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Investment advice for a widow
edward spear
Posted: 21 December 2017 10:28:50(UTC)
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Hi,
Approaching 76 I am thinking about what would be the best option for my SIPP when I am gone. My wife hasn’t a clue and unless I sort it out she would put it in the bank or worse still give it to a financial adviser to lose. I would appreciate some thoughts from contributors on the best way to provide some defence against inflation and provide a small top up for her.
Over the years I have drawn as much cash out the SIPP as possible and bought physical gold bullion which is in a vault in Switzerland, well away for Corbyn’s grubby little hands. With whats still in the SIPP I am thinking of shares which pay a regular and progressive dividend and confining the portfolio to large and mid cap’s, FTSE 100 and 250 but I would be open to any ideas except bonds which I never have understood.
Thank you
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Shetland on 21/12/2017(UTC)
Keith Cobby
Posted: 21 December 2017 10:50:21(UTC)
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Hi Edward, suggest large global ITs eg. F&C, Bankers, Scottish American.
Julianw
Posted: 21 December 2017 11:24:44(UTC)
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Hi Edward,

1st principal:

What is the investment goal of the pot of money in your SIPP?

-Are there other source of income such as pension?

-Is the money for the wife to spend or some for legacy?

-Do you have more than enough (already won the game)?


I personally favour a low cost index fund like Vanguard life strategy. You can dial up/down the equity portion based on your/her ability, willingness and need to take risk. An index fund has no manager risk and Vanguard has a strong culture of giving its investors a fair deal. She can just withdrawal a fixed percentage each year.

Vanguard also has active funds (global, global income and global balanced) with low fees, 0.6%.

There is always annuity for someone totally disinterested.

Julian
Jim S
Posted: 21 December 2017 11:28:48(UTC)
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Hi Edward

From what you've written, the priority for your SIPP seems to be income and also something which can be left alone.

Since there are some potential short/medium term risks with investing in the UK, you may want to be underweight UK focussed funds as they lack the flexibility to switch out if things go south.

Although you mention gold, its not clear how much there is compared to your other investments, also presumably your wife would not be actively using that to rebalance your portfolio. So the gold will kind of protect against risk but mainly as a last resort.

One approach might be to go for a range of investments providing global income

For Investment Trusts, you may wish to look at Invesco Perpetual Global Equity Income or maybe Fidelity Global Dividend.

In addition to that, it might be worth going for some more defensive investments, funds where the managers can switch out of equities when they think its sensible. Royal London Sustainable World Trust C Acc, MIGO, Baillie Gifford Cautious managed, RIT Capital partners IT, maybe Hawksmore Vanburgh.

So something like this might work:
50% Invesco Perpetual Global Equity Income
25% Royal London Sustainable World Trust
25% RIT Capital partners (or another defensive)

The ITs mentioned by Keith are all worth a look too, check them out and look at yield and risk for each one.

Stepping back a bit, maybe finding a financial advisor you trust would be worthwhile, just so your wife has someone she could go to for advice if needed.
Mickey
Posted: 21 December 2017 11:32:39(UTC)
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Having faced this dilemma recently I have advised my wife to put the lot into Vanguard Life Strategy 60% or the 80% if I go earlier than hoped :-)

Circs were that my wife wanted something that was simple enough for her to leave alone. Income was not a concern as if needed units could be sold.
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Tim D on 21/12/2017(UTC)
andy mac
Posted: 21 December 2017 11:37:30(UTC)
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Good question but some of the things that you need to think about
IHT care facilities for you and or your wife
Is she much younger and what sort of lifestyle will she want and what are the family genetics
( ie cancer or heart or dementia)

Is your will up to date and have you LPAs in place
Who will inherit

As to investments I think Warren Buffet said put it in a tracker

While no answers things to think about
Catch The Pigeon
Posted: 21 December 2017 11:38:37(UTC)
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My initial advice was going to be speak to a Financial Adviser, but based on your comments, you have had a bad experience.

Your wife may need guidance from a professional and it would be best to form a relationship with an Adviser now, whilst you are still around.

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AJW on 21/12/2017(UTC)
Keith Hilton
Posted: 21 December 2017 11:43:20(UTC)
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Mickey;54487 wrote:
Having faced this dilemma recently I have advised my wife to put the lot into Vanguard Life Strategy 60% or the 80% if I go earlier than hoped :-)

Circs were that my wife wanted something that was simple enough for her to leave alone. Income was not a concern as if needed units could be sold.


