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Update # 7, Q3 2016
• Introduced this quarter £0
• Sold Vanguard FTSE100 ETF
• Value on 30/9/16 = which is 36% of my mortgage balance.
In the last week of June, Britain took a vote on whether to leave the EU. No chance, I thought. The FTSE 100 dropped to around 5900 so I bought a tracker, expecting it to rise once we voted to remain. Well I got that wrong. But the tracker rose so I sold it anyway. This strange episode strengthened my view that the investment world is much more complicated than it appears. Likely, if I had made the OPPOSITE investment decision in every case over the last 2 years, I'd be better off. Which is why passive investment features highly in my plan, and you see me trying not to make many new decisions. "Don't look for the needle in a haystack. Buy the haystack."
Here are my top 10 holdings on 30th September:
VWRL Vanguard FTSE All World ETF 31.2%
Cash ISA 15.6%
Lyxor ETF Commodities TR/Jeffries CRB C GBP 8.1%
ETFS COMMODITY SECURITIES LTD ETC - DOW JONES-UBS ALUMINUM SUBINDEX 7.2%
ISHARES FTSE BRIC 50 4.8%
TESCO PLC 4.7%
SPDR MSCI EMERGING MARKETS SMALL CAP ETF 3.1%
SAINSBURY(J) 3.1%
Blackrock World Mining Trust 3.0%
ETFS - Brent Oil 1 month USD 2.9%0 -
Update # 8, Q4 2016
• Introduced this quarter £7,500
• Sold Blackrock World Mining Trust
• Value on 31/12/16 = 41% of mortgage balance.
This thread is now two years old. Thanks for coming back to it, and particular thanks to anyone who has offered advice and insights.
2016 has been a well-behaved year, in that I have mainly stuck to "the rules”:
Rule 1: 60% equity, 20% cash or bonds, 20% commodities or other stuff
Rule 2: half passive
Rule 3: No more than 3 trades per quarter
Rule 4: Don’t sell stuff at a loss
I just totted up the costs of running this portfolio. The average expense ratio of all the shares and funds held is 0.24%, or £323. Add to that two different platform fees and commissions £212, stamp duty £30, currency charges £10. In total, owning and running this portfolio this year cost £535 or 0.40%. I think that’s OK value, but would be interested to know how yours stacks up.
2016 has also been a winning year - it beat the benchmark, Vanguard’s Lifestrategy 60 Acc. Well, it was neck and neck right to the end. But by my reckoning VLS60 returned 19%, whereas my portfolio returned 22%. (Sadly this does not compensate for last year’s woeful performance. Since this thread started, VLS60 is still in the lead by some margin)
The main “ladders” were to do with commodities. My three best performers:
1. Blackrock World Mining Trust, +101%
2. ETFS – Brent Oil 1 month USD, +57%
3. Royal Dutch Shell PLC ‘B’, +53%
The main “snakes” were moonshots gone south.
1. Circle Holdings, -46%
2. Bank of Ireland, -20%
3. Electricitie de France, -17%
Right or wrong, my policy of not selling at a loss means that most of those snakes are now in fact little worms wriggling annoyingly around the bottom rows of my spreadsheet. At least they can’t do much damage there. And I once experienced a worm morphing back into a fat juicy bratwurst, so am content to just ignore them for now.
Breaking down my portfolio:
- Stocks passive: 31%
- Stocks active: 26%
- Cash and bonds: 24%
- Commodities: 19%
And in 2017 I’m planning to stay the course.
Bonds still puzzle me. My little UK government bond fund – just a toe in the water- returned 9% this year. How is that even possible? I do not understand why people willing to pay so much for bonds and feel we must be long overdue a correction. So I am digging my feet in. My main “bet” for 2017 is that both cash and commodities will outperform bonds. If this proves true, then I hope to make up some more ground on VLS60 next year.
Thanks for reading, and please have a cracking year in 2017
RB0 -
Update #9, Q1 2017
I have three investment rules, but this quarter am in the naughty corner because I broke one. It was rule number #1, the asset allocation rule: 60% equities, 20% bonds or cash, 20% commodities or other stuff.
