Portfolio analysis

peterg1965

Loughton_Monkey wrote: »

I would certainly endorse this.

I retired early almost 5 years ago. I had a bag of different pensions, some savings, and mortgage-free house (well almost). My big proviso before I pressed the button to retire, was that my income must be enough to continue spending exactly what I consistently spent in work (including inflation provision etc.)

The safety margin I built in was (a) to ignore about £50K savings, (b) add a 5% spending allowance, and (c) to assume I need to support ourselves to age 90.

Given that my pensions pay less than 50% of my spending, (c) was by far a bigger safety margin than (a) - especially since longevity does not run in my family.

Now, after 5 years, I am extremely happy that I am 'ahead' overall. Very much a "swings and roundabouts" tale. On the one hand, House value, and my Equity ISA's are a little disappointing, but more than made up by far better Pension/Life Assurance payouts than I had imagined, plus routinely spending less. In fact my total "Balance Sheet" (which includes all cash, house value, and 'actuarial' value of pension funds) is 11% higher than when I retired.

Retirement gives you time to manage the investments better, and the removal of work stress is idyllic! My wife and I are starting to discuss if we should splash out a bit more on extra holidays.

So go for it boys!

I have to say, I have similar aspirations for retirement, hence a little financial pain now will be a good trade off for a comfortable and relaxing retirement with no money worries and the ability to enjoy life without the stresses of work.

I want similar safeguards, but income from pensions/drawdown is more important to me.

Loughton_Monkey

Understood.

A lot has to do with the estate you wish to leave. Personally, we have no children and therefore wish to die 'penniless'. Getting the timing right is the impossible bit!

Others, admittedly, have a different agenda and although want a comfortable retirement, also want to leave the kids something. And they have to think about Death Duties etc.

From our own particular perspective, therefore, pensions are 'a good thing'. From an actuarial basis, if we dies young, then we have 'lost'. But the thing is, in truth we don't care. If we live long, then pensions will still keep paying out. That's good. Although retired, we are both banging the max £3,600 (well £2,880) into Stakeholder's. I plan to keep stuffing it in ad-infinitum until we have to take them. Because of the Government contribution, and low Stakeholder charging, they are very cost effective 'investments' and we'll get the cash back if one of us dies.

However, if we survive to the last, then they'll provide a lovely cash sum, plus extra income for the remaining years.

riskyb

:rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl:
I can't stop laughing. How I would have loved to be a fly on the wall for this conversation.

Loughton_Monkey wrote: »

Agreed.

Personally, I have an Offset Mortgage. Wonderful things, providing great flexibility.

Until a couple of years ago, I had it more or less 100% 'Offset', often paying no interest; occasionally £1.21 or something.

Once I twigged that my rate was only 1% over base (1½%), I took it all out, and put it into 3.85% fixed rate bonds.

Strangely, I got a phone call out of the blue from the bank, with a very polite (what they called) "Routine review of progress", reminding me that I have to pay it off by the time I am 65, and they wanted to know if I need help 'getting on track'.

I gave them a very polite reassurance that I was 'on track' and that they could sleep well at nights.