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  • FIRST POST
    • Stirfry
    • By Stirfry 13th Jun 17, 3:49 PM
    • 43Posts
    • 24Thanks
    Stirfry
    Pristine Investment, how do I know if I have made a mistake?
    • #1
    • 13th Jun 17, 3:49 PM
    Pristine Investment, how do I know if I have made a mistake? 13th Jun 17 at 3:49 PM
    Opened two S&S isa's, one for OH at the end of last Tax year, topped up for this year. One for myself current Tax year. Investments so far as follows;

    Dunedin Inc and Growth 2K +3.98%
    F&C Cap & Inc 6K +4.05%
    Henderson FE Inc 4K +1.94%
    Scot American Inv 8K +1.25%
    VLS 60 15K +1.89%

    Artemis FM Str Bond 2K +0.17%
    Fundsmith LLp 6K +5.24%
    Merchants Trust 5K -0.60%
    Murray Int Trust 5K +2.57%
    Royal London Ex Yield 2K +0.55%

    I started with VLS 60, then decided to go with IT's for income. Tried for geographical balance. My main aim is to get the bones of the portfolio in place before further investment in October.Will have to be 2 Fund and Share accounts. Should be fully invested in next 3 years once fixed savings end. Ultimately to receive £1200 a month from a 500k plus portfolio, whether from Dividends, and Growth (if any).

    My main question is have I made any glaringly obvious mistakes? Is it too early to tell? Should I just stand by my convictions and not look again until October?

    I would very much appreciate anyones thoughts on the matter.
Page 1
    • TCA
    • By TCA 13th Jun 17, 4:26 PM
    • 1,282 Posts
    • 721 Thanks
    TCA
    • #2
    • 13th Jun 17, 4:26 PM
    • #2
    • 13th Jun 17, 4:26 PM
    My first question would be who are Pristine Investment and what are they charging you?
    • Stirfry
    • By Stirfry 13th Jun 17, 6:20 PM
    • 43 Posts
    • 24 Thanks
    Stirfry
    • #3
    • 13th Jun 17, 6:20 PM
    • #3
    • 13th Jun 17, 6:20 PM
    It was said tongue in cheek, I'm using i web. Maybe someone should set up a company in that name?
    • MarkFromCornwall
    • By MarkFromCornwall 13th Jun 17, 7:41 PM
    • 697 Posts
    • 416 Thanks
    MarkFromCornwall
    • #4
    • 13th Jun 17, 7:41 PM
    • #4
    • 13th Jun 17, 7:41 PM
    They already did: http://pristineinvestment.com/
    • bowlhead99
    • By bowlhead99 13th Jun 17, 7:50 PM
    • 6,575 Posts
    • 11,630 Thanks
    bowlhead99
    • #5
    • 13th Jun 17, 7:50 PM
    • #5
    • 13th Jun 17, 7:50 PM
    If you are happy with it, no harm in putting your head in the sand until October as you suggest. I mean, if one of the funds goes up 5% or down next week, does that prove it was right to have it, or wrong to have it? You won't know.

    If you look at Murray International for example, it's up 13.5% since early February, and up 46% since mid June last year (in both cases including dividends). So next week or month or year or could be radically different. If Murray, now at £12.73 a share, went back to last June's price of £9.00 a share, that would be a drop of 30% from today's price. No reason it couldn't do that over the next year or so. From 2000 to 2003, its capital value dropped over 50%. Presumably you are ok with that, and would even welcome it, so that the next time you are putting more in to the funds you get more shares for your money.

    You mention you were trying for geographical balance. You seem to have very little in Japan, given that the Japanese investible stock market is about 30% larger than the UK's. Probably about 2% of your portfolio will be in Japan, vs about 40% of your portfolio being in the UK.

    It's understandable that you will want some home bias if you are aiming for a stream of sterling income, and with negative base interest rates, Japanese bonds certainly aren't paying much these days (with currency risk too). Still, it can be worth considering whether it was an active choice to deprioritise that country or whether you accidentally thought that Murray or Henderson or Scot American would be covering it for you. You do have a bunch of Asia but largely missing that bit, it seems (other than a little part of the equities in the VLS).

    Obviously using certain funds which are specialising in (e.g.) high income equities​, or UK listed equities, or high growth Asian stocks, or a concentrated portfolio of blue chip largecaps (like Fundsmith) you will probably miss some sectors although the use of the Lifestrategy fund in your OH's portfolio will get you some general broad largecaps exposure.

    If you're looking specifically at generating income, property and other types of alternatives to mainstream stocks and bonds can be useful. ScotAm has some fraction of its holdings in property investments for example but their whole trust is only a seventh of your portfolio so you're hardly stuffed to the gills with it as an excuse for not wanting any more.

    But really it's difficult to say whether it's right or wrong, as we are not you - and weren't inside your brain when you made the decisions you made - to know what you're really looking to do other than make some income in the short term and, presumably, growth over a long term. If this is only the first £55k tip of a £500k+ iceberg there is plenty of scope to rejig it if you know what you're doing and realise it's not quite what you were looking for once you have re-reviewed everything.