Being in a similar position, but without a gold mine in Switzerland, that's what I'm going to advise my wife to do.
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Mickey on 22/12/2017(UTC)
edward spear
Posted: 21 December 2017 13:43:18(UTC)
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Thank you.
Replying to the points raised:
Investment goal is just to preserve what is there and have a modest return to top up her state pension and a small work pension, say enough to cover my state pension she will lose. The money would be for any future expenses not living casts as we are both quite careful not to waste and get in debt.
The gold is about 50% of the portfolio, sounds too much but in the next crash it will more that make up for the drop in shares. It can easily be sold off in small increments for emergencies.
She would not know what a finical adviser is talking about so I need to get her settled so she can just leave it where it is and if its lowish, risk take her chances. She’s 71 and we are all in good health and active so I’m hoping we won’t need a retirement home. Mortgage is paid up and no debt. The house is in good condition and doesn’t need any work, what might I can do.
That’s just about everything about our position. Thanks for the ides so far.
Regards
King Lodos
Posted: 21 December 2017 15:16:57(UTC)
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edward spear;54482 wrote:
With whats still in the SIPP I am thinking of shares which pay a regular and progressive dividend and confining the portfolio to large and mid cap’s, FTSE 100 and 250 but I would be open to any ideas except bonds which I never have understood.
Thank you


I'm looking for some nice, safe, defensive stocks with a strong history of growing dividends.

I think Unilever's still one of the best .. Outside the UK (so you'll need a W-8BEN form) I like Microsoft and Johnson and Johnson a lot.

I'd say look at the portfolios of Fundsmith and Lindsell Train, or perhaps buy those funds .. They have to underperform at some point, but with markets as expensive as they are, I know I feel a lot better investing in giant, reliable, centuries-old companies (even if the dividends have been pushed down a bit) – with a history of dividend and cash-flow growth – than I do banks, miners, house-builders, biotech, etc.
2 users thanked King Lodos for this post.
gillyann on 24/12/2017(UTC), Aminatidi on 04/02/2018(UTC)
Tim D
Posted: 21 December 2017 15:21:09(UTC)
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Considered a nice sensible multi-asset fund as a one-stop-shop? IMHO these are a better and cheaper alternative to having some random IFA/wealth manager try and run the same sort of asset basket for you. A relative with significant holdings in Kames Diversified Monthly Income, Artemis Monthly Distribution and Fidelity Moneybuilder Balanced - picked as reasonably cheap (for actively managed) multi-asset monthly income payers a couple of years ago - seems happy enough with them so far. No portfolio "fiddling" needed; you're paying the fund managers to do that within their funds' holdings.

Income oriented things like the funds mentioned may well generate more income than your wife would need, but I'm guessing she'd be comfortable enough building up cash reserves in the bank with any income surplus. Either that or mix with a multiasset passive like a VanguardLifestrategy or L&G MultiIndex (which will yield less, but probably outperform in the long run due to lower charges) to bring income down to the desired level.

One other thought... the portfolio you're describing contemplating building (UK progressive dividend payers) sounds a lot like it's the sort of thing you can get off the shelf via say City of London IT (or some others like it, but I like CTY's market-leading low charges). Personally I'd much sooner leave my own wife a single big holding in CTY than a menagerie of individual stocks needing ongoing attention. Sometimes it's best to pay someone (by which I mean CTY's management, not an IFA!) to do something for you.
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Mickey on 22/12/2017(UTC), martin hargan on 27/12/2017(UTC), Guest on 13/01/2018(UTC)
Tug Boat
Posted: 21 December 2017 16:01:40(UTC)
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Had this conversation with Mrs Boat a few months ago.

She yawned all the way through my explanation of our investments. I quickly realised she had not a tiny bit of interest in them.

So my advice to her was, one I peg it, shack up with an accountant.
8 users thanked Tug Boat for this post.
Micawber on 21/12/2017(UTC), The Spanish Inquisition on 21/12/2017(UTC), Guest on 21/12/2017(UTC), jeffian on 21/12/2017(UTC), c brown on 22/12/2017(UTC), Jim S on 23/12/2017(UTC), gillyann on 24/12/2017(UTC), Peter Sm on 13/01/2018(UTC)
Micawber
Posted: 21 December 2017 16:37:37(UTC)
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Tug Boat;54503 wrote:
Had this conversation with Mrs Boat a few months ago.

She yawned all the way through my explanation of our investments. I quickly realised she had not a tiny bit of interest in them.

So my advice to her was, one I peg it, shack up with an accountant.


....as long as he doesn't diddle her out of it......
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Mickey on 22/12/2017(UTC), c brown on 22/12/2017(UTC), gillyann on 24/12/2017(UTC)
Mr Helpful
Posted: 21 December 2017 18:48:51(UTC)
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edward spear;54492 wrote:

Investment goal is just to preserve what is there and have a modest return to top up her state pension and a small work pension, say enough to cover my state pension she will lose. The money would be for any future expenses not living casts as we are both quite careful not to waste and get in debt.
The gold is about 50% of the portfolio, sounds too much but in the next crash it will more that make up for the drop in shares. It can easily be sold off in small increments for emergencies.


For a one-stop shop for Global Stocks; Tracker VWRL may be worth a look.
If a tilt to yield is preferred then Global Stocks Tracker Hi Dividend Yield VHYL might suit, but the total return (Yield + Growth) would then be expected to be less.
Alternatively for a Global Income Fund see IVPG or other Investment Trusts suggestions mentioned through this thread and in Citywire articles.
Quite understand the omission of the usually recommended Bonds or other Defensives, with that hefty dollop of Gold !!!

