The older you get, the wiser you become? - I´m not too sure about that!

DUS

Hello,

First of all, I´d like to apologise should some of the English I use in my post be incorrect and at times a bit ambiguous but as English isn´t my first language and I have come to this country only a few years ago, I still make so many mistakes that it is sometimes embarrassing. However, I still hope that any potential language issue will not put you off from replying to my thoughts and the questions asked. Thank you!

Whilst some people do tend to get wiser the older they get, this doesn´t seem to be true for myself when I look at my investment style and let alone investment success, which has been limited to say the very least. And all this what in comparison to quite a few punters on this forum seems to be a rather biblical age of 45 years and almost 3 decades of playing around in the investment world. I´ve always been rather a gambler than an investor and as we all know, in the long run gamblers almost always lose. Nonetheless, I am and will most likely always remain what the FT and others would call an (extremely) adventurous investor. But, and here´s a big BUT, maybe, just maybe that old adage of the older you get, the wiser you become holds some truth after all. At least a tiny, tiny little bit. So, sipping on my can of Stella, please allow me to share some of my investment thoughts and conundrums with you, in a hope to get some feedback from you guys.

As far as my investments go, I am currently betting on 3 investment stories to develop in a way that will allow me to achieve a healthy ROI over the next 2 decades.

#1 ASIA
#2 ASIA
#3 ASIA

Well, yes and no. On paper it looks slightly more diversified:

#1 Asia
#2 Global Emerging Markets / Frontier Markets
#3 Global Resources
#4 Infrastructure
#5 Food/Food supply

But at the end of the day, most of the above are heavily dependent on Asian economies continuing to expand at an above average rate for years and decades to come. But that´s what I believe in, hence my unhealthily balanced (or un-balanced) portfolio at the moment which looks like this:

So, how does my current gambler´s portfolio look like right now:

1. Key-Funds (% weight in my ISA)

Aberdeen Global EM Smaller Companies: 14.4%
Sarasin AgriSar 14.4%
First State Global Listed Infrastructure: 13.3%
JPM Natural Resources: 9.5%
First State Global Resources: 9.4
First State Global Emerging Markets Leaders: 7.8%
First State Asia Pacific Leaders: 7.1%
Marlborough Nano-Cap Growth: 6.6%
Franklin Templeton Frontier Markets: 3.5%

I still hold another fund in another account abroad which is the DWS Top 50 Asia fund. This position has a value which represents approx. 40% off all holdings listed above. So, yes, I am betting most of my money on the developments in Asia and the Emerging Markets.

2. Shares
I only hold 2, well, you won´t be surprised, highly speculative (penny) stocks: CORAC in the UK and a company called Bougainville Copper in Australia. The total current value of these 2 shares is around 50% of the value of my total fund investment.

So all in all, we are talking about roughly GBP 50k in the listed funds and 25k of shares in the 2 companies mentioned. So not a huge investment pot but I have to blame my „adventurous“ nature for that. Sigh! ;-)

Nonetheless, and here´s where I would love to hear your thoughts on, going forward, I want to become a tad bit more „solid“. So what does „a tad bit more solid“ mean to me?

* I want to fully subscribe to every year´s ISA and max out the allowance.
* I will not want to completely give up on my adventurous self and I will want to continue adding to the funds I currently hold in my ISA.
* I want to add another „component“ to my overall portfolio that over the next 20 years is likely to add stability although at best average yield/ROI to my overall portfolio.


So the big question for me now is what this „component“ should be and how much weight I should give it in my overall portfolio. My thoughts on this so far are:

* I should add some developed world markets.
* I should go for a global fund or tracker.
* I do not want to buy too many sector specific funds/trackers/ETFs

With that said, I started loving the idea of buying the Vanguard FTSE All-World ETF (VWRL). Common Stocks of large and mid cap companies in developed and emerging markets. I still like this ETF but when considering other alternatives, I came across 2 more Vanguard options that seem to be good investments in helping me achieve the 3 objectives for my new „component“. The 2 alternatives are: VG FTSE Developed World ex-UK (I like that the classic Emerging Markets do not seem to be included as I have too much of those covered already) and the VG LifeStrategy,, where given my adventurous nature, I would currently eye the 100% equity version. I plan the new fund/ETF etc. to represent around 25-30% of my total fund portfolio (50k at the moment, so I am looking into 10 - 15,000 pounds for the new fund/ETF etc).

So, at this point where I most likely will have lost 99% of the readers who started to read my post, let me ask you these simple sounding questions:

a/ What do you think of the 3 Vanguard investments?
b/ Do you think these might help me achieve my „solidity“ objectives? Which of the 3 would you prefer were you in my position?
c/ Is there an alternative investment you would recommend me to look into?

To use another saying, as you will struggle to teach an old dog new tricks, I do not want to give up on my very Asia/EM focussed portfolio. But if I can make it a bit more „solid“ buy not adding all fresh money to the same funds I already hold, then I would be very happy to consider that. And that´s why I would love to hear your thoughts and comments.

