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c brown
Posted: 16 May 2017 12:35:31(UTC)
#1

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Dear All

I have been very lucky and blessed to have received £500k from a family member. Yes it's a shock and I have obviously been mulling!

My thoughts.

I have my Isa all up very very nicely!
Brwm
Fcs
Fcss
Biog
Wwh
Pac
Smt
Fgt
Fundsmith
Marlborough micro cap

I am with HL. Phoned them today and I think I'm right, I asked twice, but they said no charges on IT'S etc just usual tax and dealing fees. Funds 0.25 over £250K.

I obviously do not want anything too risky so growth and income. I can always tilt my isa portfolio to be more risky.

So here goes for new one.

City of London
Trg/jesc/eat for divi
Maybe buy fundsmith direct
Bankers
Smt
Hsl
Fidelity Asia
Electra

Will consider Shares and Etfs. Does anyone have a view on Doric Nimrod? Aircraft leasing.


I'm still rather in shock of course. My cheque clears this week. All your opinions are of course welcome. I will keep some cash and some for fun aim!

Thank you!
Mickey
Posted: 16 May 2017 12:50:58(UTC)
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That's right, HL make no charge other than dealing and stamp fees for IT's, ETF's & Shares held in a Fund & Share account, if held in an ISA the fee is max £45 per year or £200 in a SIPP.

Biggest news today may well be the launch of the new Vanguard Direct service for UK investors at https://www.vanguardinvestor.co.uk/home
1 user thanked Mickey for this post.
c brown on 16/05/2017(UTC)
Keith Hilton
Posted: 16 May 2017 13:29:07(UTC)
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Mickey;46790 wrote:

Biggest news today may well be the launch of the new Vanguard Direct service for UK investors at https://www.vanguardinvestor.co.uk/home


With 100K+ you can already go direct to Vanguard. Not sure how the new service compares fee wise. One or more of their ETF's would make a good core holding.
1 user thanked Keith Hilton for this post.
c brown on 16/05/2017(UTC)
King Lodos
Posted: 16 May 2017 17:58:05(UTC)
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What percentage are you putting in stocks?

Really, choice of funds is arbitrary .. Some will beat the FTSE World (over whatever period you're measuring over) and most won't .. But no matter how much you put in public stocks, you're only creating a FTSE World with slightly different weightings.

So how much of the £500k is riding on the stock market? It may help your risk management to consider that you are putting it all in a FTSE World tracker, and see how that feels psychologically.

So then you have to consider: how much can you tolerate losing? How much do you need to make?

The reason the wealthy tend to have portfolios full of alternatives, cash and hedge funds (and often just use an SPY tracker for their stock market exposure) is because when you've got a lot of money, you don't need to be aggressively positioned – you don't need 15% returns .. Your aims shift from aggressive capital growth and risk, to keeping ahead of inflation and minimising the impact of potential Black Swans.

I may be more adversed to losing money than most, but with £500k, I wouldn't ever want to lose more than £50k .. Like now, I'd probably be looking at 35% stocks (roughly the market weighting) .. If I was all in high Quality stocks, with no or low fees, maybe I'd go as high as Buffett's 55%. (but probably not at today's prices)
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Sara G
Posted: 16 May 2017 18:59:01(UTC)
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Congratulations CB - that's life-changing money...

I agree with KL essentially, and would add:

- Don't rush into anything - you don't have to invest it all at once, and it may be safer to do it in chunks (especially the equity portion)

- Spend some time - perhaps a weekend with no internet access (!) thinking about how you view investing and what your new strategy will be. Most of us here adjust to (hopefully) growing portfolios over the years, but this requires a sudden shift of perspective... Old habits die hard so it will be challenging to suddenly change your investing style...

- In terms of Asset Allocation, the Monevator site has some good examples of simple portfolios, along with the Meb Faber book KL recommended - Global Asset Allocation.

