
The other minimum is the amount you put in your ISA. Their site says "For single investments, you can start at £500. If you'd rather invest in monthly instalments, these start at £100 per month." www.vanguardinvestor.co.uk/need-help/answer/whats-the-minimum-investment-amount
Someone asked me whether they would still have to put £100 per month into their ISA if they lost their job. Vanguard support replied: "To open an account you can either do this by a lump sum payment from £500 or set up a direct debit starting from £100. If you chose to open the account by the direct debit option, once the initial payment of £100 has been made you are able to amend or cancel the direct debit if need be due to circumstances changing." What they're trying to avoid is thousands of accounts with a few hundred pounds in them because this would lose them money. The more you hold in your account the more they make (0.15% of the invested amount per year up to a maximum of £375).
Thanks, Ramin.
Hi Ramin
can a trust invest in the Vanguard Stratedy fund? regards Karl
hi, thanks for pointing out that S&P yeild is much more higher than LS 100%. whats the best fund for S&P ? there are so many options such as VUSA, IUSA, SPXP, CSP1, HSPX
I am looking to transfer cash isa to Vanguard. Once i have completed the transfer can i hold the money in vanguard cash isa account and drip feed into life strategy fund as an when rather than doing a lum sum or the monthly feed? Also, holding cash in the vanguard isa account do they charge annnual fee like the funds? Thanks
Once you have transferred the cash into your Vanguard ISA account you can buy funds whenever you want. You will be charged the platform fee (which I believe is 0.15%) for holding cash. Even on a 20K annual maximum ISA deposit that only amounts to £30 per year.
Hello, I have just discovered your channel (great content!).and was considering the Vanguard LS Funds, I'm in my fifties and have another 10-12 years to retirement, what are your thoughts on the Bonds within the LS range? As Bonds are not really delivering much it seems atm which is a concern. With this in mind, do you think I would be better off with the VRWL + All Cap instead? What are your thoughts on going for a high yield dividend portfolio vs the V LS range? Thanks in advance, Jamie (UK).
Hi Jamie Y the bonds are there to provide capital protection in case of an equity market selloff and a small safe source of income. The time you'll be glad of them isn't during an equity market rally such as the one we're seeing currently. You'll be glad of them during an equity market correction. See my two fund portfolio video pensioncraft.com/how-to-build-two-stock-portfolio/ which shows how to do what you're suggesting. The bond funds in LifeStrategy are very boring, just as they are designed to be. Thanks, Ramin.
@@Pensioncraft Thanks for your response Ramin, yes the LS range are simple set and forget type funds (steady as she goes). I will take a look at your other suggested videos. I still have a number of years to go so I am considering the LS 60/40 (Risk 4) option which looks to be medium risk. All the best, Jamie (new sub!}.
I have both 20% and 40% Lifestartegy funds in my portfolio. I don't undestand why the (sholud be) less risky one is loosing more than the other one...... It should just be the opposite
Awesome Doom analogy 😁
Thanks Olu! I'm glad someone else recognized the reference!
Not sure if you'll respond or if I'll even be notified if you do, but when you show the graph of S&P 500, even though there are dips because of recessions and the 2008 crash for example, is it not a safe bet to still invest despite this? If I'm not going to touch my money for 20+ years, looking at previous data, the graph does seem to just be trending upwards so eventually you'd expect a higher return?
I find your videos very informative but have always wondered due to the fluctuation of stock/fund prices how dividends are actually calculated? and how often would any gains be reinvested into a fund like this. Thanks, subbed.
Accumulation funds immediately put any dividend yield towards buying more shares of the fund.
Dividends, when applicable, are paid per share. The share price is irrelevant. The company decides how much dividend to pay, if any. Many things impact the decision including earnings, reinvestment strategy, cash flow, overall strategy, etc. Not all companies pay dividends at a given time.
Any idea why the S&P500 is struggling to go above 3000?
Hi xx I'd ignore the level of stock prices. What really matters is how well stock prices keep track with earnings. If earnings aren't rising enough to warrant a rise in share prices then it would take a surge of "animal spirits" to push equities up further. The state of the global economy is one of weakening growth and the Trade War's not helping sentiment either. To see what I mean about earnings take a look at this earnings report from Factset for July 3rd 2019:
"For Q2 2019, the estimated earnings decline for the S&P 500 is -2.6%. If -2.6% is the actual decline for
the quarter, it will mark the first time the index has reported two straight quarters of year-over-year declines in earnings since
Q1 2016 and Q2 2016".