    If the goal is just to generate some income and growth, you'll probably get what you wish for over the long term - on the basis that the target is merely to generate £1200pm or under 3% income after tax (presumably you want to preserve this in real terms too). It's not overly ambitious for this sort of portfolio if you're willing to take all the downs that go with the ups and to draw some of your cashflow needs from capital rather than purely the natural income.
    Last edited by bowlhead99; 13-06-2017 at 9:08 PM.
    • Audaxer
    • By Audaxer 13th Jun 17, 9:01 PM
    • 301 Posts
    • 97 Thanks
    Audaxer
    • #6
    • 13th Jun 17, 9:01 PM
    • #6
    • 13th Jun 17, 9:01 PM
    Hi Stirfry, I'm in a similar position to you but don't have as much to ultimately invest. So far I've invested in a VLS40 and VLS60 and considering whether to put the rest into VLS (or other similar passive multi asset funds) or income generating ITs and funds similar to the types you have selected.

    When you say your £1,200 per month income target is to come from dividends and growth, are you intending to drawdown growth from the income ITs, or do you intend investing more in the VLS60 as a growth fund to drawdown from? You say you are planning to fully invest the £500k, but will you still have a cash buffer to draw from in the years when there is no growth so you don't have to sell when the capital value has fallen?
    • Stirfry
    • By Stirfry 13th Jun 17, 9:32 PM
    • 43 Posts
    • 24 Thanks
    Stirfry
    • #7
    • 13th Jun 17, 9:32 PM
    • #7
    • 13th Jun 17, 9:32 PM
    Hi Stirfry, I'm in a similar position to you but don't have as much to ultimately invest. So far I've invested in a VLS40 and VLS60 and considering whether to put the rest into VLS (or other similar passive multi asset funds) or income generating ITs and funds similar to the types you have selected.

    When you say your £1,200 per month income target is to come from dividends and growth, are you intending to drawdown growth from the income ITs, or do you intend investing more in the VLS60 as a growth fund to drawdown from? You say you are planning to fully invest the £500k, but will you still have a cash buffer to draw from in the years when there is no growth so you don't have to sell when the capital value has fallen?
    Originally posted by Audaxer
    Will be holding at least 30k cash as a buffer, maybe more but building an extension at the moment. The costs keep rising. The VLS60 was a dip my toe in the water exercise. To be honest I can be over cautious and am more interested in income, the children will be lucky if anything is left. By the way they will inherit the house when we go.
    • Audaxer
    • By Audaxer 13th Jun 17, 10:12 PM
    • 301 Posts
    • 97 Thanks
    Audaxer
    • #8
    • 13th Jun 17, 10:12 PM
    • #8
    • 13th Jun 17, 10:12 PM

    Will be holding at least 30k cash as a buffer, maybe more but building an extension at the moment. The costs keep rising. The VLS60 was a dip my toe in the water exercise. To be honest I can be over cautious and am more interested in income, the children will be lucky if anything is left. By the way they will inherit the house when we go.
    Originally posted by Stirfry
    The only thing I was thinking was that if you were intending drawing down growth from the ITs, would that not also reduce the income as you are selling some of the IT shares? If I do go down the IT route I only plan to take the dividends as income, and plan to select ITs with a long history of growing dividends. I notice bowlhead mentioned that you had not covered all geographical areas, but I'm not sure if you can cover all areas if you want an income portfolio with growing dividends?

    Once of my concerns about trying put together a growing capital and income portfolio is that the model ones I have seen are nearly all equities, weighted towards the UK, and therefore not as diverse as say a VLS or similar multi asset fund?
    Last edited by Audaxer; 13-06-2017 at 10:14 PM.
    • Stirfry
    • By Stirfry 14th Jun 17, 9:42 AM
    • 43 Posts
    • 24 Thanks
    Stirfry
    • #9
    • 14th Jun 17, 9:42 AM
    • #9
    • 14th Jun 17, 9:42 AM
    The only thing I was thinking was that if you were intending drawing down growth from the ITs, would that not also reduce the income as you are selling some of the IT shares? If I do go down the IT route I only plan to take the dividends as income, and plan to select ITs with a long history of growing dividends. I notice bowlhead mentioned that you had not covered all geographical areas, but I'm not sure if you can cover all areas if you want an income portfolio with growing dividends?

    Once of my concerns about trying put together a growing capital and income portfolio is that the model ones I have seen are nearly all equities, weighted towards the UK, and therefore not as diverse as say a VLS or similar multi asset fund?
    Originally posted by Audaxer
    I agree with everything you have said above. I suppose you cannot have your cake and eat it. My first intention was to invest in ITs only taking dividends for income, but if I needed extra money I would simply sell some units and not worry too much about reducing the income as the money should last 30 years. Income dividends seem to be weighted towards the UK but thats the price you pay. Which is why I am struggling to get a diversified portfolio.

