Take a peek at my hand?

Ceme3000

Why so much cash? What's your pension like? If it were me I would be telling my mid 40's self (I'm 54 now) to be loading up my SIPP for the tax relief. 

Ray_Singh-Blue

Update #24 Q4 2020

Bit of a long one this.  If you prefer, just read the executive summary, which is: Doing OK, bit of naval-gazing over missed opportunity, thinking of making some tweaks, thanks for reading, see you in March, bye.

But if you would like to read on, then please be my guest.

1. Doing OK
Exactly 6 years ago today, this ISA portfolio was problematic. It was:

RyanFuturistics said:

confused. 

 and

Thruglemir said:

muddled. 

£86K was invested in a mish mash of supermarket shares, commodity ETFs, niche market ETFs and other stuff. I was in need of some good advice. And you guys came up with good advice. I was grateful, and still am.

Recently I decided to calculate what the original portfolio described in post #1 would be worth today. The answer, excluding dividends, is £95K, or +11%.

Gamesa +239%
BRIC 50 +83%
Emerging Small Cap +46%
Tesco +18%
Cash 0%
FTSE100 -3%
Sainsbury -10%
Aluminum -12%
EDF -48%
Oil -51%

But instead of holding onto all that stuff, I took your advice on board, and made a gradual switch to passive investment through Vanguard’s global index tracker VWRL. And for the last few of years, that has been pretty much my only holding.

Had I simply done this one day 1, that £86K would have grown to £128K, or +49%. But over the last 6 years I have also introduced as much new money as I could afford. As a result of this, and combined with the growth of VWRL, the balance is now at £324K. So, thankyou. I’m very happy with that.

And yet...

 2. Bit of naval gazing over missed opportunity

…Tesla. Since being convinced by the passive way of investing, I haven’t bought much else. In fact, scrolling through the last few pages I only made 3 meaningful investments in the last few years. One was Garmin, who make the sports watches all my friends seem to be wearing. One was Nike, who make the best running shoes. And one was Tesla, who make the best cars.

If you scroll back 4 years to update #6, July 2016, I wrote:

Ray said:

Bought shares in Tesla. Hope I have bought into one of the future's great companies.. 

I bought 150 shares for £4,253. Less than a year later (see update #10), I sold them. They had gained of 32% or £1,360. I felt pretty good about that at the time. I had just banked roughly what you’d pay for a twelve year old Vauxhall Corsa in fair condition. Nice.

But I don’t feel so smug now. Tesla has indeed become one of the future’s great companies, and the value of those shares kept on rising. In fact, had I held on to them, those 150 shares would now be worth £78,400. With the profit I could have bought a Model 3, some fluffy dice, and hired a chauffer for a year. Not that you need to do that with a Tesla.

Don’t get me wrong, I’m not crying over spilt milk. Not at all. This is the nature of the game we play. But I am scratching my head and asking “what can I learn from this”?

3. Thinking of making some tweaks

But how could I have possibly imagined that those Telsa shares would increase in value by +1729% in less than five years? Well, I doubt I could. Except that my investment thesis was that Tesla might become “one of the future’s great companies”. These days, this implies a market cap in the hundreds of billions of dollars. Which is exactly what has happened. 

On the other hand, holding on to the first tranche of investments I picked way back in 2014 – Tesco and so on - would have been a poor choice. But what was my investment thesis back then, if I even had one? I think probably that they were average companies which seemed a little cheaper than they ought, and therefore might rise a little. And to be fair, In most cases they did rise a little, and I sold them, banking a little profit

I realise now that one mistake was adopting the same approach to much better companies. The right thing to do in this case, it appears, is to hold on & enjoy the drive.

Another mistake, was thinking too small in terms of the amount invested. My investment in Tesla was just 2-3% of portoflio. I now think 5-10% would have been more meaningful. 

All of which is to say that I am coming around to thinking that passive investing is not the only way. It's good, but there are other ways to skin the rabbit too. Don't get me wrong, I'm not about to rush out and put it all on red again, or Aluminium. The "passive core" is always going to be at the centre of my strategy.

Let me try to answer the 2 questions posed last quarter. I really appreciate them by the way, it helps me to think clearly and probably other people will see things I have not seen.

DireEmblem said:

Have you considered swapping VWRL for VWRP, the Acc version?. 

Thanks for the question, the answer is no, at least not until you suggested it. It seems like a kind of neutral thing to do, given that the investments are held in an ISA and therefore there is no admin around declaring and paying tax on dividends. Would there be some other reason to do this?

