Portfolio weighting

Totton

Ash1982 wrote: »

Done some more online research and 30% bonds is way to high. Thinking more like 15% bonds now

There are several suggested bond allocations but here is a typical one -

The old rule of thumb used to be that you should subtract your age from 100 - and that's the percentage of your portfolio that you should keep in stocks. For example, if you're 30, you should keep 70% of your portfolio in stocks. If you're 70, you should keep 30% of your portfolio in stocks.

However, with Americans living longer and longer, many financial planners are now recommending that the rule should be closer to 110 or 120 minus your age. That's because if you need to make your money last longer, you'll need the extra growth that stocks can provide.

For myself I prefer to keep 6 months salary as a cash holding and my bond holding at a low level, that gives me a better nights sleep :-) I also tend to put the majority of my portfolio into Investment Trusts holding a mixed portfolio which in itself takes care of my bond allocation. If going for a bond fun then in the past I have chosen Artemis Strategic bond fund (volatile), Invesco Perpetual Monthly Income Plus and M&G Corporate Bond Fund. I don't hold any of these nowadays.

Best Wishes,
Mickey

Linton

fiesta04 wrote: »

This thread is only 3 hours old and I love how your views/choices have changed.

This was exactly how I was not long ago. Decided I am not ready for such decisions yet.

Happy investing.

F4

I think the OPs real problem is that he hasnt decided why he is investing and over what time scale. There appear to be two different objectives - one is to buy a bigger house in 5-10 years time, another is to save for the indefinite long term, possibly retirement.

Optimally meeting these two objectives requires two different investment styles, the first needs to be relatively cautious, the second can be higher risk and return.

Suggest that firstly a decision be made on the % allocation of savings to these two objectives and then two different portfolios be constructed. If the objectives are known the % allocation within each portfolio becomes much more obvious.

Without being clear on why you are investing any rule of thumb regarding % in bonds and equity is meaningless.

Ash1982

Thanks mickey and linton.

I think I need to explain my overall position in order for people to comment further.

I have £6,000 in cash as my contingent fund (6months living expenses)

I have £1,000 a month to invest or save.

I have 2 objects. 1. Build up a capital fund over 10 years. 2. Save for deposit on a bigger house in 3years time.

Strategy for objective 1. Invest £500 a month in s&s isa (Subject of thread)
Strategy for objective 2. Save for£500 a month in cash isa(currently notts bs regular saver)

fiesta04

Personally Ash1982,if I were you at 30 (I wish).

I would save for the bigger house now. Putting the £1000pm into Regular Savers, maybe FD@ 8%, HSBC@6% Santander@5% then into Best A/Cs for 1 year. After 3 Years you should a nice sum for a deposit. Or to use differently if circumstances change.

I have been known to get things wrong!!

and then invest

Ash1982

Thanks fiesta.

I just want to start investing now to build up a nest egg and compound returns. Also think the best time to invest is in a recession when prices are low. All a matter of opinion I guess

Ash1982

So I now have:

GLG Technology Equity Accumulation 20% (100 pcm)
First State Global Emerging Mkt Leaders Accumulation 20% (£100pcm)
JPMorgan Natural Resources Accumulation Units 25% (£125 pcm)
First State Global Property Securities Accumulation 20% (£100 pcm)
M&G Strategic Corporate Bond Accumulation 15% (£75 pcm)

I'm fairly happy with this but I always welcome constructive comments!

Daniel_Elkington

Instead of global property shares, which tbh are shares and offer very little real diversification.

You could try looking at standard life global absolute return strategies as the stabilising element.

It isn't a question of bonds or stocks.

As you are so high risk I'd swap the bond fund for something like Kames high yield bond and maybe reduce risk by getting rid of the JPM fund and going for fidelity money builder dividend.

Split it equally between all five,there is no need for a fancy asset allocation, as long as the portfolio is balanced ( meaning between income and growth producing assets ) then it will work.

Not sure about the technology thing. You might want to go for Rathbone global opportunities, this way you have a global fund that picks big players in emerging markets and a fund which looks for undervalued companies all round the globe.