    I then decided to look at growth funds as well. My intention is to get the core of my portfolio in place and be happy with it before adding further funds in October.
    • Audaxer
    • By Audaxer 14th Jun 17, 10:07 AM
    • 301 Posts
    • 97 Thanks
    Audaxer
    I agree with everything you have said above. I suppose you cannot have your cake and eat it. My first intention was to invest in ITs only taking dividends for income, but if I needed extra money I would simply sell some units and not worry too much about reducing the income as the money should last 30 years. Income dividends seem to be weighted towards the UK but thats the price you pay. Which is why I am struggling to get a diversified portfolio.

    I then decided to look at growth funds as well. My intention is to get the core of my portfolio in place and be happy with it before adding further funds in October.
    Originally posted by Stirfry
    Yes, I'm still undecided and still think it may be better to put it all into the VLS and other multi-asset fund and just drawdown growth, using my cash buffer in bad years. On the other hand I like the idea of guaranteed income for at least part of the portfolio, but that part may not be as diversified or well balanced.
    • Eco Miser
    • By Eco Miser 14th Jun 17, 10:18 AM
    • 2,934 Posts
    • 2,716 Thanks
    Eco Miser
    You may have already read these articles by The Greybeard at Monevator, but if not they may help with your thinking. (Earliest at bottom of page)
    Eco Miser
    Saving money for well over half a century
    • Stirfry
    • By Stirfry 14th Jun 17, 10:38 AM
    • 43 Posts
    • 24 Thanks
    Stirfry
    If you are happy with it, no harm in putting your head in the sand until October as you suggest. I mean, if one of the funds goes up 5% or down next week, does that prove it was right to have it, or wrong to have it? You won't know.

    If you look at Murray International for example, it's up 13.5% since early February, and up 46% since mid June last year (in both cases including dividends). So next week or month or year or could be radically different. If Murray, now at £12.73 a share, went back to last June's price of £9.00 a share, that would be a drop of 30% from today's price. No reason it couldn't do that over the next year or so. From 2000 to 2003, its capital value dropped over 50%. Presumably you are ok with that, and would even welcome it, so that the next time you are putting more in to the funds you get more shares for your money.

    You mention you were trying for geographical balance. You seem to have very little in Japan, given that the Japanese investible stock market is about 30% larger than the UK's. Probably about 2% of your portfolio will be in Japan, vs about 40% of your portfolio being in the UK.

    It's understandable that you will want some home bias if you are aiming for a stream of sterling income, and with negative base interest rates, Japanese bonds certainly aren't paying much these days (with currency risk too). Still, it can be worth considering whether it was an active choice to deprioritise that country or whether you accidentally thought that Murray or Henderson or Scot American would be covering it for you. You do have a bunch of Asia but largely missing that bit, it seems (other than a little part of the equities in the VLS).

    Obviously using certain funds which are specialising in (e.g.) high income equities​, or UK listed equities, or high growth Asian stocks, or a concentrated portfolio of blue chip largecaps (like Fundsmith) you will probably miss some sectors although the use of the Lifestrategy fund in your OH's portfolio will get you some general broad largecaps exposure.

    If you're looking specifically at generating income, property and other types of alternatives to mainstream stocks and bonds can be useful. ScotAm has some fraction of its holdings in property investments for example but their whole trust is only a seventh of your portfolio so you're hardly stuffed to the gills with it as an excuse for not wanting any more.

    But really it's difficult to say whether it's right or wrong, as we are not you - and weren't inside your brain when you made the decisions you made - to know what you're really looking to do other than make some income in the short term and, presumably, growth over a long term. If this is only the first £55k tip of a £500k+ iceberg there is plenty of scope to rejig it if you know what you're doing and realise it's not quite what you were looking for once you have re-reviewed everything.

    If the goal is just to generate some income and growth, you'll probably get what you wish for over the long term - on the basis that the target is merely to generate £1200pm or under 3% income after tax (presumably you want to preserve this in real terms too). It's not overly ambitious for this sort of portfolio if you're willing to take all the downs that go with the ups and to draw some of your cashflow needs from capital rather than purely the natural income.
    Originally posted by bowlhead99
    Firstly I would like to thank you for taking the time to reply. I really appreciate it.

    I missed Japan but can correct that in October perhaps. This is where I am struggling what percentage should I be holding? What funds do you suggest I look at?

    Have been wondering about property although funds are expensive. Should I up my percentage in Scot Am in October?

    The problem is I don't know what I am doing and am learning as I go along. This is purely for retirement income for the next 30 years. AM I happy with 50% losses at any one given time, of course I am not (knowone likes to loose money) but on 55k invested so far, if it happens this year or next I will still have further funds to invest and take advantage. When and if it happens on a 500k plus portfolio I will hopefully be able to shrug my shoulders and dig in for the following 3 years until the market recovers.

    I have been debating whether holding 30k in cash is enough, but by the time I am fully invested (next 4 years) we will have one full state pension and 7.5k in other pension payments. My state pension kicks in 6 years from now. We are looking for 30K+ income in todays money.

    If I can get the bones of the portfolio right without being too ambitious I will have to learn about rebalancing as I go. I am just worried that I have not started out by making any glaringly obvious mistakes that I cannot see. In any case I have some homework to do until October when I will be investing a further 150k.

    Please feel free to comment further.
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