Share this page:
Stay connected:
Welcome to the Citywire Money Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error

Investment Bond
Tola
Posted: 12 August 2017 15:35:09(UTC)
#1

Joined: 27/02/2015(UTC)
Posts: 7

Thanks: 9 times
Was thanked: 2 time(s) in 2 post(s)
Hi Everybody,
This is my first post on the forum even though I have been an avid reader for quite some time. I am very much a novice investor even though I have learnt a great deal from your contributions to the forum. I am a retired 68 old with a private pension which at this moment in time I am not drawing down on. For background, my income derives from my state pension, some small pensions from previous employers, dividends from shares, my wife’s small pension and an amount of 5% a year (of my initial investment) from an Investment Bond that I initiated some 10 years ago. My plan is to continue to withdraw the 5% per year, from the IB, for the next 10 years and aim for growth with the balance. My IB portfolio is as follows:

Blackrock European Abs. Alpha. 3%
Blackrock UK Income. 6%
Index Linked Gilts. 7%
Invesco Perp Dist. 10%
Invesco Perp High Income. 14%
Kames Sterling Corp Bond. 7%
M&G Corp Bond. 5%
M&G Eps Allocation. 13%
M&G Glob Basics. 8%
M%G Strat Corp Bond. 12%
Newton Real Return. 4%
Artemis Income. 7%
Fidelity Strat Bond. 5%

This portfolio was created by my previous IFA and has remained unchanged for the 10 years. I am now working with another IFA and I have suggested that we need to relook at this portfolio with all the changes to the global landscape that has evolved over the past decade. The new advice is to look at 4- 5 multi asset funds that would be properly managed.
I have yet to discuss my reaction to this suggestion with my IFA.
From what I have learned from this forum in the past this advice will be expense considering the high management costs of these type of funds. Some of the suggested funds are over 2% OCF. My initial reaction is would I be better advised to look at a more passive approach like Vanguard LifeStrategy 60 and maybe some other index funds which a offer a much lower cost?
Any advice or guidelines regarding changes to this portfolio would be very much appreciated taking into account the advice from my IFA and my alternative thinking could both be wrong. If more background is required to offer further foundation to the advice I am more than happy to oblige.
Thank you!
jeffian
Posted: 16 August 2017 12:44:05(UTC)
#2

Joined: 09/03/2011(UTC)
Posts: 369

Thanks: 102 times
Was thanked: 427 time(s) in 180 post(s)
Hi Tola,

I'm not going to answer(!) your specific question about fund allocation - I'll let others do that - but I, too, have an Investment Bond and you might be interested in other issues I have been considering.

As I am sure you are aware, the right to draw down 5% per annum for 20 years is treated as a 'return of capital' and, therefore, is not "tax free", as many people think, but "tax deferred". Anything left at the end of 20 years (or whenever a withdrawal greater than 5% is made) is taxed as income, albeit the gain is 'top-sliced' over the length of term held. If it Is an 'onshore' Bond, it is treated as tax paid at the basic rate but may attract higher rate tax; if 'offshore', it is all taxable, but only at the rate prevailing in the year in which you encash it. I was smugly going along taking my 5% but was surprised when, on an IHT review with my accountant, she suggested that I gifted segments of my offshore bond to my wife, currently a basic rate taxpayer, and that she encashed them at her basic rate of tax. I queried why on earth I would want to pay 20% on the gain when I currently pay nothing and her response was that, when the time comes, I will otherwise be paying higher rate tax on it or will lose 40% of the whole lot in IHT if I snuff it!

I appreciate that it all depends on personal circumstances - I'm currently trying to reduce the size of my estate and pass on assets to the next generation - but it's worth looking ahead as you say you are looking to continue to grow the capital over the next 10 years. And then what? At that point, you will have used your full 5% annual 'allowance' but you will still be 'only' 78 and will then have to pay tax on any further withdrawals at your highest marginal rate and eventually pay IHT on the remainder. Something to think about, perhaps?

