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  • FIRST POST
    • enthusiasticsaver
    • By enthusiasticsaver 12th Oct 17, 2:35 PM
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    enthusiasticsaver
    Analysing my portfolio pre retirement
    • #1
    • 12th Oct 17, 2:35 PM
    Analysing my portfolio pre retirement 12th Oct 17 at 2:35 PM
    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?
    Countdown to early retirement on 21.12.17 3 months to go.
Page 1
    • coyrls
    • By coyrls 12th Oct 17, 3:28 PM
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    coyrls
    • #2
    • 12th Oct 17, 3:28 PM
    • #2
    • 12th Oct 17, 3:28 PM
    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
    • By AnotherJoe 12th Oct 17, 3:46 PM
    • 7,375 Posts
    • 7,908 Thanks
    AnotherJoe
    • #3
    • 12th Oct 17, 3:46 PM
    • #3
    • 12th Oct 17, 3:46 PM
    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
    • By OldMusicGuy 12th Oct 17, 4:59 PM
    • 130 Posts
    • 212 Thanks
    OldMusicGuy
    • #4
    • 12th Oct 17, 4:59 PM
    • #4
    • 12th Oct 17, 4:59 PM
    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
    • By Audaxer 12th Oct 17, 5:09 PM
    • 477 Posts
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    Audaxer
    • #5
    • 12th Oct 17, 5:09 PM
    • #5
    • 12th Oct 17, 5:09 PM
    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
    • By enthusiasticsaver 12th Oct 17, 5:21 PM
    • 4,409 Posts
    • 8,171 Thanks
    enthusiasticsaver
    • #6
    • 12th Oct 17, 5:21 PM
    • #6
    • 12th Oct 17, 5:21 PM
    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.
    Originally posted by coyrls
    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%.
    Countdown to early retirement on 21.12.17 3 months to go.
    • enthusiasticsaver
    • By enthusiasticsaver 12th Oct 17, 5:31 PM
    • 4,409 Posts
    • 8,171 Thanks
    enthusiasticsaver
    • #7
    • 12th Oct 17, 5:31 PM
    • #7
    • 12th Oct 17, 5:31 PM
    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.
    Originally posted by AnotherJoe
    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.
    Countdown to early retirement on 21.12.17 3 months to go.
    • enthusiasticsaver
    • By enthusiasticsaver 12th Oct 17, 6:00 PM
    • 4,409 Posts
    • 8,171 Thanks
    enthusiasticsaver
    • #8
    • 12th Oct 17, 6:00 PM
    • #8
    • 12th Oct 17, 6:00 PM
    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!
    Originally posted by OldMusicGuy
    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.
    Countdown to early retirement on 21.12.17 3 months to go.
    • enthusiasticsaver
    • By enthusiasticsaver 12th Oct 17, 6:05 PM
    • 4,409 Posts
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    enthusiasticsaver
    • #9
    • 12th Oct 17, 6:05 PM
    • #9
    • 12th Oct 17, 6:05 PM
    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.
    Originally posted by Audaxer
    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.
    Countdown to early retirement on 21.12.17 3 months to go.
    • bostonerimus
    • By bostonerimus 12th Oct 17, 11:06 PM
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    bostonerimus
    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.
    Misanthrope in search of similar for mutual loathing
    • Keep pedalling
    • By Keep pedalling 12th Oct 17, 11:49 PM
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    Keep pedalling
    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.
    Originally posted by enthusiasticsaver
    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.
    • enthusiasticsaver
    • By enthusiasticsaver 13th Oct 17, 12:06 AM
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    enthusiasticsaver
    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.
    Originally posted by bostonerimus
    We won't do equity release and no plans to downsize in near future.

    To live comfortably we would like £2500 per month net which is roughly what we have been living off for the last few years. Our DB pensions will give us £2200 net from January when I draw on my pension and the shortfall will be made up from income on funds and if necessary we will draw on cash buffer. That should cover our living expenses, savings for gifts, holiday and home and car expenses. Replacement cars, long haul holidays and big home improvement projects will have to come from cash buffer too but no immediate plans as both cars recently changed. DH is 59 and I am 57. My 2nd DB pension pays out in 2020 and will cover the shortfall. State pensions pay out in 2024 and 2026 and husband qualifies for full spa but I may have a year or two shortfall. No health issues.

