Question
Hi Justin, firstly, I love the site - thank you for cutting through all the marketing noise on the internet.
I wondered what you thought about the Vanguard LifeStrategy 100 per cent equity fund as a simple, low-cost way of saving for retirement. I have over 30 years to go until I retire and have recently moved to a new firm, so no longer have a company pension. I already have an ISA account with Hargreaves Landsown, who offer the Vanguard fund for £2 per month, plus a TER of 0.33 per cent. So with a lump sum of £10k - plus regular additional savings - I'd have global equity exposure for an AMC of only 0.57 per cent. The geographical breakdown of their trackers are, I notice, almost identical to my company pension (where I've left £20k invested).
In theory, I'm probably more suited to a stakeholder pension, as I don't have much desire to make investment choices myself. But this strikes me as an ideal way of getting a simple, low-cost pension which I can pay into regularly and forget about for at least 10 years. What do you think? Or would you recommend a different approach?Answer
Thanks, glad you like the site.
The Vanguard LifeStrategy 100 fund offers a straightforward and low cost way of attaining global stock market exposure. It invests in regional Vanguard tracker funds with a bias towards the UK.
At the time of writing UK exposure is just over a third of the fund, around 8% is in emerging markets and the balance spread across developed markets, weighted towards the US.
Potential negatives are the low emerging markets exposure, assuming you're bullish about emerging markets over the next 30 years and not too risk averse, and lack of exposure to other assets suited to longer term growth like commodities. Although you could obviously address these issues by holding other funds, if you wish.
Although Hargreaves Lansdown tends to lag many competitors in terms of cost these days, in this instance they're actually good value as your calculation shows.
Given your wish for a simple low cost pension I think your suggestion is very sensible. As mentioned above, you could always augment the Vanguard fund with others in future if you ever decide to widen your investment exposure.
Hi Justin, firstly, I love the site - thank you for cutting through all the marketing noise on the internet.
I wondered what you thought about the Vanguard LifeStrategy 100 per cent equity fund as a simple, low-cost way of saving for retirement. I have over 30 years to go until I retire and have recently moved to a new firm, so no longer have a company pension. I already have an ISA account with Hargreaves Landsown, who offer the Vanguard fund for £2 per month, plus a TER of 0.33 per cent. So with a lump sum of £10k - plus regular additional savings - I'd have global equity exposure for an AMC of only 0.57 per cent. The geographical breakdown of their trackers are, I notice, almost identical to my company pension (where I've left £20k invested).
In theory, I'm probably more suited to a stakeholder pension, as I don't have much desire to make investment choices myself. But this strikes me as an ideal way of getting a simple, low-cost pension which I can pay into regularly and forget about for at least 10 years. What do you think? Or would you recommend a different approach?Answer
Thanks, glad you like the site.
The Vanguard LifeStrategy 100 fund offers a straightforward and low cost way of attaining global stock market exposure. It invests in regional Vanguard tracker funds with a bias towards the UK.
At the time of writing UK exposure is just over a third of the fund, around 8% is in emerging markets and the balance spread across developed markets, weighted towards the US.
Potential negatives are the low emerging markets exposure, assuming you're bullish about emerging markets over the next 30 years and not too risk averse, and lack of exposure to other assets suited to longer term growth like commodities. Although you could obviously address these issues by holding other funds, if you wish.
Although Hargreaves Lansdown tends to lag many competitors in terms of cost these days, in this instance they're actually good value as your calculation shows.
Given your wish for a simple low cost pension I think your suggestion is very sensible. As mentioned above, you could always augment the Vanguard fund with others in future if you ever decide to widen your investment exposure.
Read this Q and A at http://www.candidmoney.com/askjustin/834/vanguard-lifestrategy-100-fund-for-pension
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