The Simplicity Portfolio


Thanks to Morgan Housel!

Investing can be made simple enough for anyone to manage their own investments. Here’s how.

Here’s a simple example portfolio using low cost Exchange Traded Funds (ETFs) from Vanguard.

Its no harder for anyone to buy or manage than it would be to open an online bank account.  Its so simple that a child could manage it themselves with minimal effort.

Why Vanguard? Because its owned by the customers. So Vanguard are the only fund management group who have no incentive to over-charge you.

Why ETFs? Because they are simple and offer the lowest ongoing fees. The ETFs are traded on the Stock Exchange and can be bought as easily as a regular share.  These ETFs pay out dividend income every quarter (e.g. Mar, Jun, Sep, Dec) which can either be used for living expenses or reinvested.

The ETFs used are:

VHYL = Vanguard All-World High Dividend Yield ETF

VEUR = Vanguard FTSE Developed Europe ETF (includes UK)

VUSA = Vanguard S&P 500 ETF

VFEM = Vanguard FTSE Emerging Markets ETF

This short video from Lars Krojer makes the point nicely about how simple investing can be made.  All you need is just a single all-world equity tracker fund.

But the reservation that I have about just chucking everything into something like the Vanguard All World ETF (VWRL) is that the US equity market looks expensive at the moment. And the USA makes up ~50% of VWRL.  US small caps and tech / social media stocks look particularly pricey. Maybe for good reasons, maybe not.

One issue with index investing is that if the index is over-priced at the time of purchase, then the long term investor is doomed to underperformance.  You can either ignore this and just keep on dripping money in each month, putting your investing on automatic pilot (this is often called $ / £ cost averaging).

Or you can choose to look for value. The Simplicity Portfolio seeks to overweight better value indexes and underweight over-priced indexes. I selected indexes that looked like they offered better value based on metrics like the Shiller PE, price: book value and dividend yield.

The Simplicity Portfolio currently underweights the USA on the basis that the CAPE on the S&P 500 is currently (Dec 2017) 32x, against a long run average of about 16x. So only 10% is directly allocated to the US stockmarket instead of a purely passive weighting based on market capitalisations of over 50%. For the same reason (valuation), there is no allocation to small cap equities.

With US valuations relatively high, particularly for many companies without long operating histories and track records of dividend payment (think Twitter, Facebook etc), I think its appropriate to tilt towards value as well as getting global exposure via VHYL which excludes non-dividend paying stocks. I also think its appropriate to have allocations to Europe (including the UK) and Emerging Markets, both of which trade on lower CAPEs than the US market.

Here are the allocations in The Simplicity Portfolio:


So the Simplicity Portfolio reflects current valuations. Valuation is not a reliable predictor of short term returns. In other words, shares or indexes that start cheap can, in the short term, get cheaper.  And expensive assets can get more expensive.  But, over the long term, lower starting valuations usually lead to higher future returns. That’s why value investing has historically provided a performance advantage.

I’ve been investing for over 20 years now and, during that time, there have always been asset classes that are popular (and relatively over-priced) and others that are unpopular (and relatively under-priced). Imagine an American High School.  The popular assets are a bit like the quarterbacks and cheerleaders (popular now but doomed to future under-achievement) and the unpopular assets are a bit like the geeks (that go on to start tech companies and get rich).

Turning to asset allocation, the 75% equity exposure equates to the highest level suggested by Ben Graham in The Intelligent Investor (which Warren Buffett describes as the best book on investing ever written). With interest rates low, the opportunity cost of holding bonds or cash is high. So The Simplicity Portfolio currently maximises equity exposure subject to the 75% constraint proposed by Graham.

As Warren Buffett reminds us, the long term investor has more to fear from inflation than from equity volatility.  The real value of cash is constantly being eaten away by inflation…its disappearing before your eyes like an ice sculpture at a party.

Price volatility is not the same thing as real risk.  Price volatility is just numbers on a screen bobbing up and down.  Real risk is something big, bad and permanent happening to your assets…which is something quite different.

Equally, many people will say having 25% in cash / short term government bonds (called gilts in the UK) represents an unacceptable drag on performance with yields so low. If you are in the wealth-building phase and can ignore equity volatility, then feel free to take your equity allocation up towards 100%.

