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    • GSP
    • By GSP 8th Jun 17, 10:53 AM
    • 125Posts
    • 17Thanks
    GSP
    800k CETV Figure, is £28k p.a. sensible
    • #1
    • 8th Jun 17, 10:53 AM
    800k CETV Figure, is £28k p.a. sensible 8th Jun 17 at 10:53 AM
    Hi all,
    Aged 55 in just over 5 weeks and I intend to start a flexi access drawdown income next month, all being well.

    I have nothing to fall back on presently. The wife nearly 50 has a CETV figure currently at £150k.

    There is likely to be 3 inheritances in less than 20 years worth something around £75k, £150k and £200k in current values. EDIT, but I am not relying on them.

    The IFA I'm going with (% fee) suggested £28k p.a. to start with, and review from there. Another one we saw (flat fee) said we should survive on £35k to we are 100.

    We will have state pensions but not the full amounts something like 75% after being contracted out.

    The questions are is the £28k too sensible? Its a figure which should comfortably provide our needs. Would you go for the £35k.

    Be interested to hear your views and what you would do overall as you start out from 55. Always good to have opinions as sure these all differ slightly.
    Last edited by GSP; 08-06-2017 at 11:37 AM.
Page 3
    • Linton
    • By Linton 10th Jun 17, 3:02 PM
    • 7,976 Posts
    • 7,787 Thanks
    Linton
    A little reading and you can learn what you need. I would bet that your returns will be similar to using an IFA and you'll save 1.5% so you'll be way ahead after fees. DIY and you could double your income.

    FYI I invest a considerably larger portfolio than you in the US and my total fees are 0.1%. I have it set up as a simple "3 fund lazy portfolio" with around 50% US stocks, 20%, International stocks and 30% US bonds. You might want a couple more funds and obviously the weighting would change for the UK, but this is not rocket science. My portfolio produces around 2% to 3% in dividends and then capital gains can be taken for some extra income. Here is a little wiki about "lazy/passive" investing in the UK. The sample portfolios are a little conservative for me, but it's a starting point.

    https://www.bogleheads.org/wiki/UK_investing
    Originally posted by bostonerimus

    The reference suggests the following for a UK investor in early retirement:

    Domestic stocks : 10% using a FTSE100 or FTSE All Share tracker
    World Stocks: 30%
    Intermediate term bonds: 30% VGOV, a UK Gilt ETF is suggested
    Inflation protected securities: 30% eg ICVC an IShares UK index linked gilt tracker

    Is this a sensible portfolio for someone with a drawdown portfolio? Is this appropriate advice for an inexperienced investor? What would happen to an IFA who recommended such a portfolio? Discuss!

    First question:

    How will having 60% of your portfolio in UK Gov Bond funds contribute the return to sustain a 3.5% drawdown? At current gilt prices the non inflation linked bonds are showing yields to maturity in 2027 of under 1%. Index linked bonds are showing negative real (ie relative to inflation) yields to maturity, assuming average inflation is 3%.
    • bostonerimus
    • By bostonerimus 10th Jun 17, 3:32 PM
    • 514 Posts
    • 252 Thanks
    bostonerimus
    The reference suggests the following for a UK investor in early retirement:

    Domestic stocks : 10% using a FTSE100 or FTSE All Share tracker
    World Stocks: 30%
    Intermediate term bonds: 30% VGOV, a UK Gilt ETF is suggested
    Inflation protected securities: 30% eg ICVC an IShares UK index linked gilt tracker

    Is this a sensible portfolio for someone with a drawdown portfolio? Is this appropriate advice for an inexperienced investor? What would happen to an IFA who recommended such a portfolio? Discuss!

    First question:

    How will having 60% of your portfolio in UK Gov Bond funds contribute the return to sustain a 3.5% drawdown? At current gilt prices the non inflation linked bonds are showing yields to maturity in 2027 of under 1%. Index linked bonds are showing negative real (ie relative to inflation) yields to maturity, assuming average inflation is 3%.
    Originally posted by Linton
    The sample portfolios aren't good and have not been translated appropriately for a UK investor. I don't like them, as I pointed out, however, it does describe some funds that could be used to construct a portfolio.....I would far rather see the OP in a VLS fund and paying 0.24% than paying 1.75% in fund and advisor fees; 50% of your income as overhead is ridiculous.

    The OP obviously wants to learn.....being on this forum proves that. IMHO the first thing to learn is that spending half of your potential income in overhead is not a good thing.
    Last edited by bostonerimus; 10-06-2017 at 3:47 PM.
    Misanthrope in search of similar for mutual loathing
    • TBC15
    • By TBC15 10th Jun 17, 5:06 PM
    • 144 Posts
    • 35 Thanks
    TBC15
    The sample portfolios aren't good and have not been translated appropriately for a UK investor. I don't like them, as I pointed out, however, it does describe some funds that could be used to construct a portfolio.....I would far rather see the OP in a VLS fund and paying 0.24% than paying 1.75% in fund and advisor fees; 50% of your income as overhead is ridiculous.

    The OP obviously wants to learn.....being on this forum proves that. IMHO the first thing to learn is that spending half of your potential income in overhead is not a good thing.
    Originally posted by bostonerimus
    Please stop giving advice to UK investors if you donít know what you are talking about.

    Yes I do know you like trackers.

    Yes getting platform fees low is important.

    Yes I do own a tracker, out of shear laziness and following the mantra diversify.

    The OP should be looking at £32000 drawdown based on not too much thinking.
    • bostonerimus
    • By bostonerimus 10th Jun 17, 5:31 PM
    • 514 Posts
    • 252 Thanks
    bostonerimus
    Please stop giving advice to UK investors if you don’t know what you are talking about.