- Think outside the box - maybe you see yourself getting into VCTs, supporting young businesses for example? Or becoming a landlord?

- Most importantly, keep the fees as low as possible. If you don't want to use passive vehicles MNKS, TMPL, SMT and HSL all have very low fees relative to other ITs.
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c brown on 16/05/2017(UTC), King Lodos on 16/05/2017(UTC), MJPM on 17/05/2017(UTC)
c brown
Posted: 16 May 2017 19:30:12(UTC)
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Yes it is life changing and this is why I'm taking time. Good idea no Internet access Sara and you are right im not going to invest all at once. I've definitely decided not to buy property. I have a house and don't want the letting hassle, repairs etc.

KL I have been fairly aggressive all my investing life apart from fairly recently with fundsmith & fgt so this is going to be very very different indeed for me.

As this is a God given opportunity I don't want to lose it. Just steady Eddy with dividends. I have always been in equities and honestly I have never researched alternatives. Ns&I seem pointless or am I very wrong? I believe 2.2pc & no tax? I want to invest 400k sensibly. I will have my Isa for my aggressive growth it's in the blood and always will be!

I obviously have been reading lots and will check over the model portfolios too for ideas.

Thank you everyone.





TJL
Posted: 16 May 2017 20:08:15(UTC)
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My contribution would be to say you don't have to overcomplicate things.
More money does not have to mean more complication.
Or more and more investments, as long as you are diversified.
And, as long as you are happy to trust in your own judgement.
If anything, our portfolio is getting less complicated the more I learn and the more it grows.
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c brown on 17/05/2017(UTC), Alan Selwood on 19/05/2017(UTC), dlp6666 on 21/05/2017(UTC)
King Lodos
Posted: 16 May 2017 20:53:28(UTC)
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c brown;46803 wrote:
Yes it is life changing and this is why I'm taking time. Good idea no Internet access Sara and you are right im not going to invest all at once. I've definitely decided not to buy property. I have a house and don't want the letting hassle, repairs etc.

KL I have been fairly aggressive all my investing life apart from fairly recently with fundsmith & fgt so this is going to be very very different indeed for me.

As this is a God given opportunity I don't want to lose it. Just steady Eddy with dividends. I have always been in equities and honestly I have never researched alternatives. Ns&I seem pointless or am I very wrong? I believe 2.2pc & no tax? I want to invest 400k sensibly. I will have my Isa for my aggressive growth it's in the blood and always will be!

I obviously have been reading lots and will check over the model portfolios too for ideas.

Thank you everyone.


I always like to check Warren Buffett's asset allocation – as he's someone who's both an aggressive, perma-bull, but also knows the value of sleeping well at night and not wanting to go broke.

https://www.gurufocus.com/profile/Warren+Buffett

http://i.imgur.com/DKdVIIa.png

I'd still be cautious on dividends tbh .. They're never guaranteed, and were some of these companies to slash dividends, their capital value could fall .. I've personally seen the dividend growth story as being parallel to falling bond yields since 1980 .. So I tend to side with Terry Smith on investing in businesses, first, and taking an income from capital if you need it.

I tend to like 1/3rd aggressive positions; 1/3rd in lower volatility investments (mostly corporate bonds and hedge funds); and 1/3rd basically in cash, NS&I, maybe short-term government bonds .. Platform/bank risk may be another consideration .. One reason individual US treasuries and TIPS are still attractive at effectively 0 yields is because you've got a guarantee from the US gov to repay the money .. I'd probably have a ladder of short-term US and UK gov bonds (probably index-linked) if I wasn't so lazy about setting it up.
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c brown on 17/05/2017(UTC), Guest on 19/05/2017(UTC)
Freddy4Skin
Posted: 16 May 2017 22:24:47(UTC)
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c brown;46789 wrote:
Dear All

I have been very lucky and blessed to have received £500k from a family member.