Jim Collins offers a neat rule of thumb to choose an asset allocation, suggesting that people working towards financial independence have 100% of their portfolio in shares (plus an emergency fund of cash). Later, as you approach the point of quitting work, you include a 25% bond / cash allocation to act as a portfolio stabiliser and ensure that you can fund a few years spending from the cash/bond element of the portfolio without selling shares.

100% in equities may sound like an aggressive asset allocation but remember this is for people that are still working and saving.  So, if the stockmarket crashes, they should be pleased (not scared) because they will be benefiting from £ / $ cost averaging and getting more units for their money each month.

The Simplicity Portfolio excludes gold and other commodities because I prefer to focus on wealth generating assets that pay an income and compound in value over the long term.  It also excludes assets that have limited upside but are not really safe (eg corporate bonds, P2P lending etc).

The portfolio has low costs.  Note the expense ratio of just 0.15% per year. This compares to typical total fees of 2.0% – 2.5% per year typical for customers of a financial adviser / wealth manager with active funds. Why give all your portfolio income away to advisers and fund managers for nothing?  The simplicity portfolio costs less than 10% of these (arguably inferior and riskier) alternatives.

stealing candyAs I showed here, minimising fees is incredibly important due to the effects of compounding. Many people can easily save a million pounds over the course of a lifetime by reducing fund management fees. If you have an easier way to make or save an extra million pounds, then I’m all ears.

This is a low turnover portfolio for long term investing but all portfolios may need some change from year to year to rebalance and reallocate away from overpriced markets and towards better value alternatives. Low churn is good but complete neglect may not be. So its worth checking your asset allocation at least once a year and rebalancing if appropriate.

I’ve seen a lot of investors portfolios over the years (including many with the “benefit” of a wealth manager or financial adviser) and most of them are a mess. Most are full of historical baggage, pointless complexity and incur ridiculous fees for no good reason. The Simplicity Portfolio is simpler, lower cost and easier to run (without sacrificing expected returns) than 99% of what’s out there. Welcome to the 1%.

So that’s UK based investors sorted out. But what about international readers? Well, in the countries that provide most international readers, I’ve looked to see whether its possible to replicate The Simplicity Portfolio using the local Vanguard product range.

And, for the most part it is! The Vanguard ETF product range is available right across Western Europe. So the same ETFs that I used to construct the Simplicity Portfolio are available from Vanguard in Ireland, Germany, Finland, Switzerland, Italy, Netherlands, Belgium, Sweden, Denmark, Norway, France, Spain etc etc

Its a bit more complicated in the USA, Canada, Australia etc where the Vanguard product ranges are a bit different. But for each of those countries I had a look at the local Vanguard website and had a go at seeing how closely I could replicate The Simplicity Portfolio using only Vanguard ETFs. And here are the results:


This is provided for information and is not regulated investment advice. These are model portfolios and have not been tailored for any individual, including me. My portfolio is different, not least because it contains a large slice of actively selected shares. So think about your risk tolerance and asset allocation preferences when constructing your own portfolio.

One final word.  If you are struggling to start, you can keep it simple with a single global equities tracker fund (such as VWRL: the The Vanguard All World ETF or a LifeStrategy Fund in the UK). Or if you are in the US, you could just follow Jim Collins guidance and stick with VTSAX.

Remember, there is no single right answer in investing.  So don’t sweat the small stuff obsessing about micro differences between different Vanguard products.

The most important thing is to get started.

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  1. dawnmartyne · · Reply

    Excellent post. youve addressed all my constant internal churning arguments.
    logical . sensible .my portfolio is similar but not the same.
    no Japan though, unless exposure is in VHYL
    i read once no more than 75% in equities and no less than 25%. this suits my risk tolerance.
    i thought about the landlord route but have been put off .
    as thats the case with me then i agree with you, you just have to get used to and tolerate equity volitility.

