Vanguard Lifestrategy VS Target Retirement Funds | This is where Vanguard gets it wrong

Vanguards Target Retirement & Lifestrategy fund ranges are both very popular. But one of them has a critical flaw.

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Capital at risk. Past performance is used as a guide only. It is no guarantee of future returns. This video does not constitute personal advice. We do not take any responsibility for third party websites and content we may link to from this video. Issued on behalf of Nova. Nova is a trading name of Nova Wealth Ltd, which is authorised and regulated by the Financial Conduct Authority (FRN: 778951) and is a limited company registered in England & Wales (10739796).

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Retirement planning and generating a sustainable retirement income are two very delicate things. Good investment portfolio risk management is critical to ensure you don't run out of money.

In this video, we cover:
00:00 Intro
03:13 What Risk Is & Why It's Important
05:10 LS VS TR
07:49 Why Vanguard Have Got It Wrong
09:09 Better Ways to Manage Risk in Retirement

[wendysmith]

Hi James, I can’t thank you enough for making these videos. Listening to you I have been transformed from being overwhelmed and fearful of investing, to having now taken action at last and I am feeling very positive about my future financial plans. Thank you!!!

[eliotbrandwood]

I’ve been self-teaching finance for the past few years and these are very well put together videos. It’s also great that you cover UK content

[Ursin]

I have a 2040 Targeted Retirement Fund. Thank you for teaching me ☺️

[FlyingGoat]

I don't really comment on YouTube, but this channel is fantastic. Great content, really well delivered. Keep it up!

[steves]

Alot of good information here thats not covered by other Youtube channels.

[ukunknown]

Go on lad! Putting in that work. Hope you had a good weekend mate!☀️ 🙌🏽

[dungster]

Thanks James. I'm completely new to investing and learning about getting my setup for retirement. So this is a really handy set of videos. now whether I go for a Lifestratery or a Target Retirement I'm still undecided.

[Kthx]

Bang on - it’s a balance of risk tolerance, risk capacity, and time horizon!

[peterbee]

This is a great vid James.
All the info explained in simple and straightforward language.
Thanks 🙏

[oliviarae]

This was a very helpful video James, thank you. I was deciding between the Lifestrategy and Target Retirement fund choices in Vanguard, and came on here to listen to some different information about both.

[bengunns]

Great video James, this was my dilemma, i transferred a Pension into a Vanguard Sipp, Target Development Fund 2025, but i was thinking although i am 66 and semi retire in November, i still wanted the Pension to work for me, and wasn't ready to slow down just yet, and i wanted a certain amount of control over it. Your video gave me the info to, decide to change it to a Lifestrategy 80/20. And i have an isa in the US Global equity index.
Thanks for helping me decide what to do.

[nginillz]

This was so helpful. I am 20 years old and I have just started using vanguard and so far I have invested in the Ftse Europe fund, s&p 500 and the ecg global all cap ucits etf, I am planning on adding the ftse 100 uk and the life strategy 100 equity fund to my portfolio😌

[anthonyh]

Brilliant content and video as always James, thank you so much. Spot on advice about questions that I, and I am sure many others have. One suggestion for future videos, a simple guide to whether to buy an annuity or whether to use drawdown, or combination of the two. I can imagine you explaining this really well!! :) Thanks again.

[davem.]

Hi James,

Great videos, I just wish that I had found them sooner! At least, the good news is that they seem to be reinforcing what I thought I had learned but I am still a little cautious because of your comment on one video that once you start down one path, you find things on the internet that simply reinforce that point of view.

Putting that aside and like other commentators, I had also concluded that Target Retirement funds are really aimed at people buying annuities but I think they can still be useful in managing cashflow - something that you have mentioned several times but I haven't seen a video on that topic (maybe I missed it?).

I have just retired, aged 63 but I am still in the detailed planning phase and need to execute on the plan. I'm hoping to continue living for another 30 years or more and I am in the fortunate position that I think I'll have more than enough income, once my state pension kicks in, to last past 100, as long as net investment returns exceed inflation by 1% on average (but I need to implement guardrails - that was new to me and very useful advice).

So how could Target Retirement funds work for me? My logic is that if I invest, say 15% of my total SIPP in consecutive target Retirement funds - 2030, 35, 40, etc. to 2060, then that would more or less optimise returns and also mitigate against losses in the period immediately preceding my need to consume those Investments through drawdown, as those dates approach. Any annual surplus could then be re-invested in an 80:20 fund to maximise the residue available for my descendents in the event of my demise. I could see that working as a general approach for many people using drawdown in retirement. Are there any major flaws in my logic? Follows the "invest and forget" strategy so that we're not worrying about the ups and downs.

[Willsmith-qv]

As always James fantastic plain speaking believe that this old fashioned notion of more bonds was based on most people ending up with annuities in retirement before the pension freedoms.this was to protect them if they happened to retire at a believe in risk and I believe in have ISA's pensions etc but there is a three year cash buffer to cope with any downturn but to also take advantage of one is a school day and Im still learning thanks to the efforts of kind indiviuals like don't tinker much but I refine as my knowledge improves again very much appreciated

[MuresanOana]

James, discovering your videos has changed my life! I now have more understanding of what I can do with my money than I ever did. I feel confident in investing and I have reviewed all my pensions thanks to you! Please keep going because your work is manna! Thank you. Oana

[RichardBarleyphoto]

Really good video, It is refreshing to find someone who really understands RISK. I have always invested in my own business and understand risk, the average person who has a secure job may not.

[tunmiseajai]

Wow. You are so knowledgeable am intrigued on how to decimated all the questions.

[Bestie-c]

Another fantastic video James. Thank you! You have no idea how much you are helping people!

[iainreeve]

Very good video! Enjoyed that. As I was watching, I was itching to post a comment saying something like "but what if you have a pension?", and then you covered it right at the end.

For me, these retirement funds seem to be aimed at people who have no pensions and are relying wholly on their investments. Maybe that's more common in the US? Then it does make sense to have a staggered path from high equity to high bond.

But you're right that everyone is different. I think if you have a decent sized defined benefits pension you don't need to hold so much in bonds. The pension gives you the low risk part of your portfolio.