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    • capital0ne
    • By capital0ne 1st Dec 17, 6:59 PM
    • 146Posts
    • 80Thanks
    capital0ne
    Capital Preservation ITs
    • #1
    • 1st Dec 17, 6:59 PM
    Capital Preservation ITs 1st Dec 17 at 6:59 PM
    The market will crash in the next 5 years - bonds and equities.
    Which IT would preserve your wealth, mt research tells me it has to be RIT CAPITAL PARTNERS and PERSONAL ASSETS TRUST.

    What other ITs are people considering to preserve your portfolio from being decimated when the crash comes? What other strategies are you considering besides the obvious cash, gold, vintage wane and automobiles and other collectibles
Page 1
    • AlanP
    • By AlanP 1st Dec 17, 9:54 PM
    • 998 Posts
    • 708 Thanks
    AlanP
    • #2
    • 1st Dec 17, 9:54 PM
    • #2
    • 1st Dec 17, 9:54 PM
    Continue to invest monthly and ignore all the noise?

    The market will crash I agree, quite possibly within the next 5 years, maybe even twice in that time who knows?

    RIT and PAT are ceratinly options, particularly if you have reached whatever your target is, or you have a looming "date" when you need to convert back to cash, and are now looking to "preserve" what you have rather than grow it.

    Of your other suggestions, apart from a healthy emergency cash fund, they don't feature in my strategy at all.
    • bowlhead99
    • By bowlhead99 1st Dec 17, 10:18 PM
    • 6,999 Posts
    • 12,608 Thanks
    bowlhead99
    • #3
    • 1st Dec 17, 10:18 PM
    • #3
    • 1st Dec 17, 10:18 PM
    I hold the two you mention.

    RIT is not really a "capital preservation" IT as much as, say, the Troy or Ruffer products you could have instead, though I am not using those as I already have and like Personal Assets and my portfolio doesn't have space for them all.

    It has some interesting choices within its diversified holdings and though it's currently positioned more defensively than at other points in the cycle, I wouldn't call it "low risk". For me that's fine; when combined with a holding of Personal Assets you can get a reasonable "lower volatility mixed asset" allocation for your portfolio, though the equities within it aren't massively globally diversified.

    Other things in the "non equity" space include things like HICL and INPP, some real estate, some absolute return etc.

    Things like wine and vintage cars can be a bit of fun but are not at all defensive. When the market is frothy and people have huge stock exchange gains and investment banking bonuses, they can buy Enzos and E-Types and pay crazy money for Ch. Latour. When the markets are at a low and the fund bosses' total wealth dropped 30-50% and high paid jobs for six-figure++ salary brigade are somewhat less certain due to recession, those "alternative assets" are really just luxuries which fall out of favour.
    • capital0ne
    • By capital0ne 1st Dec 17, 11:29 PM
    • 146 Posts
    • 80 Thanks
    capital0ne
    • #4
    • 1st Dec 17, 11:29 PM
    • #4
    • 1st Dec 17, 11:29 PM
    Cheers Folks, Okay, I've reached my target in my portfolio, its 60/20/20 Equities/Bonds/Property - 50/50 Global/UK and I have ample cash, along with an income after tax of £30k+. Portfolio is all reinvested automatically, house is mortgage free etc etc.
    So my objective now is to preserve capital and get an annual growth of 5%+

    I have a small holding in RIT so I'm thinking to increase this and also looking ahead to April when I'll be moving £40k into my ISA portfolio - my methodology is KISS!
    • Prism
    • By Prism 2nd Dec 17, 1:42 AM
    • 53 Posts
    • 29 Thanks
    Prism
    • #5
    • 2nd Dec 17, 1:42 AM
    • #5
    • 2nd Dec 17, 1:42 AM
    I plan on sticking to 100% equities and preserve my wealth by doubling it now so when and if it crashes I won't mind so much. Anything else seems like pointless guesswork
    • A_T
    • By A_T 2nd Dec 17, 9:03 AM
    • 237 Posts
    • 121 Thanks
    A_T
    • #6
    • 2nd Dec 17, 9:03 AM
    • #6
    • 2nd Dec 17, 9:03 AM
    If you know the market will crash in the next 5 years best buy lots of gold.
    • IanSt
    • By IanSt 2nd Dec 17, 11:17 AM
    • 153 Posts
    • 104 Thanks
    IanSt
    • #7
    • 2nd Dec 17, 11:17 AM
    • #7
    • 2nd Dec 17, 11:17 AM
    What other ITs are people considering to preserve your portfolio from being decimated when the crash comes?
    Originally posted by capital0ne
    Your use of the word 'decimated' would historically have meant '1 in 10' but I think you mean much more than that, so how big a percentage do you think the markets will crash and how long will they remain down?

