Analysing my portfolio pre retirement

enthusiasticsaver · 12 October 2017 at 2:35PM

I am approaching the last 8 weeks of my working life as I retire the end of this year. This year we have been investing quite heavily (husbands TFLS from his DC pension) and sale of a property and I have just worked out percentages of where our assets are held prior to my TFLS paying out next January. Does anyone else do this and does anyone have a view on how I have arranged our portfolio?

For the purposes of this I have ignored our DB pensions and CETV as my husband is already drawing on his and mine will start paying out in January 2018. Total gross income from these is £28000 per annum rising to £32000 gross in February 2020. The value of these three pension pots is not included in my calculations.

Out of our total assets we have just one property now (our family home) and this makes up 45% of our total portfolio. No mortgage.

We have investments in SIPPs, my husbands DC pot, stocks and shares isas and one fixed term cash isa maturing next year which will also be invested once it has matured. We also have 2 sharedeal accounts (1 each) which are invested in high yield Income funds to supplement pensions. All of our investments are spread over Vanguard LS 60, Artemis monthly distribution fund and Premier Multi Asset monthly income. The split on all of these totals 60% stocks approx and 40% bonds. They are all global and well diversified. Mix of passive and active funds.

The above investments when input into our total portfolio comes up with 25% stocks and 15% bonds.

The remaining 15% of our total portfolio is held in cash in current accounts, regular savers, internet savers.

So in summary
45% property
25% stocks
15% bonds
15% cash

Anyone else care to share how they split their portfolios?

coyrls · 12 October 2017 at 3:28PM

Personally, I wouldn’t be counting my family home as part of my portfolio; it’s there to live in. If you downsize and release some cash, then you could include that amount as part of your portfolio but not the value of your new home.

AnotherJoe · 12 October 2017 at 3:46PM

What coyrls said, i wouldn't count my house.

Which gives you 45%, 27% 27% stocks bonds cash. Pretty conservative for some, not for others. VLS40 equivalent I suppose?

Whether that works for you, i dont know, there is no right answer. Other than what lets you sleep at night I'd guess. I'm probably a VLS85 equivalent. And retired a few months ago.

I would say that with your very good pensions you could be more aggressive with your shares, but if you wouldn't sleep well at night, then what you have is by definition good for you

One other comment, I'm not a fan of monthly income funds, i think they are far too constrained in their choices of investments as a result of the requirement to be constantly paying out income, and you would be more diversified and get better growth/income by having a number of funds / ITs that had quarterly or half yearly distribution. It should be really easy to even it out yourself even if the distributions arent even.

OldMusicGuy · 12 October 2017 at 4:59PM

Agree, your home is not part of the portfolio, only the amount of equity you will release if/when you downsize. We are planning on downsizing which should release around £150K to 200K from our property, so that is included in our retirement planning. I am retiring in Feb 2018 and currently have around 30% of my portfolio in cash. But our DB pensions will only amount to £6K per annum, so I want to preserve a good cash pile to tide us out to SP age at 66 and also insulate us from any market shocks.

Looks like you are in good shape. £28K of DB pension plus SPs in the future will give you a good standard of living, so the DC pots should give you a great quality of life. Have fun!

Audaxer · 12 October 2017 at 5:09PM

Hi enthusiasticsaver, I think you are very well set-up financially for retirement. I recall from previous posts you are in a similar position to me as regards equity percentage, and we have some similar holdings to supplement good private pensions.

I recall that between you and your other half you have significant sums invested in VLS60 and I think from memory your investments are all on the one platform. Although the risk is minimal I am very conscious of going too far over the FSCS limit as regards fund houses and platforms, so I have my income portfolio and VLS funds on different platforms - just in case of something like a major fraud.

enthusiasticsaver · 12 October 2017 at 5:21PM

coyrls wrote: »

Personally, I wouldn’t be counting my family home as part of my portfolio; it’s there to live in. If you downsize and release some cash, then you could include that amount as part of your portfolio but not the value of your new home.

Thats true although we could downsize and release cash should we need to. I only plan to use the percentages to keep track of over next 10 years as part of the ongoing debate as to whether property or stocks do better. It is our home but also an asset. If I don't include it then stocks and shares make up 75% and cash 25%.

enthusiasticsaver · 12 October 2017 at 5:31PM

AnotherJoe wrote: »

What coyrls said, i wouldn't count my house.

Which gives you 45%, 27% 27% stocks bonds cash. Pretty conservative for some, not for others. VLS40 equivalent I suppose?

Whether that works for you, i dont know, there is no right answer. Other than what lets you sleep at night I'd guess. I'm probably a VLS85 equivalent. And retired a few months ago.