Are you married?
Tug Boat
Posted: 17 May 2017 08:47:43(UTC)
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Thought I should comment on this being in a similar situation over two years ago.

Most advice will not fit your circumstances. For example doing what Warren B does is no good as you are not a billionaire and his tax treatment is vastly different.

Getting away with no internet: I did it differently spent a week away from it all with the internet, but not being allowed to press the buy button.

Holding cash, you will pay tax. I did similar to what KL suggested, holding short duration or high yield bond funds.

Don't buy funds with overlapping holdings: If they pay divi at different times in the year and you need income then what's wrong?

Buy trackers: Remember if you buy at the top of the market, it could take years to get your capital back - I'm still not there.

Buy growth and sell to generate an income: This is a pain in the arse. I buy income classes it makes life easier.

Tax is a pain. I have a friend who understands this, try to talk to someone who knows, not someone who thinks he knows.

Balancing a portfolio. I top slice if a holding goes up a lot or the yield falls a lot. A lot is defined on what you think is a lot.

Don't panic, I am still not fully invested, 90k to go.


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c brown on 17/05/2017(UTC), Mickey on 17/05/2017(UTC)
Milo Don
Posted: 17 May 2017 09:31:34(UTC)
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Congratulations!

As that is a decent lump of cash, wealth preservation rather than generation might be a consideration.
That wily old Lord Rothschild's RIT Capital Partners (RCP) might be worth a look - variety of asset classes and decent performance, although I believe it is run for wealth preservation.

It is at a premium to NAV at the moment though.

Also the 2016 vintage of Bordeaux is being sold 'en primeur' at the moment and supposed to be very good. If it doesn't make you any money at least you can drink it!
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Keith Hilton
Posted: 17 May 2017 10:15:31(UTC)
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Milo Don;46815 wrote:
Also the 2016 vintage of Bordeaux is being sold 'en primeur' at the moment and supposed to be very good. If it doesn't make you any money at least you can drink it!


I wouldn't recommend wine investment for anything other than a tiny fraction of a portfolio. It's unregulated and initial charges are very high. Whilst 2016 is being touted as a good vintage, recent years releases have been at high prices. Also, until bottled, it can be difficult to sell (and impossible to drink!).

If anyone fancies a dabble, there's probably better value to be found in older vintages.
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c brown on 17/05/2017(UTC)
c brown
Posted: 17 May 2017 10:30:54(UTC)
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Rit is one I've been looking at! I will be speaking to my accountant shortly re tax. Can anyone point me in the right direction re research into bonds and the best way to invest in them.

Wow this is now a minefield and am determined to do this myself. Bank is already wanting to talk to me strangely!!

What percentage did you put into the bond funds initially?

I had my fill of fizzy wine and martini cocktails at weekend!! Ouch!
Tug Boat
Posted: 17 May 2017 15:37:36(UTC)
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First thing I did was negotiate a flat 0.25 fee with HL.

Bank wanted to speak to me, only wanted to talk trusts and IHT - not very useful.

Bonds, put 25% into strategic and RL high yield to park it. HL do not charge for UT transactions, so you can mess around with sales and purchases.

Bought IUKD, IDVY and GBDV and four global income UTs

Have been buying income ITs and REITs and in parallel running down the bond holdings except RL which I am keeping.

Have made a few mistakes and been lucky too. It has also taught me patience. I am in no rush to be fully invested.
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Tyrion Lannister
Posted: 17 May 2017 16:17:44(UTC)
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This thread is good timing for me.

I'm seriously considering transferring a final salary pension into my HL SIPP.

Main reason is that the transfer value (just under £500K) is 36 X annual income, whereas 20 X appears to be the norm.

I also like the fact that I'd be able to transfer the whole pension to my wife on death, at present she'd only get 50%. This matters to me because I have a health condition meaning reduced life expectancy.