This is the kind of thing which I discuss each week in my Weekly Roundup (sign up for free here pensioncraft.com/newsletter/ ). Thanks, Ramin.
lol
So would you say 60% equity is better than the 80% equity as its slightly more diverse and a bit safer? been looking into this but not alot to invest right now but looking to grow my pot over long term
Then would it better to have a life stragery. Then to make seperate investments into indexs out side the usa, to reduce the risk?
Hi Charlie,
I can't advise you Charlie but I would say the following depending on your views:
- If you don't mind a high US allocation then you wouldn't need to do anything outside the LifeStrategy fund
- If you have both a LifeStrategy fund and other regional equity index funds to even out the heavy US exposure make sure you calculate the correlation of those funds to LifeStrategy otherwise you could be doubling up your risk.
- If you want to construct your own LifeStrategy fund from single funds, but with a lower US weight, be ready to rebalance the portfolio regularly as the weights get out of line with the LifeStrategy weights. One of the benefits of the LifeStrategy fund is that it does all the rebalancing for you. Rebalancing isn't difficult, it's just a chore and it will cost you more than it costs Vanguard.
If you want a hand with the correlation calculation between the LifeStrategy and other funds give me a call. My contact details are on the pensioncraft.com website. I won't charge you.
Ramin
Your videos are great and they go really in-depth, compared to other ones out there. Since I've never invested before, I would like you to confirm something about investing, if you can. For example. if I make an initial investment of $2,000 and then invest a further $200 every month for two years, I will have invested $6,800 in total. If during the 3rd year, there's a financial crisis that doesn't start to recover until year 4, does that mean that I lose my money during that crisis or does it mean that the value of my money has decreased, but it has the potential to rise again with the recovering market? What I'm trying to ask is, will I still have the money invested and have less value or will I completely lose it and then have to reinvest?
Thank you very much for taking the time to read my question! Looking forward to your reply!
Hi Marius, thank you, I'm glad you find the videos useful. To answer your question the value of your money has decreased but has the potential to rise again as the market recovers (as it _always_ has in the past). The way to lose money is to sell when markets have fallen sharply. If you buy single stocks and the company goes bankrupt you could lose all your money. However, if you buy a whole market through an index tracker (e.g. S&P 500 tracker, FTSE 250 tracker etc.) they don't go bust so they will always recover eventually, but it might take patience. Thanks, Ramin.
Thank you so much for confirming all that!
Hi Ramin, new to the channel and just Subbed. Question if I may.
Due to inflated US equity, I am hesitant to jump into the VLS100 until after the market had corrected itself. But I don't want to waste my ISA allowance. Can I use this years allowance too buy say a the VLS20, wait for the correction and then move across to 100 equity as soon as that happens? Would there be any costs later to make that move? Am I missing anything? Your wisdom is much appreciated.
Selling shares when the price is low and buying bonds when the price is high would just be silly.
Hi David, personally I remain invested if there's a selloff, because I know that eventually markets will recover and I can't time markets short-term, as I think you're suggesting? I guess the question is low relative to what price? If you're 10% into a 50% bear market then it wouldn't be so silly. If the selloff reverses then it would be silly. Unfortunately, we never know which scenario we're in unless we have the benefit of hindsight. Thanks, Ramin.
Really good video! Do you have any tools that will give an illustration of what returns (and fees) you get if you invest a certain amount initially, then a certain amount each month over the course of a few years? i.e. if I opened an account in 2015 with £5k, then invest £500, then emptied my account - what would I have? What's the total fees/tax would I be ellibile to pay etc., and how much would I have? Been trying to put together a spreadsheet on this, but getting the right information is vague (or American :))
Hi readikus, this is fairly easy with a spreadsheet with the invested amount in column A, and one row per quarter. Vanguard charges me for May-August, August-November, November-Feb and Feb-May. Then in column B multiply the amount in the account at the end of the period by the platform fee (0.15%) and divide by 4 (because it's quarterly). If the amount is more than £93.75 then cap it at that amount (due to the £375 annual fee cap). Thanks, Ramin.