I have no comment on the portfolio. Mine has been mainly in Fidelity funds (Special Sits, American, European) and JPM Emerging Markets and I have been very pleased with the performance, though I have no idea whether i could have done better with other funds.
4 users thanked jeffian for this post.
Tim D on 16/08/2017(UTC), Tola on 16/08/2017(UTC), Mike L on 17/08/2017(UTC), Jon Snow on 17/08/2017(UTC)
Tim D
Posted: 16 August 2017 13:48:30(UTC)
#4

Joined: 07/06/2017(UTC)
Posts: 115

Thanks: 467 times
Was thanked: 135 time(s) in 65 post(s)
Tola;49781 wrote:

This portfolio was created by my previous IFA and has remained unchanged for the 10 years.


Have the fund units even been migrated to post-RDR "clean priced" unit types? That could easily take 0.5-1.0% off the OCF of each holding.

Tola;49781 wrote:

I am now working with another IFA and I have suggested that we need to relook at this portfolio with all the changes to the global landscape that has evolved over the past decade. The new advice is to look at 4- 5 multi asset funds that would be properly managed. I have yet to discuss my reaction to this suggestion with my IFA. From what I have learned from this forum in the past this advice will be expense considering the high management costs of these type of funds. Some of the suggested funds are over 2% OCF.


Can you name some of the things they're suggesting? I like multi-asset funds (mainly because these days I need to pay someone else to hold their nose and buy bonds for me, and I don't trust myself to rebalance between asset-classes) but I don't pay more than 0.75% OCF (for active) for any of them and hold plenty of 0.22% OCF Lifestrategy too.

I'm amused by the phrase "properly managed" in there. Does your adviser think there are some multi-asset funds which aren't "properly managed"? If so, perhaps the regulators should be informed! Or do they mean that you should pay them (your adviser) some yearly percentage so that they can "properly manage" these 4-5 funds? Of perhaps they mean only "active management" is "proper management" and that VLS60 doesn't qualify (I'd respectfully disagree: if I want a 60:40 portfolio maintained with extreme discipline, that's exactly what VLS60 gets me).

Tola;49781 wrote:

My initial reaction is would I be better advised to look at a more passive approach like Vanguard LifeStrategy 60 and maybe some other index funds which a offer a much lower cost?


Only you can decide what's right for you. But at least you're considering your options and can evaluate the perceived-by-you added value of more expensive options vs cheaper ones (which is more than what most people do who just go along with whatever the first adviser they talk to tells them to do).
Tola
Posted: 16 August 2017 14:58:07(UTC)
#3

Joined: 27/02/2015(UTC)
Posts: 7

Thanks: 9 times
Was thanked: 2 time(s) in 2 post(s)
jeffian;49861 wrote:
Hi Tola,

I'm not going to answer(!) your specific question about fund allocation - I'll let others do that - but I, too, have an Investment Bond and you might be interested in other issues I have been considering.

As I am sure you are aware, the right to draw down 5% per annum for 20 years is treated as a 'return of capital' and, therefore, is not "tax free", as many people think, but "tax deferred". Anything left at the end of 20 years (or whenever a withdrawal greater than 5% is made) is taxed as income, albeit the gain is 'top-sliced' over the length of term held. If it Is an 'onshore' Bond, it is treated as tax paid at the basic rate but may attract higher rate tax; if 'offshore', it is all taxable, but only at the rate prevailing in the year in which you encash it. I was smugly going along taking my 5% but was surprised when, on an IHT review with my accountant, she suggested that I gifted segments of my offshore bond to my wife, currently a basic rate taxpayer, and that she encashed them at her basic rate of tax. I queried why on earth I would want to pay 20% on the gain when I currently pay nothing and her response was that, when the time comes, I will otherwise be paying higher rate tax on it or will lose 40% of the whole lot in IHT if I snuff it!

I appreciate that it all depends on personal circumstances - I'm currently trying to reduce the size of my estate and pass on assets to the next generation - but it's worth looking ahead as you say you are looking to continue to grow the capital over the next 10 years. And then what? At that point, you will have used your full 5% annual 'allowance' but you will still be 'only' 78 and will then have to pay tax on any further withdrawals at your highest marginal rate and eventually pay IHT on the remainder. Something to think about, perhaps?

