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How best to put £255k in savings
Comments
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GeorgeHowell wrote: »Agreed, there should most often be some content of equity (even I have some) -- my quibble is over what proportion.
That depends on your age and your attitude to risk. More in equities equals larger gains at the expense of higher volatility. Younger people *should* be happier with more equities, but some panic at the sight of red, so you always need balance.is the advisor ever going to 'nurse' the portfolio as frequently and objectively as the owner of the funds will ?
Advisors can be *more* objective(1), and they can use mechanical tools to achieve balance. As it happens, my SIPP is auto-balanced by the platform, and my (outgoing!) IFA just cribs what they have done for my ISA. Of course, when I signed up, they told me that this was a skilled job that they did for me in return for the several £k that they drain off in trail commission each year. I reckon they spend 30 seconds per year, if that.
Hence "outgoing", big time!
(1) - Yes, dealing with your own investments does mean that you care more, but it doesn't mean that you make better decisions. Humans tend to have complex visceral reaction rather than a detached ratiocentric approach, which means they either panic, get greedy, or (more often) both.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »More in equities equals larger gains at the expense of higher volatility.
I would have to take issue with that "urban myth". On the basis that UK equity prices overall have not shown gains for 12 years now, it is highly questionable whether the old assertion that over a long enough period equities must beat anything else still holds true. I also think it is highly questionable that for anyone where retirement is in sight, even if on a far horizon, equities should be in their portfolio at all, except to the extent that they are willing to have a bit of a gamble, totally with their eyes open.gadgetmind wrote: »Yes, dealing with your own investments does mean that you care more, but it doesn't mean that you make better decisions. Humans tend to have complex visceral reaction rather than a detached ratiocentric approach, which means they either panic, get greedy, or (more often) both.
Indeed, this is the buying at high prices and selling at low syndrome. But the danger
of using a third party is that having got the client on board and set up an allegedly personally-tailored balance portfolio, they will then concentrate on attracting more new business rather than exercising constant vigilance over the existing.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
GeorgeHowell wrote: »I would have to take issue with that "urban myth". On the basis that UK equity prices overall have not shown gains for 12 years now, it is highly questionable whether the old assertion that over a long enough period equities must beat anything else still holds true.
Just because equities have beaten everything else over 90 percent of ten year periods obviously doesn't tell you anything about the last ten year period nor (more importantly) the next.
Oh, and you also need to consider dividends when looking at what equities have/haven't done.I also think it is highly questionable that for anyone where retirement is in sight, even if on a far horizon, equities should be in their portfolio at all, except to the extent that they are willing to have a bit of a gamble, totally with their eyes open.
I intend to hold over 75% in equities right up to retirement and beyond, however, I do intend to use drawdown, and I have ensured that I have a healthy cash buffer as part of the remaining 25%.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »Just because equities have beaten everything else over 90 percent of ten year periods obviously doesn't tell you anything about the last ten year period nor (more importantly) the next.
Oh, and you also need to consider dividends when looking at what equities have/haven't done.
I intend to hold over 75% in equities right up to retirement and beyond, however, I do intend to use drawdown, and I have ensured that I have a healthy cash buffer as part of the remaining 25%.
I think you have answered your own point there -- the past is not reliable indicator of the future. But that is essentially what all pretty much all attempts to sell equity based funds relies on these days. It is true that reinvesting dividends makes a substantial difference, but people need to understand that equities therefore yield no income per se, it's all dependent on capital gain (or loss).
Re 75% equities, that's your choice and entitlement. But I happen to think it's a wrong choice and that it would be unfortunate if people were led in such a direction by so called experts.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
GeorgeHowell wrote: »people need to understand that equities therefore yield no income per se, it's all dependent on capital gain (or loss).
Typically, even if you draw 100% of dividends as income and don't reinvest, your equities still beat inflation *and* the dividends keep rising year on year.I happen to think it's a wrong choice
What do you think is a sensible asset allocation right now and at what point will you move back into equities?I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »
What do you think is a sensible asset allocation right now and at what point will you move back into equities?
As always: Invest what you can afford to lose; Save the rest.
Just trying to keep the cat amongst the pigeons this fine morning. And the bulls with the bears.:)0 -
gadgetmind wrote: »Typically, even if you draw 100% of dividends as income and don't reinvest, your equities still beat inflation *and* the dividends keep rising year on year.
Not since 1999 they haven't. So it very much depends on the period between buying and selling and therefore it's a big gamble.
What do you think is a sensible asset allocation right now and at what point will you move back into equities?
Please see my earlier post on this thread. I don't think I will live lon enough for equities to prove beyond doubt that they are a better bet than anything else -- if they ever do.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
GeorgeHowell wrote: »Please see my earlier post on this thread. I don't think I will live lon enough for equities to prove beyond doubt that they are a better bet than anything else -- if they ever do.
I 2008, I bought £2.5k worth of shares for my daughter, and am holding them in a blind trust for her. She turns 18 soon, and that £30k worth of shares will cover her uni fees.
Yes, equities can under-perform at times, but when they perform ... well, let's just say that my knowledge of the ins and outs of capital gains tax is pretty good!
Of course, 2009 and 2010 where great years for equities, with 2011 has so far been sideways for capital value, though the dividends have been rolling in nicely.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
You're lucky they werent RBS shares........would be worth £250 now.illegitimi non carborundum0
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