Is 100% equity a good strategy for me?

My savings strategy for the next 10 years:
1) Keep three months' living expenses aside as an emergency fund.
2) Put everything else into low-cost index trackers.

I realise 100% equity is generally considered high-risk, but considering the following factors I feel it is a good plan for me:
- I'm 31, so I won't be retiring any time soon. I can shift to a cash-and-bonds portfolio when retirement begins to loom.
- I intend to buy a home with my spouse at some point, but we have no particular timescale in mind. We're happy to wait for the right time - i.e. when property prices are down and our investments are up. Waiting several years for this situation to arise is not a problem. Given this, equity seems like a better way to save for the deposit than cash.
- I have no savings goals other than home-ownership and retirement. Although I'm married, we're highly unlikely to have children so don't need to save for that either. I have no desire to go on a round-the-world trip or buy a fancy car.
- As I work in an industry which is thriving, it's very unlikely that I'll be unemployed for a long amount of time, so I don't feel I need to put aside masses for that possibility.
- I will only invest in index trackers. So although my investment will go up and down, it's pretty-much guaranteed to go up in the long-term.

Given all this, is there any disadvantage with a 100% equity portfolio, in my particular situation?


  • bristol_pilot
    bristol_pilot Forumite Posts: 2,235 Forumite
    It is a very high risk strategy for the short term; you seem to be mixing up two goals of retirement and house purchase. Given your age, if the savings were purely for your retirement then 100% equities is IMO appropriate to your aims. In this case it may be better in a pension to benefit from employer contributions or (higher rate?) tax relief. However, for short-term savings for a house deposit I would go for a boring savings account or ISA. Stock market falls of 30% or 40% do happen and have happened twice in the past 10 years. For a house deposit one should SAVE, for retirement one should INVEST.

    Also, 3 months outgoings is too low for an emergency fund IMO. Although you have convinced yourself that you are indispensible in your line of work, life has a habit of throwing up nasty surprises like unexpected sickness or accident.
  • alan5376
    alan5376 Forumite Posts: 1 Newbie
    I have no doubt more experienced posters will be along shortly to comment. I am in a similar position to you and am 100% equities. My wife has a reasonable cash pot but due to the returns on cash I choose to put all my after tax savings into index trackers. I do have sufficient funds going into a pension on the side though.

    Within the 100% equity plan would you be apportioning this in some way between pension contributions and s&s isa?

    Fyi i opted for vanguard 100 via HL but have recently bought Blackrock Em mkts tracker through Cavendish for a bit more spice.
  • Pumpkin_King
    Pumpkin_King Forumite Posts: 12 Forumite
    Bristol pilot:

    Thanks for your reply. I realise that stock market crashes happen, but if we're flexible about when we buy a home, what does it matter? The market tanked catastrophically in 2008 and a few short years later it was booming again. If we're happy to wait a few years after the crash, what's the problem? Buying up stocks in a crash would boost our returns and allow us to afford a better home when the economy recovers. Okay if we had another 1930s Great Depression our home-ownership plans would be messed up, but that's extremely unlikely, and I'm willing to take that risk. Every other crash has been followed by recovery within a few years.

    At the moment I'm not a higher tax payer and my workplace doesn't offer a pension, so for the time being S&S ISA works best for me.

    Yes maybe I should have a bigger emergency fund. I will consider it.

    alan5375: No pension for now, alas. I'm just aiming to max out my ISA. I use various HSBC funds plus the Black Rock emerging markets tracker you mentioned, all via Cavendish. At some point I intend to shift to Vanguard's SRI global tracker though (the only low cost ethical tracker I've been able to find).
  • WobblyDog
    WobblyDog Forumite Posts: 512
    Tenth Anniversary 100 Posts
    Although I'm an enthusiastic reader of, I don't have much confidence that house prices will drop substantially in the next few years; there are too many people with a vested interest in rising house prices.

    The thing that worries me about your strategy is that many politicians will intervene with tax-payers' money to support house prices, but few will intervene to support equity prices.
  • Totton
    Totton Forumite Posts: 981 Forumite
    Even within a 100% equity portfolio there are different levels of risk. Provided you understand and are willing to take on that risk then there isn't a problem so go for it.

    I would opt for 6 months cash but as your job is very secure then your 3 months is enough for now.

    Personally I don't think this is the right environment for index trackers but long term they should do you fine.

    Good luck,
  • jimjames
    jimjames Forumite Posts: 17,150
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    I am also nearly 100% equities and have been for the last 15 years or so.

    As long as you are aware of the risks which it appears you are then there shouldn't be a problem. You might want to look beyond index trackers for some markets though as certain areas are not ideal for trackers.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Primrose
    Primrose Forumite Posts: 10,572
    Part of the Furniture 1,000 Posts Name Dropper I've been Money Tipped!
    At 31 I think you should certainly be thinking about starting a pension. Don't forget that it's the payments made in earlier years that help to make your pension pot grow. And I would suggest six months emergency funds in cash. Delaying a house purchase for some years sounds fine in principle but don't forget that money paid in rent is completely wasted and could be going towards paying a mortgage off.
  • sabretoothtigger
    sabretoothtigger Forumite Posts: 10,035
    Part of the Furniture 10,000 Posts Photogenic Combo Breaker
    ) Keep three months' living

    Keep twelve
    money paid in rent is completely wasted
    money can be wasted buying a house too, depends how well its done.
    Liquidity is going to be a big with buying anything I reckon so thats why I think its ideal to have at least 12 months money ready.
    However savings rates are really bad so without risk thats not so easy
  • kidmugsy
    kidmugsy Forumite Posts: 12,709
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Keep some investment cash for buying shares when next they collapse. Instant-access Cash ISAs are good because you can transfer them into S&S ISAs whenever you want.
    Free the dunston one next time too.
  • kidmugsy
    kidmugsy Forumite Posts: 12,709
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    kidmugsy wrote: »
    Keep some investment cash for buying shares when next they collapse.

    I add, quoting a commenter at Monevator: keeping a small percentage of cash pays big dividends so you're not forced to sell equities at the wrong time.
    Free the dunston one next time too.
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