I have no comment on the portfolio. Mine has been mainly in Fidelity funds (Special Sits, American, European) and JPM Emerging Markets and I have been very pleased with the performance, though I have no idea whether i could have done better with other funds.




Hi Jeffian,
Thank you for your reply!
I was aware that the remaining amount was liable to taxation as you have advised. The IB is jointly held by my wife and I. My wife is a non tax payer and we are considering whether I should gift her the bond so that we can withdraw, from the balance of the bond, over a period of time to minimise the tax.
Appreciate your advice anyway
Cheers
Tola
Tola
Posted: 16 August 2017 15:42:04(UTC)
#5

Joined: 27/02/2015(UTC)
Posts: 7

Thanks: 9 times
Was thanked: 2 time(s) in 2 post(s)
Tim D;49863 wrote:
Tola;49781 wrote:

This portfolio was created by my previous IFA and has remained unchanged for the 10 years.


Have the fund units even been migrated to post-RDR "clean priced" unit types? That could easily take 0.5-1.0% off the OCF of each holding.

Tola;49781 wrote:

I am now working with another IFA and I have suggested that we need to relook at this portfolio with all the changes to the global landscape that has evolved over the past decade. The new advice is to look at 4- 5 multi asset funds that would be properly managed. I have yet to discuss my reaction to this suggestion with my IFA. From what I have learned from this forum in the past this advice will be expense considering the high management costs of these type of funds. Some of the suggested funds are over 2% OCF.


Can you name some of the things they're suggesting? I like multi-asset funds (mainly because these days I need to pay someone else to hold their nose and buy bonds for me, and I don't trust myself to rebalance between asset-classes) but I don't pay more than 0.75% OCF (for active) for any of them and hold plenty of 0.22% OCF Lifestrategy too.

I'm amused by the phrase "properly managed" in there. Does your adviser think there are some multi-asset funds which aren't "properly managed"? If so, perhaps the regulators should be informed! Or do they mean that you should pay them (your adviser) some yearly percentage so that they can "properly manage" these 4-5 funds? Of perhaps they mean only "active management" is "proper management" and that VLS60 doesn't qualify (I'd respectfully disagree: if I want a 60:40 portfolio maintained with extreme discipline, that's exactly what VLS60 gets me).

Tola;49781 wrote:

My initial reaction is would I be better advised to look at a more passive approach like Vanguard LifeStrategy 60 and maybe some other index funds which a offer a much lower cost?


Only you can decide what's right for you. But at least you're considering your options and can evaluate the perceived-by-you added value of more expensive options vs cheaper ones (which is more than what most people do who just go along with whatever the first adviser they talk to tells them to do).


Hi Tim D,

Thank you for your reply!

Q1 .I am not sure of the meaning of the 'post-RDR "clean priced" unit types'. Can you elaborate more on this?

Q2. These are the suggestions that have been proposed together the OCF:
Invesco Perpetual Distribution 1.12%
F&C MM Navigator Moderate 2.04%
Jupiter Merlin Balanced 2.02%
Jupiter Distribution 1.09%

Q3. I think the context of the "properly managed" comment was the IFA's comparable view of Multi Assest Funds v other fund types?????

Cheers
Tola



Julian Wang
Posted: 16 August 2017 16:33:24(UTC)
#9

Joined: 11/01/2013(UTC)
Posts: 19

Was thanked: 34 time(s) in 8 post(s)
Any other fees?

IFA fee?

Plate form fee?

Julian
Tim D
Posted: 16 August 2017 17:00:58(UTC)
#7

Joined: 07/06/2017(UTC)
Posts: 115

Thanks: 467 times
Was thanked: 135 time(s) in 65 post(s)
Tola;49867 wrote:

Q1 .I am not sure of the meaning of the 'post-RDR "clean priced" unit types'. Can you elaborate more on this?