Then you'd have a high yield bond fund and a predominantly uk dividend fund. The uk markets are not that good at growth, but paying divvies we are good at.

Finally this would be tempered by the stan life fund which would derisk the portfolio.

Linton

Ash1982 wrote: »

So I now have:

GLG Technology Equity Accumulation 20% (100 pcm)
First State Global Emerging Mkt Leaders Accumulation 20% (£100pcm)
JPMorgan Natural Resources Accumulation Units 25% (£125 pcm)
First State Global Property Securities Accumulation 20% (£100 pcm)
M&G Strategic Corporate Bond Accumulation 15% (£75 pcm)

I'm fairly happy with this but I always welcome constructive comments!

As a very long term portfolio I would not have any major argument with what you have chosen to do. Obviously one can discuss individual investments but that's very much a personal choice and if you are unhappy with the results you can easily switch new income elsewhere.

I would disagree with Daniel's views on diversification within this portfolio, as by maintaining two equal-sized separate savings streams, one pretty high risk, the other pretty low risk, both with continuous income, your overall risk is reasonable. In your high risk portfolio you should welcome the inevitable short term major falls as it means you are buying new units at a low price.

When you eventually buy your new house you may wish to reconsider the diversification aspects of your total savings.

This two pronged style of investing is the one I have adopted for the past 10 years and it has worked fine for me. It seems better for each part of your total portfolio to have a specific well defined purpose rather than having one part just to quieten the excesses of the other. There is one problem though that I have yet to satisfactorily resolve: ideally one should be able to shift money between the two portfolios. This is a real hassle if one part of your total portfolio is in an S&S ISA with one supplier and the other in a Cash ISA with a different supplier.

Ash1982

Thanks Daniel and Linton,

I've slightly tweaked it today, I'll review next year:

First State Global Emerging Mkt Leaders Accumulation 30% (£150pcm)
First State Global Property Securities Accumulation 25% (£125 pcm)
GLG Technology Equity Accumulation 15% (£75 pcm)
JPMorgan Natural Resources Accumulation Units 15% (£75 pcm)
M&G Strategic Corporate Bond Accumulation 15% (£75 pcm)

All you comments have been so helpful, I may update progress in a few months if I remember!

Ash1982

Right, I'm a month in and these are the fund I have finally settled on:

[FONT=&quot] [/FONT]

[FONT=&quot]£ invested[/FONT]

[FONT=&quot]Target Return %[/FONT]

[FONT=&quot]Target Return £[/FONT]

[FONT=&quot]JPMorgan Natural Resources [/FONT]

[FONT=&quot]£50[/FONT]

[FONT=&quot]25[/FONT]

[FONT=&quot]£12.50[/FONT]

[FONT=&quot]GLG Technology Equity [/FONT]

[FONT=&quot]£50[/FONT]

[FONT=&quot]20[/FONT]

[FONT=&quot]£10.00[/FONT]

[FONT=&quot]First State Global Emerging Mkt Leaders [/FONT]

[FONT=&quot]£800[/FONT]

[FONT=&quot]15[/FONT]

[FONT=&quot]£120.00[/FONT]

[FONT=&quot]Invesco Perpetual Japan [/FONT]

[FONT=&quot]£1,000[/FONT]

[FONT=&quot]12[/FONT]

[FONT=&quot]£120.00[/FONT]

[FONT=&quot]Invesco Perpetual Corporate Bond[/FONT]

[FONT=&quot]£1,000[/FONT]

[FONT=&quot]8[/FONT]

[FONT=&quot]£80.00[/FONT]

[FONT=&quot] [/FONT]

[FONT=&quot]£2,900[/FONT]

[FONT=&quot]16[/FONT]

[FONT=&quot]£464.00[/FONT]

Each fund has £50 pcm regular investment set up and I intend to invest additional £250 chunks as and when I have spare money into the higher risk funds. The idea is that I invest in the JP morgan and GLG funds now whilst values are depressed and 'cash in' when I reach my target return by transfering the capital to the lower risk Invesco funds, then start the cycle again.... if that makes sense on paper!

Comments welcome