Rightly or wrongly, I decided to sell most of my largest holding, the world equities tracker VWRL. My finger had been twitching above the sell button for ages, I felt twitchy about the multi-year rise which helped deliver such good portfolio returns last year. Seeing VWRL rise further, through the (entirely arbitrary) £60 barrier was the trigger in the end. So my current asset mix is 45% cash, 5% bonds, 36 % equities and 14% commodities. Quite a departure from rule #1.
The sell twitch was not just a spinal reflex. I think that soon we might see interest rate rises, and/or strengthening of GBP, and/or a fall in global stock markets. Any one of these three events might reduce the GBP value of a USD denominated, unhedged, world equity tracker. So … a punt has been taken. It generates a couple of questions though: what next, and what about the rules?
“What next” is a tricky question. I know that cash depreciates in real terms and at some point it will need to be reinvested. Selling VWRL= £59.40 my hope had been to buy back in fairly quickly at a lower price before the next ex-dividend date. No suitable opportunity came, I have missed the dividend, and now need to buy back in at price less than about £59.10 if I am to profit from this little gamble. My hope is that I’ll get the chance to do just this before the next dividend date in June. We’ll see.
“What about the rule” is easier. The rule needs to change. The change I’m considering is to : 60% equities or cash, 20% bonds or cash, 20% commodities or other stuff. A subtle difference, but one which allows an active approach and, rightly or wrongly, an option to sit on the sidelines rather than remain fully invested. Call it market timing if you like- because it is- I put my hand up.
Confession time over.
I got two ticks on the good behaviour chart for keeping rule #2 (no more than 3 trades per quarter) and #3 (don’t sell stuff at a loss). Trade number 2 involved buying shares in BT after a price drop, and trade number 3 involved selling some aluminium after a price rise.
Here are my top 10 holdings:
1. Cash, 44.5%
2. VWRL, 12.2%
3. Lyxor ETF Commodities, 6.3%
4. ISHARES FTSE BRIC 50, 4.0%
5. VANGUARD Global Short Term Bond Index Hedged Inc GBP, 3.8%
6. TESCO PLC, 3.7%
7. ETFS ALUMINUM, 3.2%
8. SPDR MSCI EMERGING MARKETS SMALL CAP ETF, 2.6%
9. SAINSBURY(J) , 2.5%
10. GLOBAL X FUNDS FTSE GREECE 20 ETF, 2.5%
Star performers this quarter were Circle Holdings up 56%, Tesla up 29%, Zoopla up 18%. Alas, all smallish holdings, though getting bigger. Duffers this quarter were EDF down another 20%, et quelle shambles monsieur. Oil ETF down 11%, Royal Dutch Shell down 6%. Not such small holdings, but becoming ever smaller!
By the way, Vanguard Lifestrategy 60% equity inc- my benchmark of choice- is up 2.8% this quarter. My little portfolio is up 3.2%. GET IN! Alas, my portfolio is still the tortoise to the VLS60 hare in terms of overall performance since this thread started. VLS60 has returned 10.1% annualised while I have returned 6.9%. Had I simply piled into VLS60 at each stage over the last 27 months, and done nothing else, I would be £8,950 richer today.
Thanks for reading. And as always, good luck in your own journey. If you suss out the answers, please let me know.0 -
Update #10, Q2 2017
I pushed the boat out and made 4 trades this quarter.
Trade 1 involved selling Tesla. Tesla's market cap kept rising and recently overtook Ford's. Something smells wrong about that. Tesla blazed a trail, but does not have a monopoly on electric cars. Other manufacturers are developing similar technologies, bringing their own know-how to the mix. I am also reading disappointing things about Tesla’s solar roofs in the USA and sense vulnerability to competition in this market too. At the end of the day, what do I know, but the bottom line is that I just sold up, banking a profit of 32% after costs.
This move also steers my portfolio a little further away from individual companies. Shares in individual companies now form less than one fifth of my portfolio. There just seems too much to consider with them. I have enough cognitive load in my day job. I’m also increasingly compelled by the argument that it is unnecessary to expend brain-power when index trackers provide easy access to the market’s consensus. So am happy to continue to own Tesla indirectly, through Vanguard’s all world equities tracker VWRL. And to drive a Ford.
