Vanguard poor returns
Discussion
Hi. I appreciate and ISA is a long term investment, and not planning on touching this for another 8 years at least, however, had it 2 years now and my return is currently 0.59%. I'm in the LifeStrategy® 80% Equity Fund. I know nothing about this really, should I leave it and be patient or move to a different strategy? Currently £5,500 in fund and I put £150 a month in.
Thanks.
Thanks.
Countdown said:
Admittedly it's not the best out there and the last 12 months have been really bad but i think you should still have seen a total return of 1.89%?
No idea, one thing I know for certain is I'm at 0.59 rate of return after 2 years. It's usually been in the red most of that time....
I would keep dripping it in monthly. It hasn't been a good time in the last two years.
I've seen big investment growth in the previous years but I started another investment with Vanguard in the last year or two. The issue has been that when this investment started, the market price was already at its peak so the average cost of purchase has been high. When you look at the daily price this has been around the same as that peak so the return looks poor.
Remember, you are investing for the longer term and you are drip feeding monthly which is the best way to reduce the risk (sometimes it is expensive and sometimes it is cheaper but it averages out).
Best thing is not to look at the prices so regularly. The index can jump up and down by a whole % each day but you would need to ride out this storm. We may see a recession where there is a big drop in the next year. This is ok as long as you keep on plugging in the money when it is cheap. This helps to pull down your average cost over time.
I've seen big investment growth in the previous years but I started another investment with Vanguard in the last year or two. The issue has been that when this investment started, the market price was already at its peak so the average cost of purchase has been high. When you look at the daily price this has been around the same as that peak so the return looks poor.
Remember, you are investing for the longer term and you are drip feeding monthly which is the best way to reduce the risk (sometimes it is expensive and sometimes it is cheaper but it averages out).
Best thing is not to look at the prices so regularly. The index can jump up and down by a whole % each day but you would need to ride out this storm. We may see a recession where there is a big drop in the next year. This is ok as long as you keep on plugging in the money when it is cheap. This helps to pull down your average cost over time.
leef44 said:
I would keep dripping it in monthly. It hasn't been a good time in the last two years.
I've seen big investment growth in the previous years but I started another investment with Vanguard in the last year or two. The issue has been that when this investment started, the market price was already at its peak so the average cost of purchase has been high. When you look at the daily price this has been around the same as that peak so the return looks poor.
Remember, you are investing for the longer term and you are drip feeding monthly which is the best way to reduce the risk (sometimes it is expensive and sometimes it is cheaper but it averages out).
Best thing is not to look at the prices so regularly. The index can jump up and down by a whole % each day but you would need to ride out this storm. We may see a recession where there is a big drop in the next year. This is ok as long as you keep on plugging in the money when it is cheap. This helps to pull down your average cost over time.
This is a part I don't understand at the moment. I see I'm buying units at about £250 each. I take it in a recession these would sell for less, then when things pick up... so in effect that's buying low?I've seen big investment growth in the previous years but I started another investment with Vanguard in the last year or two. The issue has been that when this investment started, the market price was already at its peak so the average cost of purchase has been high. When you look at the daily price this has been around the same as that peak so the return looks poor.
Remember, you are investing for the longer term and you are drip feeding monthly which is the best way to reduce the risk (sometimes it is expensive and sometimes it is cheaper but it averages out).
Best thing is not to look at the prices so regularly. The index can jump up and down by a whole % each day but you would need to ride out this storm. We may see a recession where there is a big drop in the next year. This is ok as long as you keep on plugging in the money when it is cheap. This helps to pull down your average cost over time.
I'm just trying not to look too often. I put just under £3k in a Vanguard global tracker about 15 months ago, and it's currently sitting at -0.64%. But I don't think a lot has been really gaining over that time, maybe some individual stocks but markets generally have been flat. I don't believe any comparable fund elsewhere would have done much better. At least it's only charging 0.22%.