  2. Instant diversification and extremely low cost…what more do you/we/they need?!

  3. Very interesting thoughts in this article. It comes at the right time. As my goal is to have a mix of dividend stocks and an index portfolio, I wonder when and how to build up the dividend portfolio.
    an answer might be right here: buy dividend stocks if there is a general over valuation of the etfs you have… It gets me thinking…

  4. I retired a while back (Similar to yourself) and this is very close to my portfolio – I have 5 funds over your 4. I added a specific Pacific/Asia a year or so back (Looked good value at the time). Overall, whilst not producing “stunning” returns, the dividend income delivers 1.5x my outgoings and the volatility is way within my comfort zone. Sat on about 23% Bonds at the moment, but if the equity market crashed (say 20%+ further) I would dump the majority of these and go 99% equity. To be honest, I’m secretly hoping that it happens as I would love to buy something that seems really cheap again.

  5. Derrick · · Reply

    Great post. Thank you. One question:
    Isn’t the essence of ‘VUSA Vanguard S&P 500’ contained within ‘VHYL Vanguard All-World High Dividend Yield’?

    1. Not really…the US is only about 36% of VHYL. And the dividend yield screen means the US element of VHYL is not the same as the S&P500.

  6. Rookie question: why these ETF’s instead of something like Vanguards Lifestrategy 80% equity fund….

    Is it down to the even lower charges you can obtain this way, or do you consider you will see better returns on the ETF’s.

    I am currently building up a fair bit (for me) of ISA holdings in the Lifestrategy 80% fund, so genuinely interested in learning opinions on this.

    1. dawnmartyne · · Reply

      i think i can answer your question
      lifestratergy funds asset allocations are pre set and theres a huge US proportion in there, i think its about 60 % US and quite a small emerging market allocation.
      TEA is trying to ’tilt’ away from these pre set allocations by using these 4 individual ETF ,s so he can underweight the US which is possibly too expensive at present to justify 60% of your money
      and overweight Europe and the UK which is generally considered a cheaper market at the moment.
      emerging markets are possibly where alot of future growth may come from. so hes upped VFEM
      hope that answers your question.

      I have a question for TEA
      Why is VHYL considered a ‘value’ fund?

      1. LCIL – I’m looking for better expected returns by tilting towards value (as Dawn rightly says) as well as slightly lower costs.

        Dawn – high dividend yield is a screen for value….there are others of course (low PE multiple, low price : book or price : sales etc)…but high dividend yield is probably the simplest…and its the one that Vanguard offers.

      2. LS80 has three components involving US equity:

        19.5% US equity index fund, 3% S&P500 etf, & 19.2% dev world ex-UK fund (of which 60% is US).

        Overall, the US equity component of LS80 is about 34.02%

  7. What do you think about robo-advisers like Betterment and Wealthfront? Is it even good for new investors or should the naive investor start with Vanguard?

    1. Personally, I don’t see the need as using them increases your expenses and The Simplicity Portolio is simple enough to easily rebalance yourself.

  8. I see basic flaws in this asset allocation, if its to survive a 2008/09 scenario. You are not in the accumulation phase anymore, I would bump up the bond allocation, even at current bond valuations, use a broad bond market ETF, low TER, do it in 10k blocks over a period, and add long maturity bonds as a hedge against equity market drops. Also, if you needed to realise income from this, you would be shafted if indexes went down double digit % and kept dropping. Its obvious to a lot of professional investors that valuations are stretched in equity markets. Better to go for dividend ETFs for all the equity portion, IUKD, European and Global. Also, you need corporate bond exposure, good for more income. Hands up, I am a hedge fund manager. I just wanted to add my 2 pence. NG.

    1. …if you are a hedge fund manager then you might want to read this and this

  9. I’ve seen this mentioned a lot and I am quite impressed with it. Currently advising Miss DD to consider adopting it for her investing activity. Whether or not she is persuaded is a different matter.

    Thanks for the fascinating write-up. Very interesting.

    1. TDD, glad you found it helpful. Thanks for the comment and the feedback.

  10. I agree, simplicity is important when selecting your investments, and there really is a lot of overly-complex but under-performing crap out there with ridiculously high fees.

    Diversification is fine, but do you really gain anything more by having 400 stocks in your portfolio than by having 40 stocks? Many fund managers seem to think so, but it doesn’t show up in their returns and just creates more work that someone needs to be paid for.

    It’s direct shares/stocks all the way for me, but I agree that ETFs/managed funds/mutual, funds have their place for some investors.