    I think (but cannot guarantee) that even if the markets do fall then they'll get back most of those losses within a few years, so I'm staying fully invested given that only hindsight gives you the best time to buy and sell.
    • coastline
    • By coastline 2nd Dec 17, 11:53 AM
    • 921 Posts
    • 1,061 Thanks
    coastline
    • #8
    • 2nd Dec 17, 11:53 AM
    • #8
    • 2nd Dec 17, 11:53 AM
    I plan on sticking to 100% equities and preserve my wealth by doubling it now so when and if it crashes I won't mind so much. Anything else seems like pointless guesswork
    Originally posted by Prism
    I'm guessing you see it something like the link below..

    https://img.iex.nl/profs/12siegel2108.jpg

    In that link 1994 isn't even the peak of base rates but they are certainly near a low now..

    https://www.economicshelp.org/wp-content/uploads/2009/04/historical-interest-rate-1900-2011.png

    http://www.marketoracle.co.uk/images/2010/Jan/libor-spread-dec09.gif
    • dunstonh
    • By dunstonh 2nd Dec 17, 1:21 PM
    • 89,926 Posts
    • 56,599 Thanks
    dunstonh
    • #9
    • 2nd Dec 17, 1:21 PM
    • #9
    • 2nd Dec 17, 1:21 PM
    It seems strange to see someone using ITs when it comes to talking about capital preservation and showing fear of a regular negative occurance.

    The market will crash in the next 5 years - bonds and equities.
    Whilst you never know when it will happen, its not much of a stretch to suggest a crash in the next 5 years as crashes tend to occur within every 5 years. The last one was 2 years ago.

    What did you do in preparation for the last crash 2 years ago?

    Why are you using more advanced investment options if you are concerned about crashes "decimating" your value?
    What do you mean be decimating? It means 10% if you follow it's true meaning but others use that phrase when they mean the majority of it lost.

    What other strategies are you considering besides the obvious cash, gold, vintage wane and automobiles and other collectibles
    Some of those are not obvious.
    Last edited by dunstonh; 02-12-2017 at 1:30 PM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Linton
    • By Linton 2nd Dec 17, 2:05 PM
    • 8,636 Posts
    • 8,611 Thanks
    Linton
    I am in the position/age where any excess growth beyond inflation is likely to be wasted. So currently about 25-30% of my investment portfolio is split fairly evenly between RCP (RIT), RICA(Ruffer), Trojan 'O' and Jupiter Strategic Bond. See Linton WP on the GB - Invest-off thread.

    Another 25-30% is invested as in an Income portfolio. The remaining 40% is aimed at well diversified high growth (See Linton Growth).

    The strategy is to reduce Growth to 33% investing more in the Income portfolio. From then on annual rebalancing should look after most eventualities.
    • ArchBair
    • By ArchBair 2nd Dec 17, 3:21 PM
    • 52 Posts
    • 12 Thanks
    ArchBair
    I am in the position/age where any excess growth beyond inflation is likely to be wasted. So currently about 25-30% of my investment portfolio is split fairly evenly between RCP (RIT), RICA(Ruffer), Trojan 'O' and Jupiter Strategic Bond. See Linton WP on the GB - Invest-off thread.

    Another 25-30% is invested as in an Income portfolio. The remaining 40% is aimed at well diversified high growth (See Linton Growth).

    The strategy is to reduce Growth to 33% investing more in the Income portfolio. From then on annual rebalancing should look after most eventualities.
    Originally posted by Linton
    IMO your WP and Growth portfolio's are really good, would you mind me asking what you hold in your income portfolio?
    • Linton
    • By Linton 2nd Dec 17, 4:19 PM
    • 8,636 Posts
    • 8,611 Thanks
    Linton
    IMO your WP and Growth portfolio's are really good, would you mind me asking what you hold in your income portfolio?
    Originally posted by ArchBair
    European Assets Trust - 12.5% - Equity
    Schroder Asian Income Maximiser (OEIC) - 11.7% - Equity
    L&G High Income(OEIC) - 11% - Bonds etc
    Princess Private Equity (IT) - 8.5%
    Schroder Global Cities (OEIC) - 8.5% (Global property) To be sold as the % income is too low now.
    L&G Emerging Markets Gov Bond (OEIC) - 7% - Bonds
    Legg Mason IF Brandywine Global Income Optimiser (OEIC) - 6% - Bonds etc
    Threadneedle EM bonds (OEIC) - 4% - Bonds

    The remaining 40% or so is UK directly held shares with a strong FTSE250 bias.