We (in retirement) have a written Investment Plan (trying to reduce to less than a single side of A4), which includes a guidance section for heirs. A short-list core of preferred securities is included should the heirs wish to simplify the portfolio. The plan is reviewed by all on an annual basis.
Shetland
Posted: 21 December 2017 19:23:57(UTC)
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I have exactly the same dilemma. It seems that that a world tracker seems to be the most sensible solution although I am concerned about the eggs and baskets issue. Income is not an issue as she would have sufficient income from final salary pension schemes plus the state pension.
Sara G
Posted: 21 December 2017 19:33:28(UTC)
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King Lodos;54500 wrote:
edward spear;54482 wrote:
With whats still in the SIPP I am thinking of shares which pay a regular and progressive dividend and confining the portfolio to large and mid cap’s, FTSE 100 and 250 but I would be open to any ideas except bonds which I never have understood.
Thank you


I'm looking for some nice, safe, defensive stocks with a strong history of growing dividends.

I think Unilever's still one of the best .. Outside the UK (so you'll need a W-8BEN form) I like Microsoft and Johnson and Johnson a lot.

I'd say look at the portfolios of Fundsmith and Lindsell Train, or perhaps buy those funds .. They have to underperform at some point, but with markets as expensive as they are, I know I feel a lot better investing in giant, reliable, centuries-old companies (even if the dividends have been pushed down a bit) – with a history of dividend and cash-flow growth – than I do banks, miners, house-builders, biotech, etc.


For defensive stocks how about a Global ETF with a Quality tilt, such as IWFQ?
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c brown on 22/12/2017(UTC)
King Lodos
Posted: 21 December 2017 20:22:50(UTC)
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Sara G;54514 wrote:
For defensive stocks how about a Global ETF with a Quality tilt, such as IWFQ?


IWFQ looks quite good – seems to be in a lot of the stocks I'm looking at; decent dividend; forward PE 19 (I'm slightly surprised that's not a lot higher by now).

My only personal reservation with factors is they tend to be a little reductive .. Being from academia, they put things in simple terms – and sometimes results can be a little blockheaded, and potentially back-fitted.

The perspective of factor investing is that anomalies exist with numbers .. But that also makes it easier to arbitrage away the anomaly (e.g. big funds going long Quality, short Junk) .. But I think Buffett's perspective would be that if you can find 6 really profitable businesses in there, you just want to hold them – because they'll probably do fine .. And some of these companies are so large, and own so many brands, they're like funds themselves
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Alan Selwood
Posted: 21 December 2017 22:41:12(UTC)
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When I read the earlier posts in this thread, I too thought that the City of London Trust looked a natural. And so did the Fundsmith Equity Fund.

Given that Fundsmith emphasises US companies more and City has a bit of a UK bias, I can see them working quite well together.

How about 25% gold as the backstop, 25% cash on deposit (waiting for interest rates to rise, and to mitigate the effects of bad years in the stock market, while providing cash to draw on without having to sell anything that benefits from long-term holding), then 30% Fundsmith Equity Fund (T units direct from Fundsmith, or I units via a platform) and finally 20% in CTY?

There are many, many other permutations, and the above is just one that I would be happy with personally in something like your scenario.

Try to keep as much as possible of the equities in SIPP or ISA to reduce the tax and the paperwork.
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Mickey on 22/12/2017(UTC)
Malcolm Beaton
Posted: 21 December 2017 22:45:50(UTC)
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Hi All
This problem of what to do with the partner(wife) left when the other (husband)dies and he has been handling all the money plus the monies are in investments which require knowledge and interest to manage-is a perennial one!
Annuities are good- poor value but she will manage on it -no financial adviser required .
We must be realistic- someone who has never managed money will not suddenly learn it all in her old age!
My children are my executors- one is married to a Banker- make sure you get on with you kids -they have an interest hopefully in seeing a widow (their mother) and her money is looked after ?.
If you have no kids-annuitize-it’s your only hope -she will manage!
Anything else is wishful thinking and leaves her to the mercy of con artists and scammers
Just my thoughts as I approach this situation in my own life!
xxd09
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jeffian
Posted: 21 December 2017 23:26:16(UTC)
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Although not as old as the generator of this thread, I too have become aware of the flapping wings of the Angel of Death having recently dealt with My Old Mum's estate and being all too aware that I am now the last man standing in our family. Me next! Although in generally good health, I have had one or two scares and am particularly aware of the '7 year rule'. It's no good doing IHT planning if, as in my mum's case, you don't make the 7 years and part or all of it gets dragged back into the estate for IHT.

Any road up, like others above whose wives/offspring may not be up to speed, I have now made a 'To do on my death' list which is attached to my will. This is mainly just where everything is and administrative stuff. I have a reasonable transferable annuity, so my wife will get that; she doesn't need the SIPP which will get transferred to the children; my suggestion for the investments is 'do absolutely nothing'. My Old Mum operated a system of Masterly Inactivity and she ended up quite well off! The only other thing which I haven't seen mentioned here is to remind her to operate the transferable ISA allowance within a year of death.
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