  11. therhino · · Reply

    great article – thats a very nice looking portfolio

    you hint at a mechanical allocation based on index PE ratio – maybe you could include the PE numbers relevant to each of the indices in your mix, i.e. the current value compared to long term average (as you have done for the S&P500)

    also – are all those ETFs income only as opposed to accumulation units?

    1. Yes, they all pay out income

  12. Great post – a simplicity portfolio is a great idea. I have moved quite a few funds across to Vanguard equivalents to reduce costs. I would like to invest in the High Dividend Yield fund but this isn’t offered by my investment platform. I am looking to move platform, looking at the platform charges so that I can move to someone who does offer the full Vanguard suite and has a low-cost charging structure.

  13. This is pretty close to what I was trying to put together for myself.

    I am going for 100% equities for this porfolio:
    VHYL – value 30%
    VEUR – europe 30%
    VFEM – emerging 15%
    VMID — FTSE midcap 10%
    VUSA – USA 10%

    And plan on rebalancing annually. If only the S and P had a correction I would just pump 100% into an all world tracker. From visiting american forums they are definitely extremely bullish on US shares which is a warning sign to me.

  14. Any feedback would be much appreciated before I pull the trigger in the next month

    1. dawnmartyne · · Reply

      that looks a good selection to me
      i agree , i wish the S and P would have a correction it would make things alot simpler and easier

  15. Why have You missed the FTSE Developed Asia Pacific ex Japan Index UCITS ETF (VAPX)? It is cheap: dividend (3,2%); P/B (1,4); P/E (14,2).

    1. for simplicity…the fewer ETFs you buy, the lower your transaction costs.

  16. Thoroughly enjoy the website and as someone sitting on a pile of cash this post and the recent one on fear were particularity interesting. Wondered if you had any thoughts on investment trusts as part of a simple portfolio, especially with regards to the generation of income? I am torn at the moment between something like the portfolio you post above and an investment trust portfolio as put forward in John Baron’s website. Any thoughts could be illuminating.

  17. The Weasel · · Reply

    Hey TEA, my portfolio looks very similar to the one you’ve put together here. I wonder if you know of any substitute for VIGSCA. (This is where I differ from your portfolio) I’m in this fund as I wanted some exposure to small caps given my long term horizon. But I don’t like the relatively high fees (0.38). At the time I couldn’t find any alternatives with my broker AJ Bell, but maybe you can give me some clues.

    Thanks for sharing this stuff with us newbies!

  18. Nice. I didn’t know Vanguard did a high yield ETF, will check it out!
    Hoping for another mini crash soon so can pick it up even cheaper after next payday 🙂

  19. This is a great article and I enjoyed the comments. I am now looking to add some ETFs and maybe switch some of my other unit trusts and investment trusts ( i have about 8 across a balance of areas) when I feel the time is right. I try not to tinker so mainly have an invest in value funds and leave strategy. I realised I didn’t have enough money in bonds so have been so have been investing quarterly into Vanguard Life Strategy 20% as I am 62, but I should have a good enough Army, Teaching, Private and State pensions to be able to keep investing in retirement when I am 65. I also have no mortgage and a letting property with no mortgage, mainly because i have always been a saver throughout my life. Your articles are very helpful because they make me do some deep thinking on the best strategies to suit my needs. I definitely like the idea of lowering investing charges and costs so Vanguard are very attractive.

    1. Glad you found it helpful, Howard.

  20. darkwhizz · · Reply

    What do you think of the SPDR S&P Global Dividend Aristocrats ETF as an alternative to the Vanguard All-World High Dividend Yield ETF? The index it tracks seems to have a different methodology as it has a very different list of companies on its list. (I can’t work out what’s the difference in method) The TER is at 0.45%, slightly higher compared to Vanguard’s 0.29%.

  21. I enjoyed your article, thank you. I hope someone can help. In this instance, Google as not helped but confused things further for me. I have been paying a small amount on a monthly basis into these two index funds:

    Vanguard FTSE DvpWldExUK EqIdx A
    L&G Global Emerging Mkts Idx I Acc

    My question is: are ETFs better in longer term compared to the funds above? My understanding is that the main different between an index fund and an ETF is that ETFs are priced throughout the day like a stock, whereas an index fund is priced once a day. I cannot see how this would make a different to a small investor like me who squirrels away a bit of money once a month over the longterm. My current platform, Axa Self Invest does not seem to offer ETFs. I would rather make the change now whilst I do not have a lot invested.