The thing is, LS100 is near its all time high, so is it actually ‘cheap’ at the moment? Maybe it is given inflation over the last 2 years.
I’ve taken the risk and bailed out due to relatively short term strategy on the mortgage… I may have made a big mistake - I’ll find out in March ‘27 when I plan to make that final mortgage payment!
I’ve taken the risk and bailed out due to relatively short term strategy on the mortgage… I may have made a big mistake - I’ll find out in March ‘27 when I plan to make that final mortgage payment!
snobetter said:
I'm relatively fortunate, government pension and fixed mortgage for 10 years before brexit which takes me till nearly end of term.
Just the kids will have less money towards expensive stuff when older...
Was thinking about this on Saturday while considering the effects of the rapid interest rate hikes and continued inflation. At the bottom It's hurting those that can't afford it but there's a large proportion of people in the middle who haven't borrowed beyond their means, don't have a constant flow of new cars, holidays and DFS couches on tick who will suffer long term as the money they used to save/redirect in to a pension is now redirected in to the profit margins of banks and profiteering companies.Just the kids will have less money towards expensive stuff when older...
Back on topic. Need to view funds like this as long term and don't watch them every day. I've been in a few Vanguard funds for a good few years. I was up 20% then I was down about 14% and now I'm back up about 9%. You could cash out and go back in but trying to time the market is a fools game... I tried and failed. Keep an eye on things but don't check it every day
snobetter said:
This is a part I don't understand at the moment. I see I'm buying units at about £250 each. I take it in a recession these would sell for less, then when things pick up... so in effect that's buying low?
For the last two years, the price has been near the peak so you buying less units for your £250 at an expensive price. As you carrying on investing each month, there will be times when the price is lower. This means the £250 buys more units.Effectively you are buying less units when it is expensive and more units when it is cheaper. This averages out over time.
You are hoping that in 8 years' time that the value will be higher than having put all your money in a bank savings account. Although you cannot 100% rely on past trend, history has shown than the stock market out performs cash savings in the long run.
If you are thinking, what happens if we hit recession in 8 years' time when you are looking to take the funds out then you would normally have an exit strategy closer to the time.
As you look to start to withdraw your funds you need to think about how you will take your money. Will you take it all it one go or small amounts each month?
If the former then you will need to plan to start reducing your risk in the stock market closer to the time e.g. if say the market is quite high in 6 years' time (investment doing much better than had you had the money sitting in a bank earning interest) then you would look to take it all out and putting it in say a fixed income cash saving.
If the latter then you would look to have say two years' worth of withdrawals already out of the stock market before you start drawing your funds. You would put that in an easy access interest bearing cash account so that there is no volatility on that money as you withdraw. The rest could probably stay in the stock investment for a bit longer.
Although I use the example of two years before withdrawal, this depends on how risk adverse you are. If you are very risk adverse then asset managers advocate start moving your money from stock to cash about 5 years beforehand.
There is no black and white answer because there is no prediction of the future just a balance of probability.
snobetter said:
Hi. I appreciate and ISA is a long term investment, and not planning on touching this for another 8 years at least, however, had it 2 years now and my return is currently 0.59%. I'm in the LifeStrategy® 80% Equity Fund. I know nothing about this really, should I leave it and be patient or move to a different strategy? Currently £5,500 in fund and I put £150 a month in.
Thanks.
.Thanks.
I must have been lucky with my timing. I took out this ISA last June and have everything in this exact fund. I'm currently sitting at +8.39%.
rossub said:
Just ditched mine and gone into savings. Similar amount to the OP, so not big money.
Happy with a safe 4-5% for the next 3 years while I save enough up to pay off the mortgage.
If you're looking at 3 years, savings is the right place to be. Rule of thumb seems to be to plan on a minimum of a 5 year time horizon before you look at investing. I think many forgot that in the seemingly one way bet era between ~2010 and 2019.Happy with a safe 4-5% for the next 3 years while I save enough up to pay off the mortgage.
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