Take a peek at my hand?

masonic

Not tempted at all to hold any inflation linked bonds?

VGOV might be down considerably, but look at the yield.

Ray_Singh-Blue

Update #30, Q2 2022

Bought some shares in AirBnB, another company I just have been hankering after for a while. Unfortunately, almost immediately after doing so, share price dropped 25%. Still, that's all part of the rough and tumble. Got to accept that this sort of thing will happen - ladders, snakes.

Current investments:

VWRL 46%
Novartis 2%
AirBnB 2%
Gold 9%
Cash 41%

Value of portfolio is 393K. Mortgage 232K.

masonic said:

Not tempted at all to hold any inflation linked bonds?

VGOV might be down considerably, but look at the yield.

I have avoided bonds for two reasons:
1) over recent years yields would have been less than mortgage interest.
2) what Warren Buffet said, about bonds offering "reward-free-risk" since about 2015.

However I agree that the landscape seems to be changing as interest rates and bond yields rise. Actually thinking of using the cash and gold to pay off the remaining mortgage soon. This will leave a 100% equity portfolio, a paid off house, and a small emergency fund which I don't count here.

Then, moving forwards, I may start to de-risk the portfolio by adding bonds.

Onwards, upwards.

Ray

moneysaver1978

Just curious, what prompted you to buy some Airbnb shares?

Loving this thread, please keep this up!

Ray_Singh-Blue

Update #31, Q3 2022

A few weeks early, but I had to post here, because I just paid off my mortgage.

Fixed rate deal expired. One option would have been to fix the mortgage rate again, and continue trying to out-peform with the investments.

But for various reasons, this time it seemed simpler and more comfortable just to pay it back.

So, see ya, Bank. Never again will I have to calculate the relative merits of an early repayment charge. Never again an arrangement fee. No more direct debits on the 5th of each month. The mortgage is history. Toast.

Don't get me wrong, I am profoundly grateful to have been offered a mortgage. It allowed the purchase of a house, at at time when I needed a house. And that large red number on the spreadsheet encouraged me to really get stuck into the ISAs, as described in the previous pages. And now, some years later, I have a house and no mortgage, and a bit left over in the ISA for good measure.

The mortgage was a tool. I used it, and have now returned it to the hire shop.

Guess this marks the start of a new chapter in this investment journey. But what strategy to take from here? What asset allocation, what approach to risk?

Until this point, I had really come around to feeling comfortable with a type of permanent portfolio: stocks, gold and cash. (The original permanent portolfio included bonds but after much vacillation I rejected bonds for mathematical reasons to do with low interest rates).

Paying off the mortgage took all of the cash (£160K), and all of the gold (£35K), and some of the stocks (£33K).

This means the newly shrunken portfolio is worth £185K, and consists entirely of stocks. Specifically, Vanguards world index tracker VWRL makes up 94%; and holdings in the companies Novartis and AirBnB make up 6%. I don't hate that this is the case. So think I'm just going mull things over for a while. "If in doubt, don't just do something... stand there". But probably am going to want to de-risk a little going forward.

That's all from me for another few months folks. Thanks for reading. But before saying farewell, here's an attempt to answer moneysaver1978's question.

moneysaver1978 said:

Just curious, what prompted you to buy some Airbnb shares?

It's a really good question, thanks for asking. Going back a few years, I had a hunch about the electric car company Tesla. If you  look back to update #6 in June 2016 on page 4 of this thread, you can see that I bought some Tesla shares for the equivalent of $16. By 2021 they had risen to $407. This was great news... except not for me, because I sold all my shares in 2017 for something like $25.

Now I'm not suggesting that AirBnB is going to be the next Tesla. But part of me really likes the concept of connecting people who want to lend houses with people who want to borrow houses. There are a lot of people out there, and a lot of houses. And part of me feels that - like Tesla - AirBnB has the potential to be a much more valuable business than it currently is. So that's why, but this time I'm going to stay the course a bit longer. 5 years minimum.

OK, now it's farewell.

Ray.

Ray_Singh-Blue

update #32, Q4 2022

I thought twice about posting again. After all, what is the point? I'm middle aged. I have paid for my house now. I have a pension to look forward to down the line. So what really is the point of continuing to invest? Why not just spend each pay cheque from here on in?