  22. Fulla · · Reply

    I’m approaching 70 y,going to retire end of this year, living in one of the golf country, having few hundreds thousand £ in the bank , zero interest , what would you advise me to use this money please?

    1. dawnmartyne · · Reply

      It depends if you want to leave any money to anyone once your gone. If it was me Id hang on to most of the cash and enjoy spending it over the next 10 plus years . Id certainly put ‘an amount ‘ in the markets, id use the simpliciy porfolio suggestion as my allocation. The problem is if you put a fair whack in now and the markets fall it can take 10 years to break even again and youd be 80 ish then . Cash is safe at 1% theres no growth but do you need to take the risk putting it in equities?

  23. Hello everyone, I am new to this site after reading the entire contents of MMM. I was hoping you could help me with a decision, I have always saved in saving accounts and would like to start a portfolio.

    I had decided to commit to a Vanguard Life-strategy 40%, but the minimum to open an account is £500, and the minimum monthly payment £100. I was hoping to start closer to the £100 mark, I was wondering if I chose monthly payments, can I freeze this? or to just commit to the £500?

    I am currently saving up a deposit to buy my first property, I am looking to buy a property and have a mortgage in principle of £250,000 with an approximate LTV ration of 70% I am still saving and want to cover the stamp duty in cash. I don’t have any other debts. Is it worth me committing the £500 to this portfolio to get the ball rolling or hold back until after I’ve brought property? I also have a workplace pension, but as I work freelance the amounts I invest changes wildly, so I see this as bonus investing and to reduce my tax return, rather than a main strategy.

    Thank you in advance for reading my question and for any help you may be able to provide.

    1. dawnmartyne · · Reply

      If you need the money within 5 years its advised not to put it in the stock market.

      1. Thank you, I have a bad habit of being impatient, Yes, i’ll probably get a better return by increasing my deposit rather than a portfolio just yet.

    2. Hi Claire. Welcome to the personal finance community!

      To start with, there is more than one way to skin the cat but this may be one of the ways I would approach your situation.

      1) Have a target sum for your deposit.
      Based on a the figures you suggested of £250,000 Mortgage with LTV of 70%, you will require roughly £100,000 for your deposit. Have a rough target buy date, and divide the deposit required over the months left in your timeframe to the ‘Buy’ date. That will be the minimum amount you need to save per month to achieve your deposit! Consider HTB ISAs/LISAs.

      2) Set aside an emergency cash fund.
      This is basically 6 months worth of personal expenses (Rent, Food, Bills) in cash for any unexpected events you may need cash for. This may be especially important if you are working freelance where work and hence income may not be steady.

      3) Consider what you are investing for and the time frame of investment
      General Wealth? To beat inflation? How old are you now? Aiming for Financial independence (early vs typical retirement age)? How long will you be expect yourself to be in the market for? As a general rule, a time-frame of 5 years is the minimal length recommended to ride out the volatility of the market. Pensions/ISAs are recommended if investing for retirement for the obvious tax advantages. Pensions if target retirement is standard retirement age. ISAs for early FI.

      This may all be a lot to take in all at once, but take your time to work out your strategy. Consider dropping by the moneysavingexpert forum Saving/Investment section to pick out some other ways people go about planning for deposit savings and the appropriate accounts, etc that you may consider achieving your goals.


      1. Hi Fireplanter. The Monevator site recommends dividing investments between SIPPs and ISAs for those planning early retirement. I’m new to this, but the numbers looked like they made sense.

  24. Hi Fireplanter,

    Thank you for such a detailed reply. In answer to your questions,

    I currently have a £105,000 deposit in cash, I am now working on saving for the likely stamp duty of £7,500 and have £5,000 already saved as a safety net, which I would like to increase to £10,000. My main issue now seems to be finding a decent property within my budget in outer west London.

    I’m 32 now and have a rather ambitious goal of being FI by 40. I am self employed so it is difficult to predict income and expenses, I am hoping to average £60,000+ a year post tax but can have a high expenses rate (petrol, work training). I just try not to waste money and put everything spare into savings.
    I currently have a workplace pension and a private pension.