Semi-decent article here covers a lot of aspects of it: http://www.thisismoney.c...ngy-old-funds-wash.html

Tola;49867 wrote:

Q2. These are the suggestions that have been proposed together the OCF:
Invesco Perpetual Distribution 1.12%
F&C MM Navigator Moderate 2.04%
Jupiter Merlin Balanced 2.02%
Jupiter Distribution 1.09%


I have held Invesco Perpetual Distribution in the past (in a work DC scheme) and was very happy with it. Jupiter Distribution has certainly been on my radar. But both "F&C MM Navigator Moderate" and "Jupiter Merlin Balanced" seem to be "funds of funds", which probably explains their higher OCF as yet another layer of management dips its sticky fingers in your assets; not a fan of the things myself.

Charges on them all look comparable (within ~0.1%) with what you'd pay for them on HL with their platform fee included (and HL are generally considered an expensive platform to hold funds on, although they do have their fans).

And presumably this IFA is expecting to get paid too somehow.

Tola;49867 wrote:

Q3. I think the context of the "properly managed" comment was the IFA's comparable view of Multi Assest Funds other fund types?????

Not sure what to make of that. So all-equities or all-bonds funds aren't "properly managed"?
1 user thanked Tim D for this post.
Tola on 17/08/2017(UTC)
srg751
Posted: 16 August 2017 18:40:12(UTC)
#6

Joined: 10/08/2013(UTC)
Posts: 1,168

Thanks: 402 times
Was thanked: 1004 time(s) in 508 post(s)
Tola;49867 wrote:
[quote=Tim D;49863][quote=Tola;49781]
[quote=Tola;49781]

Q2. These are the suggestions that have been proposed together the OCF:
Invesco Perpetual Distribution 1.12%
F&C MM Navigator Moderate 2.04%
Jupiter Merlin Balanced 2.02%
Jupiter Distribution 1.09%
Cheers
Tola
.....................................................................






Tola, I'd ask your IFA why they haven't 'proposed' Artemis Monthly Distribution. OCF is 0.89%, the current yield is 4.1%,and its performance over 1, 3 and 5 years is double most of the ones that they've 'suggested'.
Take a look:
http://www.moneyobserver...thly-Distribution/10FEB

This isn't my boat, but if it was I'd go for Vanguard LS. What gets me though is that it's taken me three minutes to come up with that. What's your IFA charging you?. I'd be having a word!





1 user thanked srg751 for this post.
Tola on 17/08/2017(UTC)
King Lodos
Posted: 16 August 2017 18:44:20(UTC)
#12

Joined: 05/01/2016(UTC)
Posts: 1,670

Thanks: 277 times
Was thanked: 2163 time(s) in 896 post(s)
I can see the appeal of multi-asset funds in this climate – as technically they can go anywhere and adjust to whatever markets we find ourselves in.

However in practice they still come down to simple bets, on where they think things are likely to go .. e.g. Troy Trojan, Capital Gearing Trust and Ruffer Total Return think we'll wind up with inflation, so they take pretty large bets on inflation-linked bonds, and some gold, with some market exposure (stocks and corporate bonds being high and low volatility versions of the same thing really).

Newton Real Return's more of a standard mix of stocks and bonds.

In aggregate, what they'll all amount to is a certain mix of:
- Stocks
- Bonds
- Gold/Cash

Which is why when you build a passive portfolio – of a sensible mix of Stocks, Bonds and Gold/Cash – it tends to do about as well as most things an IFA could construct, but may save you a bit in fees.

Some active funds will get their bets rights, and some will get them wrong .. So you tend to diversify and buy a few funds, and the winners tend to balance out losers, and what you're left with is the 'passive' return.

Then again, it's not a bad thing to let other people think about asset allocation for you .. Being 50:50 active and passive could be a nice compromise.

