The Lemon Fool

In my 60s, retired and living off savings, state + small private pensions. Able to contribute the maximum of £2880 annually into a private pension.
Next month I have £80k maturing from a 12-month fixed term building society account. Obviously the interest rates are now and for the foreseeable future very low.

I've never had an ISA before and I'm considering opening two S&S ISAs with Vanguard, one each for myself and my wife.
The plan is to put in £20k in each of them this tax year and a further £20k in them after 6.4.21 by which time there will be £40k in each. We don't really need to access the money for at least 6-7 years, possibly longer.

I'm risk-averse by nature, more so now due to my age. I'm presuming that VLS100 and possibly VLS80 wouldn't suit me. I'm actually thinking of putting £20k in VLS60 and £10k in each of the VLS20 and VLS40 in mine and exactly same amounts into my wife's.

Would absolutely love opinions, ideas and comments. Thanks.

Quick thought - you shouldn't need three flavours of LifeStrategy to achieve a 'custom' equity/bond balance
If my sums are correct, you can get any balance between 20% and 60% from a mix of LS20 and LS60

You might think LS100 and LS80 unsuitable for you, but I prefer to be 100% in equities, apart from a sizeable rainy day fund in cash ISAs. I'm 87, if that helps.

TJH

So, 100% in equities, apart from the cash

Seriously though, what is your equity/cash split if you look at your entire 'pot' including cash in the bank, Premium Bonds, NS bonds etc?
I think a lot of us (myself included) do some spurious mental accounting and tend to treat our ISAs/dealing accounts as separate from other non-equity assets

AleisterCrowley wrote:So, 100% in equities, apart from the cash

Seriously though, what is your equity/cash split if you look at your entire 'pot' including cash in the bank, Premium Bonds, NS bonds etc?
I think a lot of us (myself included) do some spurious mental accounting and tend to treat our ISAs/dealing accounts as separate from other non-equity assets

I count cash in absolute terms rather than a percentage of the pot, as the invested pot grows or falls the cash amount is pretty stable based on around 3 years of normal expenditure, it's been that level for quite a few years as my portfolio has doubled in value.

kempiejon wrote:I count cash in absolute terms rather than a percentage of the pot, as the invested pot grows or falls the cash amount is pretty stable based on around 3 years of normal expenditure, it's been that level for quite a few years as my portfolio has doubled in value.

I do calculate cash as a %, but in investment terms I doubt that I should. I have a similar opinion to tjh290633 and cash can be a tiny % of my total funds. It's unusually high at the moment at 2.3%, or one years normal expenditure.

I agree with AC that there is no need for three Vanguard funds to achieve the OP's objectives. Investing 63% in LS60 and 37% in LS20 would give 45.2% equities instead of the 45% equities using three funds. I can't be bothered getting the exact ratio to achieve 45% equities as I believe that the figure was just chosen as 40% was felt too small and 60% too big. By the way a 6/4 ratio would give 44% equities which might be good enough.

AleisterCrowley wrote:So, 100% in equities, apart from the cash

Seriously though, what is your equity/cash split if you look at your entire 'pot' including cash in the bank, Premium Bonds, NS bonds etc?
I think a lot of us (myself included) do some spurious mental accounting and tend to treat our ISAs/dealing accounts as separate from other non-equity assets

Just calculated mine and it is about 11% cash, 89% equities.

TJH

I am 98% in a world equity fund (FCIT) and 2% cash. I have never bought a bond fund.

World equities (shares) move up and down - sometimes quite aggressively, but have delivered about 8% per annum on average over the past 20 years. The crucial word in that sentence is 'average'. 8% (doubling every 9 years) is quite normal when looking at the past 100 years. Dividend re-investment, especially during market lows, is crucial to long-term compounded growth.

Recently governments around the world have been buying bonds to stimulate the economy, so pushing their price up to very high levels. Bonds as well as equities can go down as well as up. Mean reversion will occur eventually, but when is anyone's guess.

Hello very interest by your story, a few years later could you tell us what did you choice and if it was the good option ?