Having a wobble about investing

[TheGander]

I set up a Vanguard life strategy 60% fund about 3 years ago. I invest £300pm and in the last 2 years it’s done nothing but go down in value . It sometimes feels like I’m chucking money down a black hole. I know investments are for the longer term but it’s starting to feel painful. I’m not a high earner by any means (band 7 NHS if that means anything), have 2 kids at home who want to go to university in the next 1-3 years. We are also hoping to move home when junior leaves and will need money, I’m thinking of stopping the Lifestrategy and re routing the £300 pm into a higher rate savings account. I know no one can give definite answers but would welcome other investors’ views on this.

@FamilyFinanceDad funnily enough I was looking into this last night. I’ll probably keep what I have in the LS80 (£20k) and invest monthly in the S&P. I’m new to investing so the 5 LS options were a simple start for me but I’d like to be doing better. My LS80 is only just above what I started with

Thank you for your kind words @FamilyFinanceDad . You are not the first one on these boards to point out that US stocks seem to perform better, and Vanguard LS is overly weighted towards U.K. stocks. Maybe I should look at diversifying a bit as you say and putting some money is US focused index funds.

@TheGander apologies for my previous post. I shouldn’t have commented to the PP when it’s your post. Thinking out loud. Thank you for starting the post, it has been helpful to me

@TheGander I agree a change of approach makes sense given the underperformance of the LS funds relative to the funds I listed earlier. On a personal note, Im interested in maximising my chances of getting good returns for as little risk as possible. Investing in a highly diversified index fund that is betting on the long term potential of the US economy to outpace growth in the UK / EU (which it has done for decades) seems to me to be a good idea - my returns over the last decade confirm this. Also following the advice of someone like Warren Buffet and his conviction on this strategy should give you (and me) some confidence. Best of luck going forward 👍

@Happiestathome we’re all start somewhere and its great you’re taking action! And we’re all trying to get the best outcome we can with our money. My experience of the investing world though is most fund managers & advisors over complicate things. Investing regularly in a US all equity or S&P index tracker gives you all the diversification you need (downside risk protection) and their returns outperform c95% of all active managers and have done so for decades. It’s an easy concept to grasp,
which help me not to have think too much about it. Hope this helps you too.

Thanks for this thread. It has been really informative. I have a similar problem with the Vanguard LS40 which has done even worse than the LS60. I have a lump sum in there but haven't been able to continue investing due to a change in circumstances. I realise I didn't really understand bonds! Can anyone advise if they will be likely to recover at some point or will that never happen?

Absolutely no problem! The thread is here for all.

I have been told bonds will increase value (probably not to their pre-Kwarteng heights) this year, and more so when interest rates decrease. Pure trackers leave you very exposed compared to a 60/40 split.

I'd say that the US S&P 500 has 'performed' better than other trackers over the past 10 years or so, part of this is likely down to the make up of that tracker being quite tech heavy which has seen high levels of growth (Meta, Google, Amazon etc). There is nothing to say that the growth will continue as that level, in fact it could be the opposite (but no one can tell you what the market is going to do). That's why I find it best personally to not concern myself with trying to pick stocks or even individual indexes and go for a global index tracker which is apportioned according to the local market cap (which actually means a decent chunk ends up being in S&P 500 anyway).

I use a 3 ‘bucket’ strategy, one for short term 3-8years, one for mid term up to 15 years then the 3rd for long term ( to death basically).
Anything less than 5-8 years is in fixed interest accounts and within our pensions is either cash from income funds or short term money market , which is really good at the moment due to interest rates hoing up. Bond ladders are another option, if you hold them to maturity.
Mid term we have what’s called managed volatility mixed asset funds, a mixture of balanced and dynamic,for growth and lower volatility - these are income funds to build up a cash pot in our pensions.
Long term is 100% equities.
HSBC World tracker ( with emerging markets)
and Fidelity index word ( without) plus Fundsmith, which has always served me well.
All except Fundsmith are very low fees.