Invest or Overpay Remortgage

mark55man

So in the circumstance where I was depending on investments eg for income I can see the benefit of a big pot of cash/cashlike stuff to prevent the need to sell at a bad time and to smooth out income


But for now for this investment position what does that much cash really buy me - protection from a 12 month period redundancy - it may be arrogance as I am pretty good at what I do, or complacency due to being a long term employee but it just doesn't register as a risk worth that much mitigation


At a certain point is it diluting your returns to have too much cash? I am already at 4 years worth of equity in my House (which is modern but rarish in our area). I will get to 2 months buffer (as per Kidmugsy) then see how I feel. This will take about a year so hopefully taper and QE and grexit and abenomics are clearer - although I worry that there will be something else

gadgetmind

Thrugelmir wrote: »

The one thing that they have in common is that no one saw what was coming.

And that well-diversified investors didn't suffer too much, particularly those who rebalanced and continued to drip feed.

To answer the OP's question, if you can't decide, then go 50:50. No matter what happens, you'll wish you'd been bolder, but that's life.

gadgetmind

mark88man wrote: »

At a certain point is it diluting your returns to have too much cash?

Yes. I think you need at least 6-12 months of essential spending but not much less than 10% of your total (non property) asset allocation.

As you get older (which I intend to do) you can maybe raise this to 36 months and 20% but this depends on your bond allocation etc.

mark55man

So Thrugelmir - don't get me wrong I do see those as challenges which is why I asked my original question - I would think on the amount I will be saving each month £400-£500 a month individual equities would be a bad idea - and so maybe defensive index funds might be better - I will be able to pay the mortgage whatever -


My aim is for the "contingency" pot to have returned more than 2.99% over the 5 years I will be building it - so maybe a vanguard whole of world or a Lifestrategy 40-60% could be better (other suggestions/strategies welcomed)


as I will never be in arrears on this pot I shouldn't have to sell at a bad time the consequence of bad performance is longer time at work

mark55man

gadgetmind wrote: »

To answer the OP's question, if you can't decide, then go 50:50. No matter what happens, you'll wish you'd been bolder, but that's life.

So 50% in First Direct and 50% in something bolder - Sounds like a plan!


I am keeping this pot logically/structurally independent from my other investments and pension as I don't think this would unbalance any other strategy and such compartmentalisation is good as these are very separate gaols

gadgetmind

mark88man wrote: »

I am keeping this pot logically/structurally independent from my other investments and pension as I don't think this would unbalance any other strategy and such compartmentalisation is good as these are very separate gaols

How about Vanguard Life Strategy? They have a multi territory/asset approach but this deliberately doesn't include property to avoid over-exposing those with plenty of residential already.

You'll be effectively de-gearing your property investment while holding a portfolio of other assets. Your timescale is sensible, and you can tweak term and "rebalancing" fairly flexibly.

As you say, sounds like a plan.

mark55man

I already have some (about 25%) of Vanguard products (mainly lifestrategy 80% and Dev Europe ex UK) in the portfolio I am managing for my kids as a gift from their grandfather.


They have done me OK, and I can add to them in the same vehicles without incurring undue costs - may need some diligent record keeping, but not a great deal of work.

gadgetmind

mark88man wrote: »

They have done me OK

Bzzzzt, bad answer.

Unless you've held them for multiple decades (which I know you haven't ) and have compared them in depth with other investment vehicles (OK, maybe you have) then how they have done so far shouldn't guide your hand.

You need to ask yourself if it's the right asset allocation, right investment strategy, and at the right level of fees.

Based on what you say, I think it is, but you do need to ignore past performance particularly over a fraction of an economic cycle.

Wilkins

mark88man wrote: »

I would think on the amount I will be saving each month £400-£500 a month individual equities would be a bad idea - and so maybe defensive index funds might be better - I will be able to pay the mortgage whatever -

As has been pointed out, any company can have its "Macondo Moment", so regular investing into funds (preferably low cost passive, in my view) is probably the best strategy for most people. Only idiots like me go for individual equities because we tend to find it interesting.

mark55man

Wilkins wrote: »

As has been pointed out, any company can have its "Macondo Moment", so regular investing into funds (preferably low cost passive, in my view) is probably the best strategy for most people. Only idiots like me go for individual equities because we tend to find it interesting.

Thank you Wilkins


In my other pots (SIPP) I have my moments with individual shares - VF (since Verizon) and Lloyds (since 2011) have been my main excitement


Not sure I want to do it with this pot but correct it can be interesting