    Any shortfalls we will draw initially on cash, then DC and SIPP then stocks and shares isas. As the shortfall is only for the first 2 years I don't envisage needing to draw on the investments any time soon.
    Countdown to early retirement on 21.12.17 3 months to go.
    • chiang mai
    • By chiang mai 13th Oct 17, 1:03 AM
    • 59 Posts
    • 14 Thanks
    chiang mai
    Approximately:
    65% Asian currencies (I live in Asia) of which, 8% local mutual funds, 35% Time Deposits 17% cash
    35% Sterling, of which 20% bonds, 50% equities, 30% cash).

    40% property in Asia which I don't count as an investment.
    • bostonerimus
    • By bostonerimus 13th Oct 17, 2:02 AM
    • 961 Posts
    • 494 Thanks
    bostonerimus
    We won't do equity release and no plans to downsize in near future.

    To live comfortably we would like £2500 per month net which is roughly what we have been living off for the last few years. Our DB pensions will give us £2200 net from January when I draw on my pension and the shortfall will be made up from income on funds and if necessary we will draw on cash buffer. That should cover our living expenses, savings for gifts, holiday and home and car expenses. Replacement cars, long haul holidays and big home improvement projects will have to come from cash buffer too but no immediate plans as both cars recently changed. DH is 59 and I am 57. My 2nd DB pension pays out in 2020 and will cover the shortfall. State pensions pay out in 2024 and 2026 and husband qualifies for full spa but I may have a year or two shortfall. No health issues.

    Any shortfalls we will draw initially on cash, then DC and SIPP then stocks and shares isas. As the shortfall is only for the first 2 years I don't envisage needing to draw on the investments any time soon.
    Originally posted by enthusiasticsaver
    So you need 30k pa, inflation adjusted for maybe 35 or 40 years. If your DB pensions are index linked then you are pretty much set as you've only got to cover a shortfall of 3.6k for three years until the second DB pension starts and the when SP starts you'll be swimming in income. Given your situation you can take pone of two positions: 1) I have my income needs covered by DB pensions and SP so I can take lots of risk with my investments and go with a high percentage of equities and maybe a small cash buffer to easy access and cash flow planning; or 2) I don't need extra income from my investments so I can be conservative and put them in savings bonds or short to mid term bonds and just reinvest all the interest.

    I'm in a similar situation to you. I'm 56 and retired at 52 and have my income needs covered by a DB pension and rental income.....I also work part time, but put all I earn into a self employed pension. I have a cash buffer of about 1 year's income purely for convenience and so I can pay any big bills easily. My DC pension and other investments are 75% in stocks and 25% in a broad US intermediate bond index fund.
    Misanthrope in search of similar for mutual loathing
    • bigadaj
    • By bigadaj 13th Oct 17, 2:32 AM
    • 10,284 Posts
    • 6,600 Thanks
    bigadaj
    Approximately:
    65% Asian currencies (I live in Asia) of which, 8% local mutual funds, 35% Time Deposits 17% cash
    35% Sterling, of which 20% bonds, 50% equities, 30% cash).

    40% property in Asia which I don't count as an investment.
    Originally posted by chiang mai
    Are you allowed to,purchase property as a foreigner in Thailand now, I know several years ago it was only Thai nationals who could, though there was a work around with companies I believe.
    • chiang mai
    • By chiang mai 13th Oct 17, 2:46 AM
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    chiang mai
    My wife owns the property but I have an usufruct that is registered on the title deeds, which means to all intents and purposes I am the owner. The property cannot be sold or loans taken out against it without my approval plus I get to say who can and cannot live in the house. Usufruct is very reliable here and it has been tested in the courts, the company purchase route was cracked down on by the Land Office a few years ago and is now pretty much off limits to anything other than bona fide property companies that are structured and owned appropriately.
    • enthusiasticsaver
    • By enthusiasticsaver 13th Oct 17, 9:25 AM
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    enthusiasticsaver
    So you need 30k pa, inflation adjusted for maybe 35 or 40 years. If your DB pensions are index linked then you are pretty much set as you've only got to cover a shortfall of 3.6k for three years until the second DB pension starts and the when SP starts you'll be swimming in income. Given your situation you can take pone of two positions: 1) I have my income needs covered by DB pensions and SP so I can take lots of risk with my investments and go with a high percentage of equities and maybe a small cash buffer to easy access and cash flow planning; or 2) I don't need extra income from my investments so I can be conservative and put them in savings bonds or short to mid term bonds and just reinvest all the interest.