Would i get any capital gains as well as dividends on the shares i invest in a dividend index fund? and would that increase my yield?
Another great video. I invested in the LS 60 and 100; and sold half my holdings in LS100; gaining around 15%(over a year- I am happy with this). I have noticed that the LS60 goes up and down by roughly half as much as the LS100; which goes along with the reduced volatility. I would like to de-risk out of the LS100 into maybe the LS40; however I am worried that the returns from bonds are fairly minimal and the fund will still have risk from its equity exposure especially if there is a large correction. What returns could the bond/fixed income portion of the portfolio give? Maybe 1-5%?
Hi AP, as part of my "Almost Everything You Need To Know About Finance from Robert Shiller’s Data" course pensioncraft.com/register/know-finance-from-shiller-data/ I construct a total return index for US Treasuries and equities. Over the last 65 years the real (inflation subtracted) return for equities was 4.3% and for US ten year Treasuries was 2.3%. Just add about 2% for nominal (not inflation adjusted) return. That puts the recent very strong equity rally into perspective. Another useful source of information is Vanguard's ten-year outlook www.vanguard.co.uk/adviser/adv/articles/research-commentary/markets-economy/vanguard-economic-outlook-2018-and-beyond.jsp?lang=en take a look at the bottom of pages 24 and 25 (and pay attention to the large error bars!). Call me if you want to discuss, happy to chat ramin.as.me. Thanks, Ramin.
Good video. So, if you use a robo advisor they would change the allocation of the funds if they see the markets the funds are invested is going down? Even if you choose a riskier strategy? I thought, since Life Strategy funds are diversified that would minimise the risk... But now I'm not sure. If there's a crisis and my money is going to worth less than what it used to for 5 years and then I need to use it I'm screwed.
I started with index funds about 3 months ago with Moneybox, but recently realised the fees are high compared to other services. So I opened an investment account with Vanguard to try it out. Would you recommend Nutmeg (using a risky strategy) instead? Thanks.
Hi Ramin. At the time your content is possibly the best on YT for UK based retail investor, so thank you very much for sharing with us. I've started to look into different investment alternatives (such as funds) because interest rates from traditional bank savings are so low these days that I thought the worst I can do now is sit idle on my spare cash. After some research, I was thinking about opening stock and shares ISA with Vanguard , where I would invest whole ISA allowance for 2018/2019 into Vanguard LS60 fund. The plan would be to not touch this investment for the next 20 years (I am 38 by the way). Do you think this would be rational approach? Could I do anything better to improve my plan? For example consider LS80 instead LS60 since my plan is to not access the money for next 20 years, so higher risk fund should do well over such period of time? Is having just one fund like LS60/LS80 would provide enough divesification? In case it would not, what would be the way to intorduce even more diversification into my plan? Many thanks, Piotr.
Hi Piotr I don't give financial advice, just financial education so that you are in a position to make up your own mind what to buy and sell. However to answer your question about LifeStrategy diversification it is already diversified across asset types and across regions, so you don't need to diversify it any more. Thanks, Ramin.
I'm wondering if Vanguard has any passive fund (and do you have any guide on that)? I went searching on their website but couldn't find any. Thanks for the extremely helpful content.
Hi BearTheMusic, Most Vanguard funds are passive as they simple track an index. I have a free booklet that you can sign up for that goes through 18 of them which you can access here....pensioncraft.com/how-i-invested-20k/ Cheers Ramin
Many thanks for the videos that are hugely informative and helpful. By way of background, I am a new to investing in the UK and trying to assess potential routes to start my investment journey. I can invest a reasonable sum every month and I am contemplating using robo-advisors and/or platforms such as Vanguard to begin with.
My question is: from a diversification standpoint, does it merit spreading the monthly sum between say two robo-advisors (ideally in the same risk category in both platforms); or spreading between a robo-advisor and Vanguard?
The reasoning from my perspective is not to put all eggs in one basket, but if the underlying exposure is broadly similar then perhaps cost on fees becomes important in which case investing in one platform only makes sense.
Many thanks.
Very interesting video, keep up the good work, subbed!
Thanks Graham.
I am 39 and have nothing in the way of saving, I am starting very late but I want to try and secure something for my future as its looking quite bleak lol
With the threat of state pension goal posts moving again to 75 .. I have around £100 a month I can invest and was thinking of a life strategy fund. I know your cannot give financial advice but do you think a middle to high risk would somewhat push me in the right direction to have something by the time I am 55 say 15 years time?