Speaking of VWRL, trades 2 and 3 involved buying 500 units for around £30K in April and selling 500 units for around £31K in May. My head tells not to play higher-or-lower with the backbone of my investment portfolio. But I just made a grand by pressing a few keys- and not for the first time, either. What is a guy to do?
On the other hand, waiting for a good moment to buy back in, once again I missed the quarterly dividend. Cash in the S&S ISA account is earning nearly 0%, while the mortgage costs 2%. Sitting on £70K cash is effectively costing about £100 per month, so I’m not planning to sit too long.
The final trade was to buy a bond fund. Now, on one hand, bonds are clearly going to hell in a handcart as soon as interest rates rise. But on the other hand- I may be wrong. And my long term strategy calls for some skin in the game. So I took a nibble of Vanguard’s Global Bond Index. This joins two other bond funds: Vanguard’s UK government bond fund, and Vanguard’s global short term bond index. Portfolio now looks like this:
Top 10 holdings on 28th June 2017
1. Cash, 44%
2. VWRL, 12%
3. Lyxor Commodities, 6%
4. BRIC 50, 4%
5. Vanguard global short term bond index, 4%
6. Tesco, 4%
7. Vanguard global bond index, 3%
8. Aluminium, 3%, and strewth I have to get rid of this stufff
9. Greece, 3%
10. Emerging Markets Small Cap, 3%
How quickly these months fly by. Thanks again for reading my little investment diary and please feel free to give feedback. I particularly liked the picture of someone being slapped with a fish on page 1.
Cheers
RB0 -
Update# 11, Q3 2017
For the first time, investments, at £162K, are worth more than half of my mortgage. 51% to be exact. Nice.
But here’s a thing. Perhaps I’ll want to use some of the money for other things. Like working part-time maybe; or buying a plot of land to build a house on; or paying for university for the offspring when they get to that stage. If the goal posts change, where does that leave the investment strategy I outlined earlier?
Whenever I ponder it, this little nugget of advice keeps coming to mind:
“In many aspects of life, there is a default option. Likewise, in investing… Unless you have a good reason to do something differently, you should go with the default option… Save half your money is risky investments such as stocks, and half your money in relatively safe investments such as bonds. Don’t change this ratio no matter what the markets do. You should use one low-cost total stock market index mutual fund and one low-cost bond market index mutual fund.”
I love that. It has such a nice symmetry and simplicity.
Although not a million miles away at present, I anticipate drifting more towards that sort of simple, passive portfolio in future. It has taken a few years, and perhaps the swallowing of some misplaced pride, to truly accept that this is probably the best strategy for me. No more aluminium, no more Tesco.
I am not skilled in identifying investment opportunities, nor able to reliably identify other people with those skills. Better to buy the haystack, as they say, rather than spend time and risk money searching for needles.
This quarter I sold three smaller holdings: Zoopla Group, and the remains of Blackrock Mining Trust and Aluminium ETF. I also bought back that large chunk of VWRL incurring a small loss, (& slapped myself about a bit for doing so. Won’t try that trick again.)
Equities currently make up 55% of my portfolio, here they are in full:
VWRL, 35%
BRIC 50, 4%
Tesco, 4%
Emerging Markets Small Cap ETF, 3%
Greece ETF, 3%
Sainsbury, 2%
Lloyds, 1%
Shell, 1%
EDF, 1%
BT, 1%
Other stuff makes up 45%:
Cash, 29%
Commodities ETF, 6%
Vanguard Global Short Term Bond Index, 4%
Vanguard Global Bond Index, 4%
Oil ETF, 2%
Vanguard UK Government Bond ETF, 1%
C’est tout.
Thanks again for reading & any comments will be gratefully received, digested, and responded to… in December… Inshallah.
Ray0 -
Ray_Singh-Blue wrote: »
“In many aspects of life, there is a default option. Likewise, in investing… Unless you have a good reason to do something differently, you should go with the default option… Save half your money is risky investments such as stocks, and half your money in relatively safe investments such as bonds. Don’t change this ratio no matter what the markets do. You should use one low-cost total stock market index mutual fund and one low-cost bond market index mutual fund.”