    I'm in a similar situation to you. I'm 56 and retired at 52 and have my income needs covered by a DB pension and rental income.....I also work part time, but put all I earn into a self employed pension. I have a cash buffer of about 1 year's income purely for convenience and so I can pay any big bills easily. My DC pension and other investments are 75% in stocks and 25% in a broad US intermediate bond index fund.
    Originally posted by bostonerimus
    That is pretty much how we have modelled it and yes when our sps kicks in we will have more income than when we were working which seems crazy. We are thinking worst case scenario that may help with care costs as we get older and we will, like my mum has be in a position to help family. The DB pensions are all index linked but we will not be working or bring any self employment income in.

    We will have a cash buffer of around 2.5 years income which seems a lot as we have DB pensions covering 90% of our needs but we reckon the first 5-10 years will be the most expensive in terms of long haul holidays, home improvements etc and having worked so hard to provide a comfortable retirement we don't want to tie up any more than 75% of our assets in case there is a recession. I have not held stocks and shares during a recession before but I know the worst thing you can do is sell and crystallise losses.

    I know we could be more aggressive investment wise but it has taken a long time for us to be comfortable with investing so I think we are happy with keeping 25% liquid and 75% split between bonds and equities.
    Countdown to early retirement on 21.12.17 3 months to go.
    • Audaxer
    • By Audaxer 13th Oct 17, 11:26 AM
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    Audaxer
    I know we could be more aggressive investment wise but it has taken a long time for us to be comfortable with investing so I think we are happy with keeping 25% liquid and 75% split between bonds and equities.
    Originally posted by enthusiasticsaver
    Absolutely right. As you are pretty much sorted with pension income alone you have no need to be more aggressive unless you really want to. Even if you became more conservative and cashed in some investments to have a much bigger cash holding, I'm sure it wouldn't change your standard of living in retirement. You are in a great position financially.
    • bostonerimus
    • By bostonerimus 13th Oct 17, 1:47 PM
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    • 494 Thanks
    bostonerimus

    I know we could be more aggressive investment wise but it has taken a long time for us to be comfortable with investing so I think we are happy with keeping 25% liquid and 75% split between bonds and equities.
    Originally posted by enthusiasticsaver
    The right asset allocation for you is the one that lets you sleep well at night. With so much DB and state pension income coming in it really doesn't matter what you do as far as immediate income is concerned. Just keep reinvesting dividends and interest through the ups and downs of the market, You could have 40 years in retirement so there will be market downturns to live through, best thing is to be confident in your allocation and other than a little rebalancing don't do too much. You might think about some gifts to family and do a bit of estate planning as you might find your net worth growing quite quickly.

    Right now I'm still paying money into my investment accounts and have decided to be quite aggressive with 75% equities. In 11 years time I could be getting both UK and US state pensions, but I'm looking into deferring as part of my tax planning. I think tax planning is also going to be important for you.
    Misanthrope in search of similar for mutual loathing
    • enthusiasticsaver
    • By enthusiasticsaver 13th Oct 17, 3:19 PM
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    enthusiasticsaver
    The right asset allocation for you is the one that lets you sleep well at night. With so much DB and state pension income coming in it really doesn't matter what you do as far as immediate income is concerned. Just keep reinvesting dividends and interest through the ups and downs of the market, You could have 40 years in retirement so there will be market downturns to live through, best thing is to be confident in your allocation and other than a little rebalancing don't do too much. You might think about some gifts to family and do a bit of estate planning as you might find your net worth growing quite quickly.

    Right now I'm still paying money into my investment accounts and have decided to be quite aggressive with 75% equities. In 11 years time I could be getting both UK and US state pensions, but I'm looking into deferring as part of my tax planning. I think tax planning is also going to be important for you.
    Originally posted by bostonerimus
    Yes you are right about tax planning but I am still fairly clueless on that.

    We have put most of the income funds in my name as we have no more ISA allowances free for this year and my husband pays tax (now basic rate) and I will pay none from next April. As far as I am aware and I need to read up more on this the first £2000 of dividends are tax free for both of us and after that it must be declared as income. As the total income based on historical yields will be around £4000 a year we have structured it so £1000 is in my husbands name and the rest in mine to use up my tax allowance. We will need to think again when my second DB pension pays out and by the time the state pension begins I will be paying tax too except by then I will move the income yielding funds back to accumulation.

    I have wondered about us deferring state pensions as some people have said this is worthwhile but I need to look into that. I guess this is the same thing as you have in mind?
    Countdown to early retirement on 21.12.17 3 months to go.
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