Hi Darren for a fifteen year period a middle-to-high (say LifeStrategy 60 or at a push LifeStrategy 80) would be okay if you're happy with that level of risk. The thing to avoid is selling when equities fall. So make sure you're strict with yourself and that the level of risk is in line with what loss you're willing to bear. For example if equities fall 50% for LifeStrategy 80 the equity component would drag down your LS fund by 40%, for LS 60 the fall would be 30% (assuming the bonds didn't rally, which they probably would). Thanks, Ramin.
These videos are fantastic! Thanks again.
Hi Ken Addoh, Thanks for watching and leaving a comment. Ramin
IF you have already one of their Life Strategy Funds (such as the 80/20) it seems very very difficult to find your next Vanguard index fund to invest in? They seem to cover everything. Any tip which funds to look out for if you have already a highly diverse fund (such as the 80/20 Life strategy one)? Even if you do the correlation calculation you suggested its really tricky. Thanks for the amazing videos ..
Hi Cey, you're right but in a sense, that's the point of LifeStrategy. It's self-contained and you don't really need anything else in a portfolio. Some people take a "core-satellite" approach i.e. the core of the portfolio is a diversified set of funds like LifeStrategy, and they take a small punt with a few higher risk investments (the satellite). Thanks, Ramin
What's the difference between accumulation and income?
Hi Deo income funds pay your dividend as cash into your brokerage account whereas accumulation funds re-invest the dividend back into your fund. You gain either way. Usually people buy income funds before retirement because it's a pain to reinvest the little cash payments that start accumulating in your account, and it can be expensive if you have to pay trading costs. Thanks, Ramin.
Hi Ramin, I have invested in lifestrategy 60 over recent months. I had hoped to have a fair proportion of the equity element to be exposed to the US market but I have just noticed that it is largely UK based....I appreciate I can just buy an S&P tracker but that of course is 100% equity.....can you steer me to a balanced etf type fund with a US bias???
Hello I’m thinking of investing at the moment in high risk for 20 years should I wait ??
Great analysis, very knowledgeable, will recommend.
Thanks Sharlos! I really appreciate your support. Ramin
Hi, would a Lifestrategy 100 on a 15+ years timeline for someone who's 31 years old (and commits to strap himself to the seat and not jump out when the sh*t hits the fan) be a sensible approach? Or given my age should I instead go for 80-20 in stocks and bonds? Thanks!
I am not sure of what to invest if in the Life Strategy or Global balanced Fund!! I have read the diferences ,comparisons.. breakdowns . What would be the pros and con? they are a bit similar! differences in perhaps the concentration on what they focus ( industry).
Hi Gwendoline, I recommend having a look at my fundbuyer's checklist pensioncraft.com/fundbuyers-checklist/ Both are global multi-asset funds but Global Balanced is an active fund which means you pay about 3 times as much for it in fees (0.6% versus 0.22%). Also, LifeStrategy comes in different risk categories varying the percentage in equity (20%, 40%, 60%, 80% and 100%) whereas Global Balanced is 60% equity and 40% bonds. Call me if you have any other questions: ramin.as.me Thanks, Ramin.
Hi can anyone please answer this ?
say you are investing in lifestragy 100% then after 13 years u want to go to 60% or split that money somewhere else , do u just sell all the 100% then reinvest it to 60% lifestragy , but would this break the isa 20,000 a year rule or will that only apply to new cash input , but you can move the cash around easily ? sorry if unclear
thanks mat
Hi Mathew, the ISA £20,000 limit only applies to _new_ money that you put into your ISA. Once the money is in the ISA you can buy and sell to your heart's content. You can even transfer it onto a new ISA platform. This article may help pensioncraft.com/how-many-isas-can-i-have/ Thanks, Ramin.
@@Pensioncraft thanks for answering. I'm subscribed now. Love your content especially the interview with vanguard UK.
That's great, thank you Mathew! If you support us on Patreon for $5 + VAT you can join our weekly live call and our Slack channel patreon.com/pensioncraft Thanks, Ramin.