    I am interested in creating a portfolio as a long term investment to get a better return on my savings.

  25. blaine wheeler · · Reply

    Interestingly your recommend is echoed by Dr Cloonan at in his book Level3 Investing. After about 5 years of actively thinking about investing and risk I arrived at the same position as you two smart folks.

  26. I’m pleased to have found this article as I’ve often thought about over weighting or under weighting indexes without getting too hung up on the minor details. Do you know of anywhere I can assess the cape myself for UK, Europe & Asia? The S & P 500 is the only one I can find any info on.

    1. @Michael

      Covers pretty much the entire world. It looks pretty solid.


  27. lady aurora · · Reply

    can anyone suggest a suitable bond fund for the “short term gilts ” part of the simplicity portfolio?

  28. I’m wondering if you can help this utter newbie understand something you wrote above:

    “One issue with index investing is that if the index is over-priced at the time of purchase, then the long term investor is doomed to underperformance.”

    In January, I put £1500 in a Vanguard 60:40 and shortly afterwards, the markets started going crazy and my investment went down by around £80. The fund has stayed at around -4.5% to -3% since then. I’m wondering if this relates to your above comment? If yes, is the solution to sell my fund and reinvest in another one?

    Please excuse any slightly incorrect terminology usage i may have engaged in. Hopefully you understand my question!

    1. ladyaurora · · Reply

      Welcome TG
      Its not a good idea to sell when markets take a step back. You should be looking longer term at least 5 years when you invest money.
      You really need to decide why your investing and then how much your happy to put in the markets and then let it ride. Its more about getting your asset allocation right. Keep reading these sites to learn what to do. Yes they say markets are high at the moment especially the US thats why the simplicity portfolio here was designed to enter the markets in this point in time . Long term markets will go higher thats why you need at least 5 yrs. If your happy to invest some of your money for long term then theres no time like the present. Youve got global equity exposure and global bond exposure with the fund you’ve already bought . Thats good move and low cost with the fees. If you sold you would only be buying a the same expose under another name.

      1. Thank you for this. Do you know what the author meant in that sentence i posted then?

    2. ladyaurora · · Reply

      When you buy an index tracker, you are investing in all the stocks in that index. The suggestion is that the US market is high at this moment in time. So if/ when you buy the US index now the dividend yield will be lower (its currently about 2%). The index may not actually grow much higher from this point for quite awhile longer in which case the the dividend income is low without much capital growth.
      If / when the US market eventually crashes and if you then buy into the index at that point, you’re getting in at cut price so you’ll be in for tremendous capital growth and a good dividend too. If TEA is reading this ? Have i explained correctly?

      1. Sorry, I really don’t understand why I wouldn’t then sell and re-buy. Will I not get more for less if I do that? Sorry if I am being monumentally thick.

  29. @TEA with regards to value you choose VHYL
    vanguard now have VVAL global value factor ETF @ a slightly lower ocf 0.22%.
    This was not available when you put together the simplicity portfolio
    . Do you think this would be a better option than VHYL now?

    1. Hi ladyaurora…did you read the penultimate sentence of the post?…as someone rapidly approaching FI you should have FAR bigger and more fun issues to be thinking about 🙂

      1. ladyaurora · · Reply

        Ha ha you are right. (again)and i have read the penultimate sentence” dont sweat the small stuff!!”
        I have one last brick to put in place. I have a personal pension with Aviva that was started before sipps came about. As it fees are 0.87% im considering moving to another provider and reinvest in ETFs. It doesn’t hold a huge amount of money and i intend using this up within the next 14 years so ive been deciding what to do . Ive been researching sipp providers and their drawdown options if i move i need to rebuy and decide on an asset allocation !

  30. I’ve been using this portfolio for a few years and am very happy with it. I’m about to invest a one-off amount, actually moving company shares to a balanced portfolio, and will continue with this portfolio – rebalancing at the same time. However, I was wondering whether you’d change anything with the Simplicity Portfolio at what today is a few years on?

