Diverse portfolio suggestions for 35 year old

PennyPurple

Hi,

I appreciate there are no 'right' answers to this question but I would appreciate some opinions. I am 35, in a good job and married without children (we do not expect to have children). This is my current financial situation and I'm wondering what to do next / how I should use this year's ISA allowance / whether I should be diversifying into other investment types, etc:

Mortgage - Approx £150k outstanding on an approx £375k value house (I overpay each month).
Emergency Fund - 6 months net salary in cash
Pensions - Approx £63k in defined contribution schemes.
Investments - Approx £42k all in index trackers - 43% UK all share, 22% US, 18% Europe, 11% Japan, 2% Health & Pharms & a small holding in a single stock from an employee scheme.

All suggestions greatly appreciated, however I do not particularly want to go into single stock picking as my job does not give the time I would expect it is necessary to spend to do the homework.

Thanks!
Penny

Pssst

You've invested enough...do some spending and enjoying..35 quickly becomes 45...

dunstonh

Approx £42k all in index trackers. 43% UK all share, 22% US, 18% Europe, 11% Japan, 2% Health & Pharms

So, that puts you as a medium/high to high risk investor then. In which case your selection is not likely to be very well diversified for the risk as you are missing key markets and areas which would only appear in managed fund form (as well as asia which you can get in tracker form)

Your cash level of 6 months salary doenst offset well against your high risk invesments. Where are your lower risk areas? At the moment you have two extremes and nothing in the middle.

wriggly

That's a pretty good portfolio already - you should be advising others.

The remaining large gap in equities is Asia-Pacific ex Japan. China and its rapidly industrialising neighbours, along with Australia, a major supplier of their raw materials, should probably have some representation.

You should also be considering how to increase your non-equity exposure over the next few decades by gradually increasing the amount of fixed interest (bond) investments you hold.

PennyPurple

dunstonh wrote: »

So, that puts you as a medium/high to high risk investor then. In which case your selection is not likely to be very well diversified for the risk as you are missing key markets and areas which would only appear in managed fund form (as well as asia which you can get in tracker form)

Your cash level of 6 months salary doenst offset well against your high risk invesments. Where are your lower risk areas? At the moment you have two extremes and nothing in the middle.

You say that I am missing key markets and areas. Please would you give me some examples / suggestions so that I can better understand your kind point?

Regarding two extremes and nothing in the middle (6 months salary vs 100% equity) - what type of product would you consider to be 'in the middle' and do you have a suggestion of proportion of savings/investment that should be in this bracket?

Thanks so much.

dunstonh

You say that I am missing key markets and areas. Please would you give me some examples / suggestions so that I can better understand your kind point?

You are clearly a high risk investor with that spread. However, you are missing asia and emerging markets and only have one specialist area in there. You are totally missing the fixed interest asset class giving you no downside protection or anything to rebalance into.

PennyPurple

wriggly wrote: »

The remaining large gap in equities is Asia-Pacific ex Japan. China and its rapidly industrialising neighbours, along with Australia, a major supplier of their raw materials, should probably have some representation.

You should also be considering how to increase your non-equity exposure over the next few decades by gradually increasing the amount of fixed interest (bond) investments you hold.

That is really helpful - I hadn't considered those.

On the fixed income side I was aware that I was missing and have preiously read the suggestion about your age as a %age holding in fixed income. I'll definitely look into this too.

Thanks for your kind suggestions.

tonygee_3

Sounds pretty 'safe' to me,Agree with pssst,now have a bit of fun..travel etc and dont dismiss children..the best 'investment' Ill ever make

sabretoothtigger

11% Japan is interesting, I would want to be in individual companies there.
I heard someone recommend the small cap market as worth investing, if you are only going to consider trackers then you could look into that


Your over weight in western markets. This is where all the money is but not the growth and you want your money to grow.

Tracking an index makes sense if there is general growth. Japan hasnt grown in a while and theres no indication to me that it will in future (long term), the west imo is not a growth market.



Totally missing all the pacific markets which is a shame because they have outperformed the west since the crash. Whats the pension invested in because I would off set that and avoid duplicating whatever its reliant on

All share is a crap index for growth, I would not recommend long term investment but obviously you are a uk resident so have the inside view on where it might go.
Worth dipping in and out of imo, trackers dont have initial charges usually so you have this choice

As a British resident and under this government particularly you are already highly invested in the economy and even specific ftse companies, duplicating this risk seems a mistake


http://www.ftse.com/Indices/FTSE_All_World_Index_Series/Performance_Analysis.jsp




http://forums.moneysavingexpert.com/showthread.html?t=1646539&page=2



I recognise the mistake because Ive done the same, caution is costing you money instead of saving it.
I think its good advice there to split the priorities, get the fixed return investments for security and follow some growth (riskier even) indexes

PennyPurple

sabretoothtigger wrote: »

I heard someone recommend the small cap market as worth investing, if you are only going to consider trackers then you could look into that

Whats the pension invested in because I would off set that and avoid duplicating whatever its reliant on

I recognise the mistake because Ive done the same, caution is costing you money instead of saving it.
I think its good advice there to split the priorities, get the fixed return investments for security and follow some growth (riskier even) indexes

I will take a look at Japan Small Cap, but as you and others have rightly pointed out the main gaps seem to be Asia Pac ex Japan and some fixed income. Yesterday I opened my ISA for this year (Hargreaves Lansdown Vantage) and put my first £1,200 into the HSBC Asia Pac Ex Japan tracker fund as this seems to have lowest charges for this type of tracker. If you have further suggestions on other funds to look at then of course I would appreciate it, but you have been very kind already to give such a detailed reply, for which thank you.

You also make a very good point that I should take into account what my pensions are invested in. I think they are quite general / safe equity 'balanced' funds but I will look at this in more detail and take this into account when considering my portfolio as a whole.

Thanks again for your time and detailed reply - I really appreciate it.

Penny

thrupence

PennyPurple wrote: »

I will take a look at Japan Small Cap, but as you and others have rightly pointed out the main gaps seem to be Asia Pac ex Japan and some fixed income. Yesterday I opened my ISA for this year (Hargreaves Lansdown Vantage) and put my first £1,200 into the HSBC Asia Pac Ex Japan tracker fund as this seems to have lowest charges for this type of tracker. If you have further suggestions on other funds to look at then of course I would appreciate it, but you have been very kind already to give such a detailed reply, for which thank you.

You also make a very good point that I should take into account what my pensions are invested in. I think they are quite general / safe equity 'balanced' funds but I will look at this in more detail and take this into account when considering my portfolio as a whole.

Thanks again for your time and detailed reply - I really appreciate it.

Penny

IMO First State funds are quite good for the Asia Pacific region.