I love that. It has such a nice symmetry and simplicity.For every complex problem there is an answer that is clear, simple, and wrong.0 -
Do you receive any income from your holdings?Be who you are and say what you feel because those who mind don't matter and those who matter don't mind.
Personal Finance Blogger + YouTuber / In pursuit of FIRE
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And just like that, another year has gone by. Maybe not any wiser, certainly a bit older, but at least the ISA balance is a bit bigger. It was £153,951 at the start of the year. During the year another £6,000 went in. And at the time of writing, the balance is £171,820.slowlyfading wrote: »Do you receive any income from your holdings?
Some. The shares and share funds pay dividends at intervals through the year. The bond funds and cash ISAs pay interest. But the commodities ETFs do not generate any income, and neither does cash sitting in the trading accounts. This year I received about £2k of income, which got automatically re-invested.
I'm more interested in total return though, which was 8% this year and has averaged 7% annually since the start of this thread, exactly three years ago.AnotherJoe wrote: »For every complex problem there is an answer which is clear, simple and wrong.
Ha, that's wry. But wait... who says this is a complex problem? Isn't the question simply, how do I invest my money so it has a fair chance growing, without too great a chance of losing it?Harry_Markovitch wrote:I visualised my grief if the stock market went way up and I wasn't in it – or if it went way down and I was completely in it. My intention was to minimise my future regret. So I split my contributions 50/50 between bonds and equities.”
I'm a pretty simple person, as any of my work colleagues will testify, especially that guy from IT. So am OK with Harry's answer. He won a Nobel prize after all (the economist Harry Markovitch, not the guy from IT).GeoDaddy999 wrote:What is the capital of Guam?
It's Hagåtña. OK you didn't ask, but see how much I like answering questions?
This quarter, I have just simplified and consolidated a little. Sold BRIC and Emerging Market funds, and reinvested the proceeds in a single world tracker. Sold short dated bond fund, and invested the proceeds in a single world bond fund.
The portfolio looks like this:
VWRL, Vanguard's All World shares index tracker fund - , 37%
Cash, 23% - @ overall interest rate 1.6%. Target for next year is to increase this to >1.99% so it trumps the mortgage.
Vanguard Global bond index, 20%
Lyxor ETF Commodities, 5%
Tesco, 3%
Greece ETF, 3%
Oil ETF, 2%
Sainsbury, 2%
Lloyds, 1%
Royal Dutch Shell "B", 1%
EDF, 1%
BT, 1%
Overall OCF is 0.15% and platform and trading fees were £220 this year
So, which is better? To invest, or overpay the mortgage? Can't answer. But for me, over the last 3 years, the numbers show it has been better to invest. The ISAs are now 55% of the mortgage. And it has kind of been more fun too. Whether the sun will continue to shine, who knows. But I hope I'm positioned OK if it starts to rain. Will keep you posted.
Here's another quote:some_guy_on_the_internet wrote:Success is 20% doing smart stuff, and 80% not doing dumb stuff
Thanks for reading. Have a merry Christmas, and a prosperous and happy New Year. And don't be shy, post your numbers somewhere, would love to see what you are doing and why.
Ray0 -
Keeping things simple is surprisingly difficult for the modern man and it's personal philosophy as well. The human mind tends to wonder and over complicating issues which can be simple and straightforward and just work. We don't need perfect, we need things to just work. Hence when iphone first came out, it is like magic, it just works! When lightbulbs came about, it just works! But humans come along and over complicate things adding more and more features.
Less sometimes is more. Simplicity breeds headspace for you to do more.
'For every complex problem there is an answer which is clear, simple and wrong.'
I didn't really understood this. The question/problem can be as simple as you ask it or as complicated as you ask it and the solution is the same. And I don't think there can ever be a wrong answer, but perhaps an answer that is less wrong.
Save 12K in 2020 # 38 £0/£20,0000 -
ISA gains for the year for me = 15%. Heavily in US stocks which gained in $ terms however in £ terms not as much as £ strengthened about 10%.
My non-ISA rose about 40% for the year due to being tech focused. Lets hope 2018 will be the same
Pension about 15% (all funds, highly diversified).
Stocks make up about 65% of my investible assets (excludes my home).0
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