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Aminatidi
Posted: 14 July 2024 10:49:28(UTC)
#61

Joined: 29/01/2018(UTC)
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The LS returns are just what it's returned.

Not "real".
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Rookie Investor
Posted: 14 July 2024 10:59:04(UTC)
#60

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Aminatidi;310170 wrote:
Compound interest still fries my brain.

I look at LS60 and it "only" returning 6.7% annualised the last ten years.

But if I use Trustnet that still sees £100K turned into almost £200K over that ten years.


It is not that hard to imagine this sort of return.

6.7% on £100k is £6.7k/year. Over 10 years that is £67k. Of course the 6.7% is compounded so you get more than £67k after 10 years as you need to add on the return you get on the return etc.

After inflation of say 3%, it does not look particularly amazing, just ok.
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Robin B on 15/07/2024(UTC)
Collie
Posted: 14 July 2024 14:06:42(UTC)
#62

Joined: 09/04/2015(UTC)
Posts: 47
I get that LS is nominal, ie. the yellow line, in the graph, but wondered why the blue line, ie. 4% inflation, is in more or less the same place on the graph at the end of the period?
Maybe i'm just overthinking it and its best just to think of it as being 7.1% annualised return less 4% annualised cpi which gives a real return of 3.1%?
Another thing though, of course is that this is the past so maybe the next ten years will be more subdued returns especially as interest rates are still high and may continue to be so for a while?
I wondered when interest rates do eventually fall will it have an immediate positive impact on prices or will it only show well into the future?
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Thrugelmir
Posted: 15 July 2024 11:16:04(UTC)
#63

Joined: 01/06/2012(UTC)
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Collie;311929 wrote:

Maybe i'm just overthinking it and its best just to think of it as being 7.1% annualised return less 4% annualised cpi which gives a real return of 3.1%?
Another thing though, of course is that this is the past so maybe the next ten years will be more subdued returns especially as interest rates are still high and may continue to be so for a while?


Historically equity markets do not compound upwards in a linear fashion. Expecting them to do so what be optimistic planning.

There's been an unusual period since the end of the GFC. Understand the GFC and you'll comprehend why the measures taken since were deemed neccessary. Then like everybody else you'll be scratching your head how as to what impact exiting the measues will have. Interest rates aren't high.either. Nor have the full impacts fully begun to be felt yet.
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Taltunes on 15/07/2024(UTC), Robin B on 15/07/2024(UTC), Guest on 15/07/2024(UTC), Martina on 15/07/2024(UTC)
Tug Boat
Posted: 15 July 2024 12:39:17(UTC)
#64

Joined: 16/12/2014(UTC)
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“Historically equity markets do not compound upwards in a linear fashion. “

Compound interest is not linear.
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Taltunes on 15/07/2024(UTC), Jay P on 15/07/2024(UTC)
Thrugelmir
Posted: 15 July 2024 12:47:57(UTC)
#65

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Tug Boat;312061 wrote:
“Historically equity markets do not compound upwards in a linear fashion. “

Compound interest is not linear.


I didn't mention interest. I was referring to stock prices. Individual companies do not exponentially grow.
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Harry Trout
Posted: 17 February 2025 08:54:23(UTC)
#66

Joined: 08/06/2014(UTC)
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Just sharing my recent dashboard update for LifeStrategy 60%

The holdings year on year are very similar

VLS 60% Holdings Jan 25

And here a summary of fund performance since launch in June 2011

VLS 60% Performance

The way I look at this table is that if you are going to hold this fund you might reasonably expect over the long term that your return will average 7% per annum and that at the extremes the outcomes could be about +/- 3% per annum of this - see shaded cells in the bottom right hand corner.

In saying this, I understand that the fund has existed during a great time for equities. However, if you held a sufficient number of years of cash for expenses you can avoid being a forced seller in a market crash?

It would seem to me that as a base case if you only held this fund together with say 10 years of expenses you could reasonably model the investment in this fund at 5% or 6% going forward with some margin of safety.

Context:
I model forward at 3%, have 6 years of expenses in cash and am currently 48% equity. I am (very) gradually lifting the equity % up, it was 42% at one point last year for example.
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Jane Daisy on 17/02/2025(UTC), bill xxxx on 17/02/2025(UTC), AlanT on 17/02/2025(UTC), North Star on 17/02/2025(UTC), ravedeath on 17/02/2025(UTC), Peanuts on 17/02/2025(UTC)
bill xxxx
Posted: 17 February 2025 10:04:50(UTC)
#67

Joined: 17/12/2011(UTC)
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Thanks for this. I'm always interested in potential 'fire and forget' holdings.

On a side note - as you've clearly gone into this quite deeply - I think that I saw elsewhere that Vanguard aren't allowed to hold more than 20% in one vehicle.

In this light - is the first holding - the c.20% in a global bong fund - likely to be VAGP? If so, do all the other bond holdings, added together, just replicate VAGP - in other words, the 60% bond holding is effectively just VAGP?
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Fin Man V on 17/02/2025(UTC)
John Bleke
Posted: 17 February 2025 10:34:38(UTC)
#69

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If you could hold two funds (equity and bond) then what would it be? It'd have to be global rather than something with a UK bias to generate extra returns. Perhaps LGGG or SWDA with a global bond fund in 60/40 ratio. What bond fund would you choose? I know nothing about bonds btw.
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bill xxxx on 17/02/2025(UTC)
Fin Man V
Posted: 17 February 2025 18:21:00(UTC)
#68

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bill xxxx;334773 wrote:
Thanks for this. I'm always interested in potential 'fire and forget' holdings.

On a side note - as you've clearly gone into this quite deeply - I think that I saw elsewhere that Vanguard aren't allowed to hold more than 20% in one vehicle.

In this light - is the first holding - the c.20% in a global bong fund - likely to be VAGP? If so, do all the other bond holdings, added together, just replicate VAGP - in other words, the 60% bond holding is effectively just VAGP?

Bonds are at 40% in this fund not 60%. To answer your question, the first holding is an OEIC which is very similar to but not the same as VAGP which is an ETF. VAGP is there at the lower rank of 8th largest - "Global Aggregate Bond ETF Hedged" - 2.84%.

The other bond holdings are also not the same as VAGP so it definitely wouldn't be correct to say that VLS 60% has 40% VAGP.

Hope this helps Bill
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1 user thanked Fin Man V for this post.
bill xxxx on 17/02/2025(UTC)
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