Tug boat, how did you manage to negotiate the flat 0.25% with HL, do you have any tips? I tried this on the telephone with the threat that I'd happily invest the money elsewhere. They wouldn't budge.
Tug Boat
Posted: 17 May 2017 16:24:21(UTC)
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I had everything in place to transfer my HL holding to II and has a significant amount ready to get transferred to HL.

I said to them please reduce the charge or say goodby to what's coming and what is already there.

They offered 0.25%

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TJL
Posted: 17 May 2017 16:42:30(UTC)
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I negotiated the lower custody fee arguing that taken together at that time our joint portfolios were over their threshold, but that was post-RDR when they had just released their new charging structure and they were getting a lot of flack.
They might not feel so pressurised now (unless they see the Vanguard news making a difference, but there has been comment today from Numis (see The Expert View) that they don't think it will).
Not sure it makes any difference to me now as I have all but abandoned funds, other than M&G Optimal Income (which I'm thinking about).
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Tyrion Lannister on 17/05/2017(UTC)
Alan Selwood
Posted: 17 May 2017 17:00:04(UTC)
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c brown;46789 wrote:
Dear All

I have been very lucky and blessed to have received £500k from a family member. Yes it's a shock and I have obviously been mulling! ..........

...... I am with HL. Phoned them today and I think I'm right, I asked twice, but they said no charges on IT'S etc just usual tax and dealing fees. Funds 0.25 over £250K.

I obviously do not want anything too risky so growth and income. I can always tilt my isa portfolio to be more risky........

Thank you!


First of all, Charlotte, I am delighted to hear of your good fortune. I hope it was a lifetime gift that you received, since receiving money as a legacy is usually a two-edged sword : a mixture of emotional sadness and financial joy.

Having given investment advice in the now distant past to some Pools and Premium Bond winners, I know that the biggest danger of receiving large sums out of the blue is not being used to it and either frittering it away, or being extremely fearful of losing it, or very rash in the decisions made.

In your case, from your many comments on this forum, I do not feel the anxiety that I often felt in the past when large sums appeared in people's bank accounts unexpectedly.

Looking at your existing holdings, there is very little for me to add that you have not already thought of.

I think that if you go for more Fundsmith, you should certainly do it direct. Remember that if you decide to put £100k+ with them, the best unit class is the 'I' one, as it is marginally cheaper than the 'T' class that most use. Many platforms will put you into the 'I' class too, but most also want a platform fee, especially HL.

Risk-wise, I can well imagine that funds/ITs run by Troy Asset Management will appeal, since they veer more towards capital preservation than shooting the lights out, and will appear prescient and gratifying in performance terms after a downturn and boringly sluggish at times when the markets are racing away. So Personal Assets Trust, those Troy funds that have equities, bonds, gold in their composition, and to some extent also the Ruffer IT [RICA]. The latter has apparently been buying up lots of put options on the market, so if that proves to be a good decision, it should do a lot better in the future than it has done in the last few years!

It is also worth checking your position with regard to Inheritance Tax, since with this inheritance alone, you are now halfway to a married couples maximum exempt amount on death, even including the latest complication of the new allowance for a family home left to children or grandchildren on death, when and if that additional allowance rises to its maximum in a few years' time. A collection of solid AIM stocks could be worth a look re IHT implications if you need to consider IHT as an issue! See the Investors' Chronicle articles of a couple of weeks ago for some ideas on which ones may be winners and good value rather than losers and too expensive. Other useful sources for AIM stocks is all of John Lee's articles in the FT (he did one a week or two back, and mentioned, among others, his thoughts on TREATT, Tarsus, Concurrent Technologies, Air Partner - I know nothing about the Nimrod share you mentioned), and a scan through the top 10 holdings in smaller companies ITs and funds such as Marlborough Micro Cap, or anything by Gervaise Williams, River & Mercantile, Aberforth, etc. Be aware, if you are not already, that small companies individually can have major swings in price caused by lack of liquidity from one day to the next, and trailing stop losses of less than 20% may be a mistake with hindsight, however hurtful a few 5% drops in a week may be.

