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  • FIRST POST
    • enthusiasticsaver
    • By enthusiasticsaver 12th May 17, 8:27 AM
    • 3,406Posts
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    enthusiasticsaver
    Should we Invest in only one fund?
    • #1
    • 12th May 17, 8:27 AM
    Should we Invest in only one fund? 12th May 17 at 8:27 AM
    My husband and I are relatively new to investing and have stocks and shares isas and I have a sipp. We have other occupational pensions and my husband took early retirement last year and I will do the same at the end of this year.

    All our investments are in Vanguard LS60 and amount to around 150k between us. We have a large cash buffer in national savings earning only 0.75% now plus some high interest current accounts and are selling a property this year so will have more to invest.

    I think I should expand our portfolio now to include another fund rather than keep it all in Vanguard as the figure is now quite high. I am still looking for long term growth and will accept moderate risk. I am researching global managed income funds like Artemis high income and Henderson global income.

    Do other more experienced investors think this is sensible or is it better to stick with the Vanguard considering it is the correct level of risk for me, balanced, well diversified, does what I need it to and has low charges? I want to manage these myself rather than use an IFA as so far I have not found one I feel confident in.
    Debt and mortgage free and saving for early retirement
Page 5
    • enthusiasticsaver
    • By enthusiasticsaver 15th May 17, 11:45 PM
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    enthusiasticsaver
    Be careful not to have too much in cash. Not having enough in equities can reduce your returns and those are important to keep up with inflation.

    Of course this also depends on the level of guaranteed pension income you have coming in. If you have your basic expenses covered by pensions you can look at investing anything else you have in two ways.

    1) I have my expenses covered so I don't need to take any risks with my other money. Just put it in some fixed income/savings bonds that will keep up with inflation.

    2) I have my expenses covered so I can take risks with my other money. Invest it in an equity heavy portfolio and hope to grow it significantly. You can take the risk of losing capital because your income need is covered by pensions.

    The tricky situation is where you have to fund retirement mainly from drawdown.
    Originally posted by bostonerimus
    Yes, I think it is a bit of a balancing act. Our expenses are mainly covered by pensions but being newly retired there are things we want to do in the early years while we are fit and healthy and those will cost money. Hence the 20% cash buffer. It could well be we never need to touch the investments unless either of us needs care in later life.
    Debt and mortgage free and saving for early retirement
    • grey gym sock
    • By grey gym sock 16th May 17, 1:39 AM
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    grey gym sock
    By that logic we don't need any industry, just a printing press.
    Originally posted by Glen Clark
    you've misinterpreting what i was claiming.

    i wasn't saying that the government doesn't need to collect any tax, and can just print money instead.

    the government does need to collect nearly as much in tax as it spends. but it can consistently collect slightly less in tax than it spends. and this can continue indefinitely. spending slightly more than you raise in tax does not imply that at some time in the future the position will have to be reversed, i.e. more be raised in tax than is spent.

    "common sense" might suggest the latter is true. but arithmetic proves that "common sense" is wrong in this case.

    e.g. suppose public debt is 100% of GDP. suppose the interest on that debt is 2%, and that nominal GDP is growing by 4% per year (that 4% is some combination of inflation + real growth).

    in that case, if tax receipts exactly equal public spending (excluding interest on public debt), then the debt-to-GDP ratio will have fallen to 98% after 1 year.

    or, to look at it another way, public spending (excluding interest) could exceed tax receipt by 2% of GDP, and the debt-to-GDP ratio would stay steady at 100%.

    my broader point is: the really difficult economic problems are about real resources, not about money/debt per se. (real resource problems include environmental limits, and the increasing ratio of pensioners to working-age adults.) if we can solve the problems of real resources, the money/debt issues will be relatively easily sorted out. and indeed we can't solve real resource problems purely by making changes to money/debt.
    • Eco Miser
    • By Eco Miser 16th May 17, 10:56 AM
    • 2,797 Posts
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    Eco Miser
    Ps. Fund Houses deal with some ludicrously wealthy Clients with Portfolio values way into the millions of pounds per Client ... so, 100K is not close to too much for one Fund House and won't even qualify you as a Wealth Client with some !
    Originally posted by Redski69
    I don't think enthusiasticsaver was worried about overwhelming the fund house, but about what might happen if the fund house fails.
    Eco Miser
    Saving money for well over half a century
    • enthusiasticsaver
    • By enthusiasticsaver 16th May 17, 1:22 PM
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    enthusiasticsaver
    If you consolidate it all into one Platform you can get preferential rates across your portfolio Fees. For example, Fidelity will give you 20bps across your portfolio if you hold 250K+ with them and an enhanced Client Service offering - as opposed to other Platforms that'll charge you Banded 45bps tapering off.