I often recommend Burton Malkiel's (current edition) of Random Walk Down Wall Street for recommended portfolios by age group .. It's meant for a US audience, but I think most of the recommendations could be adapted for UK available tracker funds
3 users thanked King Lodos for this post.
Tim D on 16/08/2017(UTC), Tola on 17/08/2017(UTC), Mike L on 17/08/2017(UTC)
Alan Selwood
Posted: 16 August 2017 22:32:52(UTC)
#13

Joined: 17/12/2011(UTC)
Posts: 2,344

Thanks: 443 times
Was thanked: 3447 time(s) in 1346 post(s)
Leaving aside the question of whether an investment bond is a suitable vehicle (for very many it is not, but in the past an awful lot of people bought them because the salesman/IFA/tied adviser got a much higher commission on them than he could have got from selling you investment trusts, government stocks bought on the Post Office Register, individual shares, or unit trusts), it seems to me that these multi-asset funds and the intermediaries are over-complicating the investment allocations and charging far too much per annum for the privilege.

If you are not at all interested in the detail of asset allocation or in researching particular funds, investment trusts, bonds, etc then you will probably find that one of the global multi-asset tracker funds that charges peanuts p.a. will be simpler and cheaper, and will at least be actual, correctly-labelled tracker funds, not a multi-asset fund charging a lot to end up doing much the same thing overall as the tracker fund.

If you want to get your hands dirty, I'm sure that you could construct a decent portfolio by choosing your desired 'comfort zone' percentage allocations of equities, bonds, gold, property, etc, then asking us all for our favourites in those sectors, which you then buy or don't buy at your own discretion. You probably can't do any of that, however, through the investment bond format, because the bond manager won't let you!

I am always reluctant to spend more than 1% p.a. on a fund or investment trust, and don't want platform fees on top of that either. There are some really good portfolio managers around who will charge you around 0.5% p.a. Why pay 1.5% or 2% when you can pay a lot less by cutting out half the middlemen?
14 users thanked Alan Selwood for this post.
Jon Snow on 16/08/2017(UTC), Tim D on 16/08/2017(UTC), Tola on 17/08/2017(UTC), Jeff Liddiard on 17/08/2017(UTC), Mike L on 17/08/2017(UTC), jeffian on 18/08/2017(UTC), Guest on 18/08/2017(UTC), dlp6666 on 18/08/2017(UTC), Bit at a Time on 18/08/2017(UTC), Guest on 18/08/2017(UTC), sarah b on 19/08/2017(UTC), Guest on 19/08/2017(UTC), Guest on 19/08/2017(UTC), PaulSh on 21/08/2017(UTC)
Tola
Posted: 17 August 2017 04:59:35(UTC)
#10

Joined: 27/02/2015(UTC)
Posts: 7

Thanks: 9 times
Was thanked: 2 time(s) in 2 post(s)
Julian Wang;49872 wrote:
Any other fees?

IFA fee?

Plate form fee?

Julian



Hi Julian,
Thank you for your reply.
The IFA fee is 0.5%
Tola
Julian Wang
Posted: 17 August 2017 06:10:43(UTC)
#15

Joined: 11/01/2013(UTC)
Posts: 19

Was thanked: 34 time(s) in 8 post(s)
Hi Tola,

Investing is NOT an exact science!

Based on your age of 68 and 10 year investment horizon, I personally will go for a 60% equity and 40% bond portfolio (even 70/30) Provided you can stick to the plan and sleep well with a volatility of up to 20% (30%)

You should check on the charge of your current portfolio!

Your new IFA's recommendations have average fee of 1.6%, plus his fee of 0.5%, give overall fee of 2.1%.


Simple alternative is Vanguard life strategy 60% equity with a charge of 0.22. If you use Iweb plateform, you pay one off £25 plus £5 per trade.


Its highly unlikely ANY active manager over 10 years can over come a 1.9% per year handicap/fee differential without taking ADDITIONAL risk.


If you prefer an active manager, you might like to consider couple LOW FEE options:
Vanguard global balanced: charge 0.6%, about 70% equity
Ballie Gifford managed: charge 0.45%, about 75% equity

Can mix with Vanguard Life Strategy 20% equity to achieve your desired equity bond mix.

The financial industry are expert at designing products to sell to you that make money for them! Good stories sell, boring simple low cost products does not (just as much us/ consumer's fault)

This year the story is multi asset, last year was absolute return etc.