I would say that with your very good pensions you could be more aggressive with your shares, but if you wouldn't sleep well at night, then what you have is by definition good for you

One other comment, I'm not a fan of monthly income funds, i think they are far too constrained in their choices of investments as a result of the requirement to be constantly paying out income, and you would be more diversified and get better growth/income by having a number of funds / ITs that had quarterly or half yearly distribution. It should be really easy to even it out yourself even if the distributions arent even.

We are cautious so yes I guess your analysis is correct. The income funds are more skewed towards bonds Artemis is 60/40 from memory. Around 65% is in the VLS60 so 60% equities and my husbands DC pot is balanced 50/50. I realise we are no where near as aggressive as we could be given we have good DB pension income but our criteria was we wanted to at least cover inflation and that would safely preserve our assets for the future. They have been doing that.

The income funds are new and I know some people have suggested various ways of us topping up pension income as there is a slight shortfall. I am not expert enough to select funds but may look into this in the future. It was in N s and I bonds before so doing better than that at least.

enthusiasticsaver · 12 October 2017 at 6:00PM

OldMusicGuy wrote: »

Agree, your home is not part of the portfolio, only the amount of equity you will release if/when you downsize. We are planning on downsizing which should release around £150K to 200K from our property, so that is included in our retirement planning. I am retiring in Feb 2018 and currently have around 30% of my portfolio in cash. But our DB pensions will only amount to £6K per annum, so I want to preserve a good cash pile to tide us out to SP age at 66 and also insulate us from any market shocks.

Looks like you are in good shape. £28K of DB pension plus SPs in the future will give you a good standard of living, so the DC pots should give you a great quality of life. Have fun!

Thanks and I hope you enjoy your retirement too. Exciting times. We are lucky with the level of DB pensions we have although we have overpaid into them over the years so nice to finally see the rewards. We will have less cash than you but as you say if your pension is less then a large cash buffer is essential.

enthusiasticsaver · 12 October 2017 at 6:05PM

Audaxer wrote: »

Hi enthusiasticsaver, I think you are very well set-up financially for retirement. I recall from previous posts you are in a similar position to me as regards equity percentage, and we have some similar holdings to supplement good private pensions.

I recall that between you and your other half you have significant sums invested in VLS60 and I think from memory your investments are all on the one platform. Although the risk is minimal I am very conscious of going too far over the FSCS limit as regards fund houses and platforms, so I have my income portfolio and VLS funds on different platforms - just in case of something like a major fraud.

You have a good memory and yes apart from my husbands DC pot all our other investments are with HSDL as that is fixed fee. I had not thought of using different platforms for income and accumulation funds as they are all in different funds but take your point re the FSCS guarantee.

I was wary of going too high in the VLS 60 but still about 65% of our investments are in that and around 25% in Artemis and 10% in Premier multi asset. I have heard different people mention using more than 1 platform so may read up more about that. We do have a large cash buffer though and good pension income so I think we are protected to a certain extent. It is also split in my husbands and my name but most of the income fund is in my name as not yet in ISAs and I will be a non tax payer as my pension much less than my husbands.

bostonerimus · 12 October 2017 at 11:06PM

You haven't really given us enough to comment intelligently.

1) Don't include your house in your portfolio. It's where you live and the capital is locked up and you should avoid equity release if at all possible.
2) You need to tell us the income you require in in retirement and your age and any unusual health issues.
3) You also need to include DB pensions and all other DC pensions and how they are allocated. You need to take a holistic approach to asset allocation.

Keep_pedalling · 12 October 2017 at 11:49PM

enthusiasticsaver wrote: »

You have a good memory and yes apart from my husbands DC pot all our other investments are with HSDL as that is fixed fee. I had not thought of using different platforms for income and accumulation funds as they are all in different funds but take your point re the FSCS guarantee.

I was wary of going too high in the VLS 60 but still about 65% of our investments are in that and around 25% in Artemis and 10% in Premier multi asset. I have heard different people mention using more than 1 platform so may read up more about that. We do have a large cash buffer though and good pension income so I think we are protected to a certain extent. It is also split in my husbands and my name but most of the income fund is in my name as not yet in ISAs and I will be a non tax payer as my pension much less than my husbands.

I think you are well protected. We are in a similar position, currently two DB pensions and. SP totalling £32k pa and I get my SP in 18 months time. We top that up from savings drawdown of 3%. Apart from an emergency cash fund, we also hold enough cash to replace 2 years savings drawdown should markets get sticky, I feel safe enough to have cashed in all my bonds this year and shifted them to equities, although my wife still holds 10% in bonds in her accounts.

Analysing my portfolio pre retirement

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free