    Feels like a sensible thing to me to lower your overheads !

    Ps. Fund Houses deal with some ludicrously wealthy Clients with Portfolio values way into the millions of pounds per Client ... so, 100K is not close to too much for one Fund House and won't even qualify you as a Wealth Client with some !

    Hope that helps put some concerns to bed & helps save you some money in Fees !
    Originally posted by Redski69
    Our platform is Halifax share dealing which is flat fee 12.50 per year so 25 for me and my husband as we have it all within our isas now) and a sipp in my name. I am not talking about using a different platform, just a different fund house so maybe Legal and General multi index fund which is similar to Vanguard Lifestrategy in that it is well diversified and has similar charges. We would still use Halifax share dealing for that though.

    I note your comment about some very wealthy clients having considerably more than our 150k and we are not worried about being considered a wealth client. My discomfort comes from my general investment strategy which is diversify and all our investments being with vanguard goes against that somewhat. However as bowlhead and others have pointed out the investments are not actually in vanguard so even if it failed we would still have them. I understand the 50k FSCS guarantee per fund house only applies to fraud.
    Debt and mortgage free and saving for early retirement
    • StellaN
    • By StellaN 17th May 17, 11:46 AM
    • 131 Posts
    • 36 Thanks
    StellaN
    The capital drawdown method sounds a bit complicated so I think I might still go down the route of 50% of my portfolio in a VLS 40 and 50% in ITs for income. For the ITs I'm thinking of the likes of City of London, Temple Bar, Murray International and City Merchants High Yield to start with. Is such an IT portfolio classed as high risk because mostly equity-based and some high yield bonds?
    Originally posted by Audaxer
    I'm also doing a lot of research into IT's therefore I'm very interested to know why you are only considering 4 UK Equity Income funds (is this just for the dividends payable from the UK sector)?

    At the moment I am just considering choosing one IT from each geographical sector to diversify as much as possible just as you would do with selecting different OEIC's/Funds? Or am I missing something?
    • Stirfry
    • By Stirfry 17th May 17, 3:20 PM
    • 32 Posts
    • 19 Thanks
    Stirfry
    I'm also doing a lot of research into IT's therefore I'm very interested to know why you are only considering 4 UK Equity Income funds (is this just for the dividends payable from the UK sector)?

    At the moment I am just considering choosing one IT from each geographical sector to diversify as much as possible just as you would do with selecting different OEIC's/Funds? Or am I missing something?
    Originally posted by StellaN
    I have just started investing in the following ITs

    Scottish American Inv Co 40%
    F & C Capital and Income Inv Tr 30%
    Dunedin Income Growth Inv Tr 10%
    Henderson Far East Income 20%

    My idea was to diversify across geographical regions whilst also considering dividend yields, charges and Premium/Discount. Intend to hold up to 10 ITs once portfolio is finalised. I am current looking at adding Merchants Trust,City of London I T,Aberdeen Asian Income Fund.

    My reason is to take a retirement income once the portfolio is fully invested in the next 3 years. So I will have invested to date 10% of total savings and will see how it goes, until I can invest next lump sum in October.
    • Audaxer
    • By Audaxer 17th May 17, 3:54 PM
    • 156 Posts
    • 33 Thanks
    Audaxer
    I'm also doing a lot of research into IT's therefore I'm very interested to know why you are only considering 4 UK Equity Income funds (is this just for the dividends payable from the UK sector)?

    At the moment I am just considering choosing one IT from each geographical sector to diversify as much as possible just as you would do with selecting different OEIC's/Funds? Or am I missing something?
    Originally posted by StellaN
    Hi Stella, I was just quoting these 4 ITs as examples of the ones I was thinking of to get started. If I do go down the IT route for 50% of my portfolio I would hope to have about 10 ITs to make it more diversified and include property and bond ITs. It seems that UK Equity generally gives higher yields than Global Equity, so that is why I was thinking it would to have to be more weighted towards UK Equity, but I'm concerned whether that would make it too risky. Normally you would diversify into bonds to lessen the risk level, but taking the example of say City Merchants High Yield I'm not sure whether high yield bonds reduces the risk level or not?