There is No substitute for education.
Couple books you can download for free:

Elements of investing
https://nebula.wsimg.com...ion=0&alloworigin=1

Boglehead's guide to investing
http://doc.xueqiu.com/14...3ebdeb1cd3fd7a1bfa2.pdf

You might like to watch the Vanguard webcasts:
https://investor.vanguar...vesting/webcast-videos/

I hope its not too much home work for a retiree.

Julian
9 users thanked Julian Wang for this post.
Tola on 17/08/2017(UTC), Lemanie on 17/08/2017(UTC), Jim S on 17/08/2017(UTC), Mike L on 17/08/2017(UTC), Tim D on 18/08/2017(UTC), dlp6666 on 18/08/2017(UTC), MJPM on 18/08/2017(UTC), Guest on 18/08/2017(UTC), Guest on 20/08/2017(UTC)
PaulSh
Posted: 17 August 2017 21:13:01(UTC)
#11

Joined: 02/12/2014(UTC)
Posts: 51

Thanks: 6 times
Was thanked: 90 time(s) in 47 post(s)
Tola;49879 wrote:
The IFA fee is 0.5%

Not if you don't have clean-priced funds it isn't because they will be raking in the trail commissions from the fund managers on top of that.
Freddy4Skin
Posted: 17 August 2017 21:34:16(UTC)
#16

Joined: 22/04/2014(UTC)
Posts: 64

Thanks: 104 times
Was thanked: 45 time(s) in 30 post(s)
My only bond holding is M&G Emerging Market Bond which I have held over about 4 years. Run by a very experienced manager with reasonable charges compared with its peer group
Tim D
Posted: 18 August 2017 08:22:16(UTC)
#17

Joined: 07/06/2017(UTC)
Posts: 115

Thanks: 467 times
Was thanked: 135 time(s) in 65 post(s)
Freddy4Skin;49913 wrote:
My only bond holding is M&G Emerging Market Bond which I have held over about 4 years. Run by a very experienced manager with reasonable charges compared with its peer group


Er, I suspect you may be unaware what an "Investment Bond" actually is. It's a (confusingly named) tax-wrapper... see e.g https://www.moneyadvices...ticles/investment-bonds (particularly the "Tax on investment bonds" section) and https://en.wikipedia.org/wiki/Insurance_bond .
1 user thanked Tim D for this post.
Freddy4Skin on 18/08/2017(UTC)
jeffian
Posted: 18 August 2017 09:34:18(UTC)
#18

Joined: 09/03/2011(UTC)
Posts: 369

Thanks: 102 times
Was thanked: 427 time(s) in 180 post(s)
Indeed it is.

Just coming back on a comment made by Alan Selwood -

"Leaving aside the question of whether an investment bond is a suitable vehicle (for very many it is not, but in the past an awful lot of people bought them because the salesman/IFA/tied adviser got a much higher commission on them......."

Like Alan, I have a personal aversion to any 'managed' entity, preferring to do my own stockpicking, but it can be a case of 'horses for courses'. Part of my capital which I knew would not be required for a long time, I 'parked' in an Offshore Bond which had two features I particularly liked -
1) All income and gains within the bond roll up tax-free, which should result in an accelerated rate of growth with the benefit of compounding and
2) you can choose when to bring it back onshore at your prevailing rate of tax at the time, so organising your affairs to best advantage (e.g. on retirement or by gifting between spouses to achieve the lowest rate) or, if you have plans to retire abroad, not 'onshore' it at all, thereby avoiding all UK tax.

As for fees, after the first 10 years during which my IFA (long gone) not doubt received his trail commission, I registered myself as the 'Adviser' and ever since I note that commission has been credited to my cash account on a Quarterly basis!
1 user thanked jeffian for this post.
Tim D on 18/08/2017(UTC)
Law Man
Posted: 18 August 2017 16:34:52(UTC)
#19

Joined: 29/04/2014(UTC)
Posts: 207

Thanks: 64 times
Was thanked: 369 time(s) in 149 post(s)
Tola: my age and position is similar to yours. I have managed my own SIPP investments for some 6 years since transferring in the proceeds of long term pension policies. I started by reading and learning. Buy recommended books, take out a subscription to Investors Chronicle, and follow Citywire, FE Trustnet, etc.