Thank you very much! And again, apologies if my wording and grammar was here and there not up to par with the quality you get from native speakers here on the forum. At least for tonight, can I blame the consumption of Stella for it? ;-)

Cheers

DUS

theGrinch

no point getting older unless you get wiser I was once told by an old wise gent

andy013

I'm curious now to know what you investment returns have been like up until this point.

DesG

I don't really have any advice on your investment strategy, but I would just like to say that your wording and grammar are better than the majority of posts from native speakers

Cheers, Des.

ColdIron

DUS wrote: »

The older you get, the wiser you become?

Perhaps, but you also get more forgetful. Last night I tried to open my front door by waving my work swipe card at the lock

planteria

good questions DUS.

i know nothing of Vanguard.

my initial thoughts are that I think significant exposure to Asia is a good idea, along with Resources, including Agriculture. all are represented in my portfolio too.

further, perhaps some High Yield shares would give you the balance you are looking for? i tend to think that i can manage large, blue chip, high yielding selections myself, rather than use a fund manager...perhaps wrongly. there are certainly some Income managers that are highly regarded and that focus on UK companies.

redbuzzard

I am Mr Passive Investor by instinct. Yet I find it very hard to resist trying to 'beat the system'.

In March 2009, at 56, I decided to try and fix my retirement position following the announcement that the final salary pension scheme I was in was to be closed, and the realisation that I was facing an impecunious retirement.

I started shovelling money into mainly developed market trackers, which was of course exactly the right thing to do, both logically then and in hindsight now. Probably the first and last time I will ever perfectly time an investment.

It was when the markets had risen by 30%-40%, less than half the increase I would enjoyed had I hung in there, that I started to fret about volatility and sought out funds with lower risk - mixed investments, some absolute return, and some equity income especially IP Income, which last has continued broadly to keep up with the market but with somewhat lower volatility. In May last year I reduced risk again, which hasn't gone particulary well as a large holding of SL GARS, and smaller chunks of other AR funds have either trod water or lost value.

The point is that I would have been better at this point to have stick with the trackers. I would have more risk now, but a considerably more valuable portfolio. Valuable enough in fact to bridge the risk gap between those investments and what I now hold.

I still think I made the right choice, for me. I am gradually retiring, and while I will use drawdown on the SIPP and stay invested, I needed to reduce the risk of a wipeout of most of my gains.

At 45, it's a different case I think (dependent on the many facts we do not know, regarding retirement provision especially). A well understood and balanced passive approach should provide a solid base for growth over a period of 10 years +.

The one caveat for me would be where we are starting from now - even so, regular contributions are a different case to my lumpy investment history - you can rub your hands at this stage if the markets slumps, knowing you will be tucking away more units.

Regarding the proportion - I would say build the core of your investments in passive funds/ETFs in developed markets. £25k in penny shares would be more than enough for most people!

That's not advice of course, or even a complete thought process - just a stream of consciousness that I will now cut off as I need to do something else!

DUS

Thank you all for your feedback so far!

takesyourchances

Interesting topic this. I think Asia long term has excellent potential as well and have a few funds focusing on Asia and smaller companies there.

I am not as adventurous as your overall holdings but I do have good coverage for Asia and next will be looking at infrastructure.

Good luck with it all and as one of the replies said it would be interesting how they have performed for you while you have held them all.

Rollinghome

takesyourchances wrote: »

I think Asia long term has excellent potential.

There's no doubt that Asia has potential, few would disagree with that. But we need to be a little careful in assuming something "having potential" is always the same as being a good investment.

What normally makes you money, whether it's a shareholding or a region, is if the potential hasn't been recognised by other investors and is therefore underpriced. If you decide that other investors haven't priced in the potential then there needs to be the further calculation of whether the better return is worth the additional risk.

The fall in Asian markets over past year suggests that investors decided they were overvalued. If you know they're wrong then it might be a good time to invest. If you're not sure then you may want to fall back on "modern portfolio theory" and spread your risk.

grey_gym_sock

the basic idea of adding some developed markets makes sense.

vanguard developed world ex-UK is neat in that it's all developed. however, perhaps you'd want to add some UK exposure on top? ignoring the UK completely is perhaps going a bit far.

VWRL has the UK at market weight (c. 8%), lifestrategy 100% has UK over-weighted (at 25%). a matter of opinions which you prefer. (and both include some EM, as you say.)

going back to the dev world ex-UK, it is roughly 60% north america (mainly USA), 20% europe ex-UK, 20% asia-pacific. (the bit in asia won't overlap much with your more EM-focused existing investments.) i tend to think so much in the USA is bit high; though others will say it makes sense, because that's based on the market size.

other possibilities are vanguard's regional ETFs (which do have slightly lower TERs than the above 3 options, though then you have a bit more dealing costs):

VEUR - developed europe (including 33% UK)

VUSA - USA

VJPN - japan

VAPX - asia-pacific ex-japan