60-year investment: asset allocation thoughts?

jimjames

Totton wrote: »

For such a lengthy time period I would be inclined to simply purchase a small number of Investment Trusts such as RIT Capital Partners, Personal Assets and Scottish Mortgage or similar. A simple fire and forget strategy whereas asset allocation would require tinkering to manage rebalancing.

Regards,
Mickey

Definitely worth looking at. When you think about it and looking at a 60 year timeframe there are very few assets other than investment trusts that have performance records and pedigrees that go back over such a period for historic comparisons.

F&C launched the first IT in 1868 and many others began at similar times so they have far longer track records than almost any other investment vehicle other than say gold.

racing_blue

bigadaj wrote: »

Interesting projection.
One area I'm going to look at in more detail is turkey

Certainly worked for Bernard Matthews

FatherAbraham

anoncol wrote: »

I honestly don't see the point of this. The money markets will be so different by the time it matures, and this baby will be well in control of their finances by then anyway it almost sounds insignificant.

Some reasons:

• It is part of my responsibility to help this child develop good savings habits
• It is part of my responsibility to provide for this child
• Because of the long time-frame, it is relatively cheap to provide a worthwhile sum
• Due to the Endowment Effect, people tend to (over-) value what they've been given (or born with)
• It is easier to contribute to a pension fund that one already has, than to open one and then start to contribute (this is one reason why everyone's being auto-enrolled into pension-funds)
• Choosing funds for specific asset classes means that the entire portfolio of underlying investments might change several times in the coming decades, but wealth will continue to grow

Why do you think it "insignificant"? In particular, no fund size has even been mentioned.

Warmest regards,
FA

grey_gym_sock

unless there's a lot of financial provision, which will be accessible much sooner, already being made for the child, this seems like a strange approach to me. since they may have much earlier sensible uses for cash, and won't be able to access this. though they will be able to lose part of the pension in a divorce.

westy22

I can certainly see the point of this.

With compounding growth over time, money contributed in these very early years will enable the beneficiary to be able to contribute far less in those expensive years where marriage, house purchase and children are a drain on income.

There is basic tax relief added and compounding on that tax benefit even though no tax is being paid by the minor and, although the money is inaccessible to the child through his/her working life, they will be very grateful for it once they are old enough to realise the benefits.

I plan for my daughter to have approximately £35k in her pension fund at age 18 so even if she contributes nothing extra during the period 18 to 30 she should still be heading towards a reasonable standard of living in her retirement.

FatherAbraham

grey_gym_sock wrote: »

unless there's a lot of financial provision, which will be accessible much sooner, already being made for the child, ...

There is.

Warmest regards,
FA

FatherAbraham

grey_gym_sock wrote: »

Since they may have much earlier sensible uses for cash, and won't be able to access this. though they will be able to lose part of the pension in a divorce.

Surely any asset held by the individual can be divided in a divorce settlement? In other words, a pension fund is no more harshly treated on divorce than any "normal" asset held.

Warmest regards,
FA

bowlhead99

FatherAbraham wrote: »

Originally Posted by grey gym sock
Since they may have much earlier sensible uses for cash, and won't be able to access this. though they will be able to lose part of the pension in a divorce.

Surely any asset held by the individual can be divided in a divorce settlement? In other words, a pension fund is no more harshly treated on divorce than any "normal" asset held.

The advantage of any asset held rather than spent is that you can get some value out of it in future. A disadvantage of any asset held rather than spent is that it can be permanently taken away from you in a divorce. If the asset is inside a pension, you can't get any value out of it until age 55 (or whatever later age is enforced in 50+ years time), while it can still be taken away from you.