If I had to give an answer, it is that perhaps a certain peace of mind comes from having some investments just sitting there, ready to provide for whatever life might have in store.

One example: there's a lot and doom and gloom at the moment around energy prices. My energy bill will probably go up from £2K to £4K this year, maybe more. I fully get how this could be really stressful - 10 years ago it would have caused me at least passing angst. Not now though, because: INSULATION. Of the financial, rather than thermal kind.

Sorry if this comes across wrong, I'm just trying to explain why I see benefit in investing.

And another reason to keep posting here: I guess I might yet do something really stupid, and perhaps one of you can tell me - or at least someone may learn from the mistake and not do the same thing. So.

The current state of play is that I have £161K in the ISAs, almost all in Vanguard's world equities tracker VWRL.

Now that the mortgage has gone, I *think* I'm feeling comfortable with 100% stocks. It's volatile- one day the portfolio is worth £170K, the next day £150K... that's OK. In a years time it might be worth £100K or it might be worth £200K... I think I'm OK with that too. It still does the same job, as a parachute and insulation, it's just that it might do the job a little better or worse depending on when it's valued.

And while  the £ value may swings, it's possible to think of the portfolio in terms of units of VWRL. That value only changes once per quarter, when the dividends are automatically reinvested.

In terms of activity this quarter, the only thing I did was sell a bit of VWRL because I had miscalculated when paying off the mortgage, and found the current account a bit bare. It's looking healthier now.

So, there it is. Happy New Year to one and all.

I hope that this diary thread might be helpful or at least mildly thought provoking for someone. Start here and work back maybe, you may even avoid buying 8 tonnes of aluminium.

Cheers,

Ray

edit: to correct numbers

Ray_Singh-Blue

Update #33, Q1 2023.

Well, another 3 months have gone by. The mortgage is history, and I’m settling into new ways of thinking about financial life.

I’ll explain more in a moment, but first a question, if I may:

***

Question: What is the most cash-like thing to hold in a stocks and shares ISA, that is not actually cash? It should have the following properties:

1. linked or hedged to the Great British Pound

2. low risk of capital loss

3. some yield.

The cash I have sitting in these accounts right now meets criteria 1 & 2, but not 3.

I was thinking maybe a very short dated UK bond index fund? Or something else? Any suggestions?

***

Anyway, at present the ISAs contain £171,013. Cash makes up 14% of it. Equities make up 86%, and are: VWRL (80%), Novartis (3%), AirBnB (3%). That's it.

I still have it in mind to navigate towards the target asset allocation I mentioned in post #26, Q2 2021. Which is:

• Stocks, 25%;
• Physical assets, 25%;
• Pension and bonds, 25%
• Cash, 25%

And once there, to try to stay there for the rest of my life.

However, this target is some way off.  For example my house, a physical asset, is currently worth way more than 25% of the total. So is the pension. And stocks and cash are worth way less. But over time, I think this is the target I will slowly navigate towards. It seems to offers the sort of balance and stability I seek for all seasons, and hopefully will help guide decisions as I get older. Would love to hear your thoughts on this.

As an interim target, I have in mind:

• Stocks, 30%;
• Physical assets, 30%;
• Pension and bonds, 30%
• Cash, 10%

Talking of getting older, stumbled across this poem by John Whitworth "12 dont’s for the aged":

Don’t neglect your daily bath.
Don’t become a psychopath.
Don’t say all the best has gone.
Don’t go on and on and on.
Don’t decide to grow a beard
Don’t do anything too weird.
Don’t rub pigfat on yer bonce.
Don’t make scenes in restaurants.
Don’t be stingy: tip the waiter.
Don’t become a couch potater.
Don’t spend every evening plastered.
Don’t be such a dismal b*****d.

Now that's advice I can get behinfd. Top of the morning to you all,

Ray

Edit: to correct numbers

moneysaver1978

Top of the morning to you, Ray too - thanks for another insightful update! 

Johnjdc

Ray_Singh-Blue said:

Question: What is the most cash-like thing to hold in a stocks and shares ISA, that is not actually cash? It should have the following properties:

1. linked or hedged to the Great British Pound

2. low risk of capital loss

3. some yield.

The cash I have sitting in these accounts right now meets criteria 1 & 2, but not 3.

I was thinking maybe a very short dated UK bond index fund? Or something else? Any suggestions?