EAT : I personally would not use this for income, since they have a clear mandate to cannibalise capital to create income, and in your situation, I suspect that there are easier and more effective ways to get income by looking for something with a simple, plain natural yield. But that is only my opinion. I would tend to use JEO for Fundsmith-style selection of quality European equities, and/or TRG if I wanted to go into the smaller companies sector of European markets, but these are really growth-oriented. At the moment, I am not in anything European, because I find more interesting hunting grounds elsewhere!

HL charges: Read all the small print very carefully about charges on their various platform offerings (ISA v. SIPP v. Fund & Share), and the extent to which the charges cover each account separately or all accounts together; then the question of charges based on tiers of portfolio value on each account.

Timing: I would certainly encourage anyone whose finances have changed fairly drastically to sit back and think for months or even years, so that wishes, plans and possibilities settle into place in the mind. Given the latest upward tilt in markets, there may not be a pressing need to invest now - it may be better to sit on your hands, dribble money into the market, sit and plan what to do when.......

When it comes to mixed-asset funds like Personal Assets, etc, you do have enough money to create your own near equivalent if the idea appeals - x% in equities such as the top 10 holdings of P/Assets, plus y% in a few similar bond holdings (probably largely US TIPS), a z% slug of gold - ideally physical gold rather than through ETFs, because it should be both safer and cheaper in sizeable amounts to do it that way (eg via BullionVault).

That's all that comes to mind immediately, but good hunting (Live Long & Prosper!).
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Jim S on 17/05/2017(UTC), TJL on 17/05/2017(UTC), Tyrion Lannister on 17/05/2017(UTC), gillyann on 18/05/2017(UTC), c brown on 19/05/2017(UTC), Jim Thompson on 19/05/2017(UTC), satish mittal on 20/05/2017(UTC), TJ33A on 22/05/2017(UTC), Liz Llewelyn on 22/05/2017(UTC), Former Commando on 22/05/2017(UTC), Guest on 23/05/2017(UTC)
King Lodos
Posted: 17 May 2017 18:18:19(UTC)
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It's never proven easy to determine whether you're at the top of the market or still in the bottom eighth. And some great investors have been sidelined into retirement having a strong opinion that hasn't borne out.

But there is the observation that stocks and bonds are almost as expensive as they've ever been, and a lot of wealthy investors (like El-Erian) have half their portfolios in cash or short-dated government bonds because they expect asset prices to come back down to earth at some point.

Ruffer and Troy Trojan's high weighting to TIPS and inflation-linked gilts seem a little committal – I've not got more than a few % in them myself yet .. But their long-term view is obviously that global debt will necessitate inflation at some point (or will spark a crisis), and in either case, presumably, inflation-protected gov bonds would be where you want to be .. The 70s were one of these decades where stocks and bonds effectively returned nothing, while betting on inflation would've done quite well.
Independent Thought
Posted: 19 May 2017 07:19:38(UTC)
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1. I like

SMT and MNKS they are globally diversified so they shouldn't drop too much barring a repeat of 2008. Look into MNKS too, it is managed by the same company who run SMT and has a newish manager with an excellent track record. The discount may be better than SMT, check Morningstar.

Small cap is good too, long term. THRG and SDV are what I have. THRG has a better discount currently.

2. Please don't listen to the people suggesting trackers! ITs are better generally
http://view.ceros.com/ci.../issue-29-may-2016/p/34

3. I am assuming you are are not a teenager or very young, in which case you should diversify. If you want to be safer you need to buy bonds or something other than shares. It is tricky to diversify while 100% in shares, they are all hit by a major downturn, whereas people will then run to gold or similar with their money.

4. I get inspiration from this guy (£160 a year, I believe), peanuts to you. http://johnbaronportfolios.co.uk/

Good luck!
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