  31. I’ve been one of them many ditherers – having recently ( three years ago ) left the 9-5 to pursue a self employed lifestyle – I am now sitting on a lot of cash – thanks to this website I have gone for the vanguard lifestrat 100% equities fund ( I will be 40 this year ) I will drip my ISA allowance in for the next 4.5 years so should have 100k in it by 45 – hopefully still get 20 years of compound interest to do it’s thing then. Not exactly an ‘early retirement’ but aiming for some security. Thanks again for giving me the motivation to get off my backside and do something- like most on here wish someone has sat me down years ago and told me to drip stuff in – now need to move my company pension of 4k into a SIPP and let it run for 25 years as well

  32. ladyaurora · · Reply

    Well done. Your doing alot better than the vast majority of people epcially the self employed .

  33. […] FI club.  Nor by arguing on the internet. You get into FI club by working hard, saving hard and investing wisely.   Its a marathon not a sprint and so getting to financial independence is temperamentally suited […]

  34. Hello Escape Artist. With Vanguard ETFs in an ISA wrapper, I believe you have to manually reinvest dividends. If that’s the case, won’t trading fees be incurred? Can the Simplicity Portfolio be replicated with Vanguard index funds to make accumulation simpler? I’m a total beginner looking for a hands-off solution to monthly investment. Many thanks

  35. If you have a lump sum to invest how do you move from a growth oriented portfolio eg 100% in Vanguard FTSE all world to an income oriented portfolio when you are ready to retire without getting smashed by capital gains tax?

    1. ladyaurora · · Reply

      You can still keep your vanguard fund and with draw 4% a year from it 2% would be dividends and 2% selling a few units. You got a capital gain allowance of about 12k a year. Withdrawal s beyond that would be subject to CGT. Unless of course your investment is inside an ISA. Then there’s no problem.

      1. el Deco · · Reply

        Doesn’t selling units reduce your income next year and so on though. Isn’t the idea to leave the principle alone?

        1. ladyaurora · ·

          Yes it does . Highly debatable subject how much to take from a portfolio. You need to do research to find what your comfort able taking. But your question was triggering CGT .

  36. Heather P · · Reply

    I have enjoyed reading and applying TEA’s advice over the years- but I’m also interested if there’s any planned update to the above, given it was written in 2015? 🙂

  37. Loopy · · Reply

    I’m new to all this and looking to start investing for myself and this article has been super helpful – just wondering (as it this post was written almost 3 years ago), given the current state of the markets would you allocate the same percentages to the same ETFs? America is still expensive… And UK/Europe have Brexit ongoing… Also, why ETFs over Vanguard’s equivalent funds? Apart from being quicker to buy/sell? Thanks

  38. Hi, First of all thanks for this very helpful article. My question is the same as Loopy. Will you still recommend the same allocation today? And why ETFs over Funds? I am still in accumulation phase and want to invest in something which is all automatic to do. Currently 100% invested in Vanguard LS100 but looking to alter that due to high UK tilt.


    1. Dickrog · · Reply

      Hi Seema, Heather P asked in May this year if TEA would do the same allocation TODAY, and he responded with an updated article which you can see in response to her query.

      Loopy asked a similar question in June – would TEA advise the same allocation today, and I’ve linked to that same article.

      I don’t know if TEA wants to weigh in on your question officially. But I think I’d suggest you to read his more recent post –

  39. Hi,
    Thanks for the great post!
    are you aware of the 15% US withholding tax in vanguard’s VSUA? using a reinvesting/acculating version of this ETF (iShares for example) can overcome this problem since it will postpone the payment of tax

  40. […] or 80:20 ratio of stocks to bonds. Generally Vanguard funds are recommended. Try a portfolio like this one known as the Simplicity […]

  41. […] drop is there or thereabouts. The CAPE in the US was about 29 and VWRL is 50% US. There are/were arguments to tilt away from high CAPE markets, but a market can tolerate a high CAPE longer than you have patience. The market was therefore […]

  42. Matei · · Reply

    I am looking on TrustPilot for Vanguard and the good and bad reviews are almost at the same percentage. The bad reviews mostly complain about people getting delayed when they want to withdraw money.
    From your experience, have you had any such troubles or have you not considered withdrawing money yet?

    Thank you

  43. […] to pull the trigger, I fortuitously stumbled upon this article by the Escape Artist. Then read this and this. And found out what safe withdrawal rate meant here! Nothing to persuade me to give it a […]

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