A SONIA tracking overnight Money Market Fund? Which is not very different from your own suggestion. I have a bit of my dry powder in the Royal London version.

Stargunner

Johnjdc said:

Ray_Singh-Blue said:

Question: What is the most cash-like thing to hold in a stocks and shares ISA, that is not actually cash? It should have the following properties:

1. linked or hedged to the Great British Pound

2. low risk of capital loss

3. some yield.

The cash I have sitting in these accounts right now meets criteria 1 & 2, but not 3.

I was thinking maybe a very short dated UK bond index fund? Or something else? Any suggestions?

A SONIA tracking overnight Money Market Fund? Which is not very different from your own suggestion. I have a bit of my dry powder in the Royal London version.

If you prefer an etf version of the above, depending on your platform charges, you can opt for CSH2 which has the same performance.

Ray_Singh-Blue

Update #34, Q2 2023

3 months really isn't very long is it?

And yet... maybe an idea, after 3 months in the oven, is at least partly baked.

Like many people, I have been interested by the attention being given to AI and am optimistic about its application. For various reasons, I have been baking in my oven some ideas about the US tech company Palantir.

Now, I know that:

1.  A lot of people know more about AI than me;
2. A lot of people will know more about companies using AI than me;
3. A lot of the people buying and selling shares in those companies will be professional investors;
4. It seems unlikley that I might make a better judgement than all those other folk.

On the other hand, I can afford to take some risks and actually want to take some risks again. And, well, there is this really nice smell of baking cake.

So, at the start of April, after about 3 months on gas mark 6, I bought 1,000 shares for £6,500.

One of my reasons for keeping this thread is to record things I have learned about investing, and about my own misadventures, and to actually write down these things so I don't repeat mistakes.

Reflecting earlier (in update #24, Q4 2020) a mistake I previously made was buying too few shares in the leccy car company Tesla and then selling them too soon. It was a really big mistake and a tough lesson. I bought them for £3K and sold them for £4K but if I had held for 5 more years, they would have topped out at £70K. How to prevent similar mistakes in future?

My reflection was that:

It's OK to buy shares in what might become one of the world's important companies. As satellite holdings, around a big passive core. There's obviously a risk of losing money. But the unbounded upside is worth the risk. So that's the first "conviction test". 

Then... be decisive and bold. Invest not less than 5% of portfolio

Then... don't sell too soon. Hold for at least 5 years.

Well, 5% of portfolio back in April would have been about £9K. And with this current investment, I'm ashamed to say that I wimped out a little. I watered it down to less than £6.5K, partly using the lame justification of round numbers, buying 1000 shares.

But I'm determined not to make the second mistake of selling too soon. Will be holding this one until 1st April 2028 at the earliest. Please, do quote this back and slap me with a fish if I sell any sooner. It will have to be a fish, the cake metaphor will clearly have broken down by that point, it would be all crumbs and mould.  

*******

In other news,  it was possible to introduce a healthy chunk of cash before the end of the tax year, and with some rise in world stock markets the value of the ISA portfolio is now £216,701. The breakdown is:

• VWRL, 78%
• CSH2, 11%
• Palantir Tech inc (PLTR), 6%
• Novartis AG (NOV), 3%
• AirBNB inc (ABNB), 2%

Thanks @Johnjdc and @Stargunner for the suggestion about an instrument to behave like an interest-bearing cash deposit in a S&S ISA. I went with CSH2, and transferred all the cash from our S&S ISAs into it. So far the ETF has behaved exactly as I hoped, a nice straight line:

• Initial purchase, £23,650
• After 1 month, £23,716
• After 2 months, £23,788
• After 3 months, £23,894

When interest rates were close to 0%, it wasn't such a big deal to have uninvested cash sitting around unrewarded. But now it is. So thanks.

*******

Just a final thought. If you whizz back in this thread 39 months (to update #21, made at the end of March 2020), you'll see that the balance of these ISA accounts was £253K and the outstanding mortgage was £274K.

In a little over 3 years, thanks to the regular introduction of saved cash, rising markets, compounding, and now some gains on individual stocks, the balance is once again similar. But the mortgage is toast.

3 months isn't very long. But it's long enough to bake a cake. And when you bake a dozen, a few might turn out OK. That's the reason why I'm still posting.

Cakes, toast.

Good wishes to all, as always.

Ray.