    Yes I do know you like trackers.

    Yes getting platform fees low is important.

    Yes I do own a tracker, out of shear laziness and following the mantra diversify.

    The OP should be looking at £32000 drawdown based on not too much thinking.
    Originally posted by TBC15
    The thing with forums is you have to take the good with the bad.
    I agree with some of your comments, but not the drawdown level you are proposing. particularly in the UK and obviously with the OPs current fees around 14k would be spent on overhead rather than actual living.

    The essence of my response to the OP is that 28k is a sensible initial withdrawal level from a 800k portfolio invested in a diversified portfolio of 60 % stocks and 40% bonds if you want to fund a 30 year retirement, but paying 14k of that 28k in IFA and fund/platform fees is not very sensible at all.
    Last edited by bostonerimus; 10-06-2017 at 5:45 PM.
    Misanthrope in search of similar for mutual loathing
    • TBC15
    • By TBC15 10th Jun 17, 5:45 PM
    • 144 Posts
    • 35 Thanks
    TBC15
    The thing with forums is you have to take the good with the bad.
    I agree with some of your comments, but not the drawdown level you are proposing. particularly in the UK and obviously with the OPs current fees around 14k would be spent on overhead rather than actual living.

    The essence of my response to the OP is that 28k is a sensible initial withdrawal level from a 800k portfolio invested in a diversified portfolio of 60 % stocks and 40% bonds if you want to fund a 30 year retirement, but paying 14k of that 28k to an IFA and in fees is not very sensible at all.
    Originally posted by bostonerimus
    My apologies £14000 fees are indeed well above what I would feel comfortable with.
    • bostonerimus
    • By bostonerimus 10th Jun 17, 6:41 PM
    • 514 Posts
    • 252 Thanks
    bostonerimus
    My apologies £14000 fees are indeed well above what I would feel comfortable with.
    Originally posted by TBC15
    Very kind, but not necessary. I will tend to make some specific errors as I have not lived in the UK for so long and maybe a bit too much Yankee brashness has rubbed off on me in 30 years. But sometimes the perspective of an outsider can be useful to shake up the status quo ......
    Misanthrope in search of similar for mutual loathing
    • GSP
    • By GSP 10th Jun 17, 11:04 PM
    • 125 Posts
    • 17 Thanks
    GSP
    Thanks for the continued advice guys.
    Does anyone have 5 years worth of performance data for the funds they invest in or mentioned above.
    Would like to see how these compare in the different risk portfolios. Assume any equity based funds have the wildest swings.

    Linton, if possible would be good to see the performance for the last 5 years mix of those funds you mentioned.

    That does appear to be a lot of money, £14k. As you know I am starting on a journey, not clued up with a lot to learn. I think for now I will stay with this now just to get off the blocks. The knowledge will come and in a years time imagine I will have learnt a lot. If things "turn out okay", I may stay where I am but may look into ways of getting the fees down. Could put the feelers out to other IFA's to see how they compare then go back to mine to see if he is willing to come down, after a good year for him!
    Is it easy to move to another IFA if I need to? Obviously if I feel comfortable at some point I may go it alone, but its a new wide world to learn in pensions, so will leave my trust in the experts for now.
    • CFrog
    • By CFrog 10th Jun 17, 11:13 PM
    • 44 Posts
    • 30 Thanks
    CFrog
    I'd have a look at www.trustnet.com. You can look at discrete performance of 100's of funds / trusts etc and then 'build' your own portfolios and look at asset allocation, performance etc etc.
    • Linton
    • By Linton 10th Jun 17, 11:20 PM
    • 7,976 Posts
    • 7,787 Thanks
    Linton
    Look on www.trustnet.com for all the data you may want on funds. There is a good charting tool in tools/charting.
    • TBC15
    • By TBC15 11th Jun 17, 2:46 AM
    • 144 Posts
    • 35 Thanks
    TBC15
    Trustnet.com is also good for setting up what if portfolios and see how they get on.

    I’ve been tracking my own portfolios for years on this site.

    It’s also an excellent place to check on the performance and track record of fund managers.
    Last edited by TBC15; 11-06-2017 at 3:08 AM. Reason: Addition of last line.
    • bostonerimus
    • By bostonerimus 11th Jun 17, 3:03 AM
    • 514 Posts
    • 252 Thanks
    bostonerimus
    Thanks for the continued advice guys.
    Does anyone have 5 years worth of performance data for the funds they invest in or mentioned above.
    Would like to see how these compare in the different risk portfolios. Assume any equity based funds have the wildest swings.

    Linton, if possible would be good to see the performance for the last 5 years mix of those funds you mentioned.
    Originally posted by GSP
    I haven't worried about performance for 25 years. My investments have just tracked large indexes and they return what they return. My portfolio and my blood pressure have gone in different directions,
    50% of my allocation is to the US domestic equity market, because I live in the US....so that's not right for someone in the UK. But here's the US equity fund and it's performance....the part I like best is 0.04% fees.

    http://www.morningstar.com/funds/xnas/vtsax/quote.html

    Take a look at

    http://www.vanguard.co.uk

    They have a clear website and it's a good place to start. They have a limited range of services, no SIPPs etc yet, but would be a good option for you to invest some of your inheritances and non pension funds. Look at their Life Strategy funds and use them to understand asset allocation. Also look at the other platform sites and click around reading their intros and get comfortable with the different flavors of funds the charges and how the data is presented.
    The more you learn the more tools you will have to see if you like the job your IFA is doing and maybe eventually DIY. Best of luck.
    Last edited by bostonerimus; 11-06-2017 at 3:12 AM.
    Misanthrope in search of similar for mutual loathing
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