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£180k in "cash" - looking for ISA suggestions?
Aminatidi
Posted: 31 January 2018 07:42:37(UTC)
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Alan Selwood;56187 wrote:
One point about 'risk' : if Trustnet or other statistics provider says something is higher or lower risk, they mean more volatile in price or 'likely to go up or down more (or less)'. They don't mean that there is a greater risk of becoming ultra-wealthy or losing the lot.

There was a nice comment about the defintions of words in this context in the Saturday Financial Times Saturday before last, when a fund manager at Baillie Gifford said that the latest Key Information Documents that fund managers were forced to issue, using prescribed calculations and wording, were best not looked at, or burned unread, because the regulators had no clue about concepts such as risk!

I would certainly keep all NSI I-L savings certificates as a very low risk, extremely unvolatile investment, for use as insurance against higher levels of inflation.

I would suggest that Fundsmith Equity Fund (T Class Accum) bought as an ISA direct from the managers is worth dribbling into as a major part of your core portfolio.

I find bonds rather undesirable at the moment, as they trhive best when interest rates are falling and inflation rates are declining, which seems wisdhful thinking at present. Corporate bonds look much riskier to me than Government ones - greater risk of loss if the issuing companies get into difficulties.

Have a look at Capital Gearing, Ruffer [RICA], Personal Assets Trust, and Troy funds for conservative, cautious management. Yes, as KL says, you are paying a fee to own cheap bonds and gold and near-cash as well as shares, but at least they are managing, which you don't want to do!

Moderation in all things should serve you well.


Thank you for all of that.

The comment on "risk" is useful, I hadn't fully appreciated their definition.

The NSI certs aren't going anywhere, they're as good as cash should the worse ever happen.

Fundsmith keeps being mentioned a lot, which I must admit makes me think "All good things..." but from what I read Warren Buffet stuck to "good things" and did OK out of it..

I suspect the likes of Ruffer and PAT are out of my league as I'd say there's a distinction between being "wealthy" vs. being lucky enough to have a lot of money in the bank but I do like what Troy offer in terms of decent returns compered to cash with seemingly minimal risk.
Aminatidi
Posted: 31 January 2018 07:46:04(UTC)
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King Lodos wrote:


Principally allocations.

We'd generally say there's an 'accumulation stage' in investing – where you build your positions .. Then eventually you get to a 'capital preservation' stage (generally, as we get older, we'd shift to more defensive portfolios, as large losses become harder to absorb).


Makes sense, then it's how much risk I'm prepared to take in the accumulation stage and that's ultimately a personal thing I think, there are many things where I can feel myself knowing I'd be saying something different when talking to someone else about the situation I find myself in "it's only £5k out of £180k" and so on.

King Lodos wrote:

For that reason, a defensive fund like Troy Trojan might not make much sense yet .. GAM Star is a great fund, but I think it's very specialist, difficult to assess risk in, and also perhaps unnecessary at this stage.



And risk is what attracted me to those in that they appear reasonably stable.

As above I think Fundsmith will figure somewhere in this too.

Thank you for all the details you posted by the way, I've had my head in a lot of websites and books recently and it's useful to know I took some of it in correctly.
Aminatidi
Posted: 10 February 2018 08:52:04(UTC)
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My ISA has only just opened to allow me to actually add funds (long story).

Given this weeks mild turbulence would people advocate going in hard with this years allowance to try to take advantage of the dip, or would it be prudent to still drip say £5k in now and £5k next month and so on in case there's more turbulence ahead?

Crystal ball I know :)
Mickey
Posted: 10 February 2018 09:44:02(UTC)
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Aminatidi;56865 wrote:
My ISA has only just opened to allow me to actually add funds (long story).

Given this weeks mild turbulence would people advocate going in hard with this years allowance to try to take advantage of the dip, or would it be prudent to still drip say £5k in now and £5k next month and so on in case there's more turbulence ahead?

Crystal ball I know :)

The falls are said to be the worst since 2008 but they could get more serious yet. Watching Bloomberg and CNBC suggests no one knows exactly what is happening, some say we are overdone and others say more to come. If it were me, I would probably take advantage of the recent falls and invest but keep around 25% as cash to take advantage of further weakness, if that doesn't happen I would add the remainder but expect further volatility.
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Aminatidi on 10/02/2018(UTC)
King Lodos
Posted: 10 February 2018 09:44:24(UTC)
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Good timing!