    Ideally I would like the IT portfolio to produce around 4% income (growing annually) with a bit of capital growth as well. Do you think that could that be achieved with one IT from each geographical area, with the overall IT portfolio being medium risk?
    • StellaN
    • By StellaN 17th May 17, 4:59 PM
    • 131 Posts
    • 36 Thanks
    StellaN
    Hi Stella, I was just quoting these 4 ITs as examples of the ones I was thinking of to get started. If I do go down the IT route for 50% of my portfolio I would hope to have about 10 ITs to make it more diversified and include property and bond ITs. It seems that UK Equity generally gives higher yields than Global Equity, so that is why I was thinking it would to have to be more weighted towards UK Equity, but I'm concerned whether that would make it too risky. Normally you would diversify into bonds to lessen the risk level, but taking the example of say City Merchants High Yield I'm not sure whether high yield bonds reduces the risk level or not?

    Ideally I would like the IT portfolio to produce around 4% income (growing annually) with a bit of capital growth as well. Do you think that could that be achieved with one IT from each geographical area, with the overall IT portfolio being medium risk?
    Originally posted by Audaxer
    Yes, I thought you might be selecting UK Equities for income which is the opposite in my case because I am looking for growth and re-investing the dividends.

    That's why I want at least one IT in quite a few geographical regions including UK, Global, Europe, Asia Pacific ex Japan, Japan etc.
    • bostonerimus
    • By bostonerimus 17th May 17, 5:05 PM
    • 106 Posts
    • 62 Thanks
    bostonerimus
    Yes, I think it is a bit of a balancing act. Our expenses are mainly covered by pensions but being newly retired there are things we want to do in the early years while we are fit and healthy and those will cost money. Hence the 20% cash buffer. It could well be we never need to touch the investments unless either of us needs care in later life.
    Originally posted by enthusiasticsaver
    20% is a lot to have in cash unless some of it is working for you in something like a savings bond ladder. If you have regular income from pensions you could afford to have a smaller cash buffer, but if it helps you sleep better then that's a good argument for it.
    • Audaxer
    • By Audaxer 17th May 17, 5:09 PM
    • 156 Posts
    • 33 Thanks
    Audaxer
    Yes, I thought you might be selecting UK Equities for income which is the opposite in my case because I am looking for growth and re-investing the dividends.

    That's why I want at least one IT in quite a few geographical regions including UK, Global, Europe, Asia Pacific ex Japan, Japan etc.
    Originally posted by StellaN
    Are your ITs going to be all equity then, and are they going to be part of a larger portfolio which includes bonds?
    • StellaN
    • By StellaN 17th May 17, 5:15 PM
    • 131 Posts
    • 36 Thanks
    StellaN
    Are your ITs going to be all equity then, and are they going to be part of a larger portfolio which includes bonds?
    Originally posted by Audaxer
    Yes, all my funds or IT's are all equity (with the exception of property) at the moment. I made a decision some time ago not to invest in bonds because I prefer to keep a very good cash buffer in case of market downturns so have around 100K + in cash spread over many accounts.

    This will change sometime in the future, however, I am still looking at growth at this time.
    • enthusiasticsaver
    • By enthusiasticsaver 17th May 17, 7:05 PM
    • 3,406 Posts
    • 5,712 Thanks
    enthusiasticsaver
    20% is a lot to have in cash unless some of it is working for you in something like a savings bond ladder. If you have regular income from pensions you could afford to have a smaller cash buffer, but if it helps you sleep better then that's a good argument for it.
    Originally posted by bostonerimus
    Yes, it is slightly more than we ideally would like but we have filled our stocks and shares isas and sipps for this year, the market is high at the moment and I take early retirement at the end of this year so for that reason we are holding off until next April when we will put a further 40k away when we have a definite idea of how we will replace my pay and whether we will drawdown from the cash buffer or draw on my DB pension.
    Debt and mortgage free and saving for early retirement
    • enthusiasticsaver
    • By enthusiasticsaver 17th May 17, 7:09 PM
    • 3,406 Posts
    • 5,712 Thanks
    enthusiasticsaver
    20% is a lot to have in cash unless some of it is working for you in something like a savings bond ladder. If you have regular income from pensions you could afford to have a smaller cash buffer, but if it helps you sleep better then that's a good argument for it.
    Originally posted by bostonerimus
    Is a savings bond ladder where you have bonds all coming out at different times? We have 80k in National savings income bonds and the rate has just gone down to 0.75 so I am considering taking most of that out and saving 20k each in 1,2 and 3 year tranches for slightly higher income and keeping the remaining 20k accessible for this year.
    Debt and mortgage free and saving for early retirement
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