SIPP Advice & Thoughts

cheerfulcat

I'm an ardent believer in the importance of asset allocation and keen to balance the relative riskiness of equities with a more stable component. I'd keep a cash element with a view to switching to bonds when they become more attractive. Otherwise I would also use commercial property to give my portfolio some balance.

I'm not questioning the holding of cash for future investment purposes ( though holding it for too long will adversely affect the return, IMO ). It's just that you have allocated 10% for cash and 35% for gilts; that's 45% of your portfolio sitting there doing nothing! You could look at something uncorrelated ( or negatively correlated ) with your other choices instead, like emerging markets or commodities ( not advice! Just a suggestion ).

whit_3

cheerfulcat wrote:

I'm not questioning the holding of cash for future investment purposes ( though holding it for too long will adversely affect the return, IMO ). It's just that you have allocated 10% for cash and 35% for gilts; that's 45% of your portfolio sitting there doing nothing! You could look at something uncorrelated ( or negatively correlated ) with your other choices instead, like emerging markets or commodities ( not advice! Just a suggestion ).

Thank you. You are right, of course. I think my first run at asset allocation has probably been too conservative.

dunstonh

If anything, it's probably better to be conservative to begin with. Do not get overly encouraged by recent performance. Remember that a profit is no profit until you move it into something safe. You need this low risk assets in any portfolio. Especially if you intend to rebalance your portfolio to your chosen asset allocation percentages on a regular basis.

Everybody is different. You have to be comfortable with what you are doing.

NeilW

whit wrote:

I'm an ardent believer in the importance of asset allocation and keen to balance the relative riskiness of equities with a more stable component.

You do need to have a certain amount of faith in the approach because it is mostly claptrap.

Asset allocation is a way of getting a particular percentage return at the lowest possible volatility. It doesn't protect you from the most important risk of all - which is that you won't have enough to live on in retirement.

NeilW