Well .. events like this don't make sense to anyone .. No one really has a clue why stocks are selling off, which is why no one knows whether they'll bounce back or keep selling off.

I'd possibly go 50% in now (£10k?), then just maintain that 50% .. So if stocks fall 10%, put another £1k in straight away .. Fall another 20%, put another £2k (give or take) in.

If we say the worst case is stocks fall 70%, so you've lost £7k (if you had to sell tmrw), which you can cover with the rest of your ISA allowance, meaning you've bought probably near the bottom of the market – great for long-term returns.

Whatever happens, take how much money you've got left to invest for the tax year – say £7,500? – divide it by how many months you've got left in the tax year, and just pay those in regularly, so if stocks don't fall anymore, you're on a regular paying in schedule, and if they do, you can buy dips, then recalculate the paying in schedule.

That's probably very overelaborate – that's just the way I'd do it .. In the scheme of things, it'll be a rounding error whether you go all in now or drip feed in

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Aminatidi on 10/02/2018(UTC)
Aminatidi
Posted: 10 February 2018 11:42:29(UTC)
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OK so let's say I was going to put £5k 50/50 between Troy Trojan and Lindsell Train Global Equity.

Presume if that was my rough ongoing plan there's no downside in putting £5k in LT now to take advantage of the equities dip and then just balancing when it makes sense to do so, or if markets dip again buy more LT?

I know there's a view that at 40 I should be all-in on equities but it's a personal tolerance thing until I get used to possibly waking up and seeing a big paper loss :)
King Lodos
Posted: 10 February 2018 12:30:05(UTC)
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Well my position would still be that whatever you don't want to risk should go in NS&I bonds – basically cash that guarantees some return .. Paying a fee for a fund that may or may not prove effective when markets fall could be a huge opportunity cost early on.

I like the idea, outlined by Sara, that you should measure your portfolio in how many shares you own, not what they're currently trading at (which is meaningless, unless you need to sell everything tmrw).

The tricky thing with market timing is you never know if it's a dip or the start of something really steep .. So it's balancing taking advantage of a small opportunity (buying stocks as cheap as they were in October) vs the risk of further falls, and the opportunity to buy even cheaper .. So 50:50 bets are what I like when I have no way of knowing one way or the other .. 50% in LT or Fundsmith, then keep it topped up, keep money going in, and learn to love volatility (because there may be a lot of it)

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Aminatidi on 10/02/2018(UTC)
Aminatidi
Posted: 12 February 2018 17:10:23(UTC)
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Well after a lot of messing about I'm in.

"Only" £2k initially but do that each week and it won't take long to get to the annual ISA limit.
Alan Selwood
Posted: 12 February 2018 17:22:22(UTC)
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As long as you get the last subscription in by the beginning of April! (Absolute last-ditch deadline is midnight on 5th April, IF they are open to receive the cash then!). There are not many weeks left now.
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Aminatidi on 12/02/2018(UTC)
Aminatidi
Posted: 15 February 2018 20:05:47(UTC)
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Doing a little reading on what may be either a final 1/3 or a third quarter (if that makes sense) of an initial portfolio which is so far 50/50 LT Global/Fundsmith.

Points taken and noted about hording funds which I don't want to do :)

So, Troy Trojan is a reasonable defensive OEIC which I asked about.

How might I judge this against something like RIT Capital Partners? I'm reading up right now as RIT looks flagged as defensive in most stuff I'm reading but seems to have very consistent long term returns.

What's the downside?

Again apologies for all the questions which may invoke fair accusations of overthinking but I don't want to be that guy with 27 funds who's created the worlds most elaborate global tracker... :)
Aminatidi
Posted: 25 March 2018 08:29:40(UTC)
#31

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Where I ended up was:

LT Global £5k
Fundsmith £5k
RCP £5k
SMT £2.5k
BGS £2.5k

I just had £12.7k transfer across from an old ISA so current plan is to go to:

LT Global £10k
Fundsmith £10k
RCP £5k
SMT £5k
BGS £2.5k

And then that's it until the new ISA year opens.

At that point the current plan is to bring SMT up to £10k as it seems a good complement for the more "defensive" Fundsmith/LT combination.

Seem reasonable?
Tony Peterson
Posted: 25 March 2018 20:24:28(UTC)
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Not by my metrics.
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