    At some stage much of the UK equity will be moved into 2-3 ITs keeping only a few FTSE250 shares that have served me well over many years and possibly a few REITs. I am losing enthusiasm for the amount of research needed to maintain a 17 share portfolio.
    • capital0ne
    • By capital0ne 2nd Dec 17, 4:23 PM
    • 146 Posts
    • 80 Thanks
    capital0ne
    Just out of interest what is everyone's portfolio objective? Income for retirement, house purchase, yacht purchase, kids inheritance, or are you just doing it for the fun of it!

    And more contentious, what sort of sums do most people have in their portfolio, £100's, £1,000s, £10,000s, £100,000s or even more.

    What's your strategy besides WB's two rules - I'm sure everyone here knows them!

    What sort of gains losses have you made in the last 10 years?

    Should be interesting
    • bowlhead99
    • By bowlhead99 2nd Dec 17, 7:00 PM
    • 6,999 Posts
    • 12,608 Thanks
    bowlhead99
    Just out of interest what is everyone's portfolio objective?
    Originally posted by capital0ne
    If you mean literally everyone then the range of answers will be everything.

    I'm 41. Mine is 'building my wealth'. I do have different portfolios (GPP, SIPP, ISA, unwrapped, VCT, EIS/ SEIS etc), with different objectives.

    What sort of gains losses have you made in the last 10 years?
    Gains and losses, but overall, gains.
    Last edited by bowlhead99; 02-12-2017 at 7:02 PM.
    • Alexland
    • By Alexland 3rd Dec 17, 1:05 PM
    • 776 Posts
    • 473 Thanks
    Alexland
    Similar - lots of accounts / wrappers for different purposes. I am fortunate enough to have not crystallised any losses since moving to low cost mostly passive long term funds investing.

    In the old days when trading individual shares it was like a bad game of roulette where the dealing fees would seriously errode any gains.

    Alex
    • bostonerimus
    • By bostonerimus 3rd Dec 17, 2:51 PM
    • 1,227 Posts
    • 685 Thanks
    bostonerimus
    I take a holistic approach with my various retirement and regular investments accounts, I look at the asset allocation over all of them and use them to achieve my goal of financial independence. My retirement accounts are not accessible yet so I have a cash buffer earning 2% in a tax deferred accessible account....and have 100% equity index funds in my regular account for tax efficiency. I plan to stick with my 70/30 asset allocation if a crash occurs.

    Psychology plays a big part in the approach to investing, particularly as you approach retirement and capital preservation and income generation seem to become more important. Historically it wasn't an issue as you just had a final salary pension or you bought an annuity....the conservative safety first solution. Now that the UK has greater "pension freedom" and a rapidly increasing dependence on DC pension pots there are difficult choices to be made. So if you ask me whether I am conservative or a risk taker my answer would be "yes".......I'll explain. I'm lucky to have enough savings to comfortably cover my expenses so after securing guaranteed income that will cover my expenses I then take a risky equity heavy total return approach to income generation with the rest of my money.

    Long term planning has got me to this happy point. I bought a two family house 20 years ago which is now mortgage free and produces $1600 in rent each month. Also just before I retired I had the chance to take some of my DC pension savings and use it to buy into my employers final salary pension....so the reverse of taking a CETV....they took $280k from my DC accumulation and gave me a $20k/year index linked lifetime pension starting at age 55. So I have ~$40k /year in reliable income. That's my foundation. I would encourage people to invest some money for "foundation income" in conservative fixed income that along with state pension will keep the wolf from the door. Maybe annuities will be part of that in the future.

    Once paying for the basics are covered, or at least having enough to survive a multi year down turn in equites, then you should invest for capital growth to finance those trips to Antibes. My approach is to use simple low cost equity indexes with a US bias because I'm in the US. They produce around 2% or 3% in annual dividends and hopefully annual gains....but the dividends should give a pretty stable compliment to your foundation income.

    So to summarize my retirement investment strategy isn't much different from when I was working. I have a low cost equity index portfolio with some bond index to dampen volatility. I have a slightly larger cash buffer than when I was working and I took the opportunity to buy into a final salary pension when I could; that could be replaced in your plan by an annuity, a savings bond ladder or a gilt or high quality corporate bond portfolio. But the biggest help in retirement income planning is having enough to cover your expenses. Increasing your assets takes time, so you should look at reducing your income needs. Cancelling the Sky TV subscription will have immediate benefits........
    Last edited by bostonerimus; 03-12-2017 at 3:34 PM.
    Misanthrope in search of similar for mutual loathing
    • bostonerimus
    • By bostonerimus 3rd Dec 17, 3:06 PM
    • 1,227 Posts
    • 685 Thanks
    bostonerimus

    What sort of gains losses have you made in the last 10 years?
    Originally posted by capital0ne
    Looking at my accounts I see 7.5% annual average return from 2007 to 2017 and 10.5% for the last 5 years.
    Misanthrope in search of similar for mutual loathing
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