If then you decide to keep it simple, buy a careful balance of ETF index trackers.

You will learn that the most important stages are:

(1) what is your investment period: will you run down your fund over 20 years, or take income and leave the balance to heirs?

(2) What is your attitude to risk? The only certain approach is cash with a known real loss of c. 2-3% p.a. With a long term view you should have at least 50% in equities; but if you could not stand a paper loss of 20%, do not do it.

(3) Then form your asset allocation e.g. 25% in bonds, 50% in equities (geographically diversified) and 25% in real estate, infrastructure, etc. Rebalance annually. This stage is more important than individual fund selection.

(4) keep charges down.

Your list of funds suggests you are cautious. Your bonds have done well over the last decade, but you should consider reducing the proportion substantially now that bonds may lose money.
PETER BOTHAM
Posted: 18 August 2017 16:55:27(UTC)
#21

Joined: 13/10/2012(UTC)
Posts: 1

Using five multi asset funds will result in an overall portfolio that has too much overlap and fail to deliver the performance that you are seeking.
If you don't want to do your own asset allocation, or pay the expense of an adviser doing it for you then the various low cost lifestyle funds are a very effective way of achieving your goals.
But if you do want to get a bit more hands on then I would suggest having a bit less exposure to the UK than you have at present. Regardless of your political views, our own markets do not look to be the best option for an overweighting at present.
Tola
Posted: 18 August 2017 17:27:34(UTC)
#20

Joined: 27/02/2015(UTC)
Posts: 7

Thanks: 9 times
Was thanked: 2 time(s) in 2 post(s)
Law Man;49949 wrote:
Tola: my age and position is similar to yours. I have managed my own SIPP investments for some 6 years since transferring in the proceeds of long term pension policies. I started by reading and learning. Buy recommended books, take out a subscription to Investors Chronicle, and follow Citywire, FE Trustnet, etc.

If then you decide to keep it simple, buy a careful balance of ETF index trackers.

You will learn that the most important stages are:

(1) what is your investment period: will you run down your fund over 20 years, or take income and leave the balance to heirs?

(2) What is your attitude to risk? The only certain approach is cash with a known real loss of c. 2-3% p.a. With a long term view you should have at least 50% in equities; but if you could not stand a paper loss of 20%, do not do it.

(3) Then form your asset allocation e.g. 25% in bonds, 50% in equities (geographically diversified) and 25% in real estate, infrastructure, etc. Rebalance annually. This stage is more important than individual fund selection.

(4) keep charges down.

Your list of funds suggests you are cautious. Your bonds have done well over the last decade, but you should consider reducing the proportion substantially now that bonds may lose money.


Hi Law Man,

Thank you for your reply.

I have downloaded 3 books, for immediate reading, that have been recommended, via this forum. I opened a subscription to Investors Chronicle only last week and I also follow City Wire, Trustnet, Morningstar etc. So far so good!

I need to look at the ETF's trackers that you recommended to buy but I need to check if these can be changed via my bond holder. I also take the points you have highlighted in 1-4.

Lastly, the funds I now realise are cautious and is the very reason I have requested a review with my new IFA.

Your advise is greatly appreciated

Tola

1 user thanked Tola for this post.
King Lodos on 18/08/2017(UTC)
Tony Airey
Posted: 18 August 2017 19:45:19(UTC)
#22

Joined: 15/09/2016(UTC)
Posts: 1

Personal opinion.

I outsource everything; house decorating, electricity faults/installations, plumbing/heating, car maintenance, dentistry....to people who are more skilled than I am.

In 2013, despite having 30 years experience of investing, I adopted the same philosophy.

Now, 70% of my investments are managed by a Manchester stockbroker/wealth manager (expert); the other 30% (self-managed) are in reputable Investment Trusts (managed by experts). The results, after 5 years, are very acceptable (10%+pa nett of all fees).

So, the day after I decide to do my own dentistry, I'll decide to manage my own investments. Until then.......here's to the experts.
2 Pages12Next page
+ Reply to discussion

Markets

Other markets