Hi Ramin,
I was thinking of investing on life stragety 100 .So, do you think investing in Vanguard stragety 100 would be a bad idea even if i am thinking of investing for 10 years or more? just because of fixed allocation?
the bulk of my Vanguard money is in LS100 and it's honestly a good performer. Definitely good for 10+ years investing. My target is to retire in 2050.
Subscribed even though I don't have a penny to invest.
Hi Vanguard For life, Thank you for your support! Ramin
Thank you for this , excellent
Hi Laszlo, I'm glad it was useful for you. Thanks, Ramin.
thanks for the info, great job.
Hi Tom,
I'm glad you found it useful, let me know if there's anything else you want me to cover.
Ramin.
Very interesting video,thanks
Glad you enjoyed it @Veronica Jackson
new to your channel, just had a few questions im trying to save up long term if i open a Roth ISA can i access the funds anytime in the long run or would they be a penalty, 2. if i do open a account of anything not necessarily isa but would it be managed by vanguard or i would need to do the investing manually and would i be charged for them managing it rather then me self managing it if yes what % would they charge lastly can uk citizens open a roth isa with vanguard?
Hi Darkskysz storm are you a UK resident? Tax wrappers are usually only available to people who are resident in a particular country. For example UK citizen face restrictions on ISA contributions if they live abroad www.gov.uk/individual-savings-accounts/if-you-move-abroad The US has Roth Individual Retirement Accounts (IRA) but these would not be available for UK citizens. And UK ISAs would not be available for US citizens. In terms of management the tax wrapper and how the account is managed are totally separate. So you can get a managed account e.g. a robo adviser with an ISA wrapper so it's free of income and capital gains tax. Or you can get a Stocks & Shares ISA where you can manage the whole thing as I show in this video. For more information comparing ISAs and SIPPs take a look here: ua-cam.com/video/aYhGjewV_LA/v-deo.html Call me if you want a quick chat ramin.as.me Thanks, Ramin.
Have you considered doing a video on comparing platforms? In my opinion too many people are wasting money on high charges like in HL
Great idea Phillip! To be honest I was quite shocked when I saw the article in Citywire talking about Evestor's comparison. Okay, this was obviously designed to paint Evestor in a good light, so hardly impartial, but still interesting:
twitter.com/PensionCraft/status/971713245466767360
I'll add this to my todo list,
Thanks,
Ramin.
PensionCraft thanks. I’ve switched from HL to interactive investor and cannot see what the difference is apart paying far less and not having any fancy web graphics. On my calculations this switch is going to save me tens of thousands, but can’t quite believe it’s true. Very much Looking forward to your presentation.
Hi Phillip, I took a look at the fees page at Hargreaves Lansdown and they say their fee is 0.45% per year for shares (including ETFs) and they cap the Stocks & Shares ISA fee at £45 per year. Is that cap per share or overall? If it's overall then it seems quite competitive. The page where I found this information is here: www.hl.co.uk/investment-services/isa/savings-interest-rates-and-charges
PensionCraft interactive investor charge a flat rate while HL charge a %. So £250k invested with ii costs £220/year and in HL cost £969/year. www.google.co.uk/amp/s/www.telegraph.co.uk/investing/sipps/in-tables-the-cheapest-sipp-firms--whether-youre-investing-5000/amp/
I forgot to mention that I was referring to a sipp rather than an isa
Hi I was wondering what your take is on nutmeg versus vanguard overall
Hi Shel DeMax, if you are willing to spend a _bit_ of time on your investments then a cheap platform (Vanguard is one of several) where you invest yourself is much cheaper than a robo adviser like Nutmeg. I'd strongly recommend a look at the second video in my introduction to investment playlist ua-cam.com/play/PLlqeAQqQK7TcG9QNlRJ_QjI8iX_q_I8jo.html called "Do It Yourself or Do It For Me?". Thanks, Ramin.
I’m 18 and been looking into creating an investment isa, best to start young. However would you recommend creating one with coronavirus hammering the economy?
Now is the perfect time but drip feed
Same, I just turned 18 yesterday and will look into opening an investment ISA soon.
@@ssc3360 Even if you can save a small amount the effect of compounding the annual returns over many years will be spectacular. I wish I had been as on the ball with investing at 18 as you guys seem to be!
Great video
Thank you Craig! Do you have a LifeStrategy fund, and if so what do you think of it?