The right portfolio for extended retirement

diveleader

I thought I would refresh this post with some additional information and some questions on where to invest next.

I will be 49 this year and my wife 48.

We are retired, but I still do a couple of days of work a month.

We are still receiving income from our company's retained profit of approx 70k total per annum. This should continue for another 3 years.

Our combined portfolio is as follows:

Cash 17.4%
Peer 2 Peer lending 5.0%
dividend paying shares 4.2%
Vanguard LS 80/20 56.5%
Vanguard global small cap 6.5%
Blackrock global property tracker 10.4%

Our 'number' for spending per annum equates to 2.5% of our current portfolio.

State pension (still some time off) is not included in the above.

With additional income to be added, I am thinking of reducing the overall equities % still further.

Do you think this makes sense?

Currently, the 'cash' aspect of the split includes saving / current accounts, national savings and premium bonds and is already close to 8 years of spending.

I was thinking of increasing the peer to peer.

Any other suggestions?

(and feel free to comment on my funds choices.)

Thanks

kidmugsy

OP, read this chap.
http://www.theretirementcafe.com

dunstonh

Vanguard LS 80/20 56.5%
Vanguard global small cap 6.5%
Blackrock global property tracker 10.4%

That is quite a high risk spread. Have you considered diluting it to hold more bonds and property (note that very high risk property share fund is not the same as lower risk bricks and mortar property funds).

You havent stated your risk profile or capacity for loss. So, its difficult to comment further

gadgetmind

dunstonh wrote: »

lower risk bricks and mortar property funds).

Which rarely have a geographical spread worth mentioning, and tend to be open-ended, so during a downturn have to lock the doors as they "fire sale" their properties.

A global property tracker will hold shares in property companies and REITs around the world, so may be more volatile at times due to premiums and discounts, but I'd still personally prefer this to a high fee fund and "lock in" that may last for years.

dunstonh

Which rarely have a geographical spread worth mentioning, and tend to be open-ended, so during a downturn have to lock the doors as they "fire sale" their properties.

UK property funds by their nature focus on the UK. Property by its nature is illiquid.

Property share on the other hand will drop in value if the shares of the property companies falls because the property company has to have a fire sale of their properties.

A global property tracker will hold shares in property companies and REITs around the world, so may be more volatile at times due to premiums and discounts, but I'd still personally prefer this to a high fee fund and "lock in" that may last for years.

Fair enough but the risk & volatility levels are significantly higher and property share does not diversify asset class as they are shares.

diveleader

Thanks for the replies.

I to felt a global property tracker would offer more benefits than disadvantages.

Currently my thoughts would be:

Increase bond holding, possibly in the Vanguard 20/80 fund as it has low charges, and the current reduced returns make the impact of charges all the more important.

Rejig our cash holdings to ensure we can increase the gross interest % (already have x3 123 accounts and x2 TSB) but could add the other accounts as described on this website.

Increase the peer 2 peer by a couple of percent. Currently use ratesetter and funding circle and will look into one or two alternatives.

My other question is with our withdrawal rate requirement of 2.5% should we look to reduce equities still further? as there is less requirement to 'chase' a higher return.

The above, of course, relies on low inflation rates to be maintained.

atush

given you are still receiving income, are you still filling sipps and ISAs?

diveleader

Yes, we have been contributing the maximum to ISA's for many years and have maxed out SIPP contributions over the last couple of years (with our Ltd companies assistance).

Max ISA contributions will continue and SIPP contributions will probably be to 100% of our (small) salaries.

I await the Budget on whether SIPP contributions will continue into future years.

Linton

diveleader wrote: »

.....

My other question is with our withdrawal rate requirement of 2.5% should we look to reduce equities still further? as there is less requirement to 'chase' a higher return.

Or on the other hand the fluctuations of a high return portfolio would be less of a risk to your steady income.

Thrugelmir

dunstonh wrote: »

Property share on the other hand will drop in value if the shares of the property companies falls because the property company has to have a fire sale of their properties.

Commercial property values have changed with technology and ways of working (hi-tech offices). Plenty of redundant commercial property around. Likewise somebody with a 40 year retirement plan is highly likely to outlive the majority of companies they invest in.