Ceme3000 said:

Why so much cash? What's your pension like? If it were me I would be telling my mid 40's self (I'm 54 now) to be loading up my SIPP for the tax relief. 

A great question and I do not have the answer quite dialled in. I am fortunate to an index linked, defined benefit pensions. It should support me when I am old. So this ISA investment project is not about providing for retirement, except that one of the potential uses might be to help fund the gap between early retirement and drawing DB pension.

The original purpose was to pay off the mortgage. But I’m in no rush to pay it off, the rate is really low and it kind of takes care of itself. It feels much nicer to have a parallel pot of money which can be deployed for the different things life throws up. 

Like maybe helping the kids in their early adult lives perhaps. Or maybe, at the back of my mind, I have a plan to buy a plot of land and build our next (downsized) house. That sort of stuff.
 

The purposes and timings are a bit vague and so that is why I settled on a “minimise your regret” approach of 50% risky investments (shares), and 50% safe investments (cash). 

Going forward, now that the investments exceed the mortgage, I am questioning whether this is still the right approach. One option might be keeping the 50:50 balance in the mortgage pot, but increasing the risk in the remainder. But more about that another time.

For now, may I wish you a Merry Christmas & 

4. Thanks for reading,

5. See you in March

6. Bye

Ray 

Thrugelmir

Ray_Singh-Blue said:

. And one was Tesla, who make the best cars.

Reliability and build quality suggest otherwise. 

dales1

DireEmblem said:

Have you considered swapping VWRL for VWRP, the Acc version?. 

Thanks for the question, the answer is no, at least not until you suggested it. It seems like a kind of neutral thing to do, given that the investments are held in an ISA and therefore there is no admin around declaring and paying tax on dividends. Would there be some other reason to do this?

Yes, VWRP (acc) saves dealing costs on reinvesting the VWRL dividend cash building up in the ISA.

If you would have reinvested VWRL dividends in more VWRL units, then VWRP effectively does this free of dealing costs.

Dales.

Ray_Singh-Blue

Update #25 Q1 2021

Very brief update this quarter.

A moment of clarity fell up on me in relation to the Garmin shares. I had bought £10000 worth and watched them rise in value to £12000. I liked that. Then one day I checked and they were worth £11000. I did not like that. It felt like I had "lost" £1000. It would take a week to earn that back. 

Logically I know that this is stupid. I was still up 10%. But emotionally? Couldn't help myself. And the scary thing was thinking- hang on - how do I know that Garmin isn't going to Hell in a handcart. What if I lose the remaining £11000? That's 3 months work down the drain.

The moment of clarity: I can't help thinking feeling like this. Wired that way. It is why I seem destined to sell highly performing investments too early (a la Tesla mentioned in post #24), and expect I would find a prolonged bear market to be a really stressful experience.

That's why I think I have finally kicked the habit of owning shares in individual companies. It's funds all the way from now on I think. And when it comes to funds, I have high conviction in a passive approach.

So I sold the Garmin shares. Once again all I have is cash (49%) and VWRL (51%). Which is right where I want to be. The pot is today worth £345,541, and the mortgage stands at £256,505. 

TTFN
Ray

Ray_Singh-Blue

Update #26 Q2 2021

There are all sorts of ideas out there about how to invest. 10 years ago, I would run around lapping them up like a puppy after spilt gravy. 

Not so much now. I stumbled across an approach I can live with. It matches my aims and ambitions, my tolerance for risk and my personality.

I still occasionally sniff around the kitchen floor. But these days I'm more like the old dog having a snooze in the sunny corner.

The approach I like is essentially the approach recommended by Harry Browne in his 1998 book "fail safe investing" - also known as "The Permament Portfolio".

The concept is to strike an equal balance between four different baskets of investments: equities, cash, gold and bonds.  25% , 25%, 25%, 25%.

1. Equities: the world index tracker VWRL does the job.

2. Cash: seeking the best return in fixed rate ISAs.

So far, I'm with Harry Browne. But here is where I start to think a little differently.

3. Gold:

Why does Harry Browne suggest investing in gold? Kind of niche, no? Well he explains it is because gold is a physical asset, the value of which is not directly correlated with movements in the stock markets, and which should hold value over time. Despite being a volatile and risky thing to invest in, it tends to bring ballast and stability to the overall portfolio & particularly helps it's performance in times of high inflation.

Hmm. Well after having a shocker with a different sort of metal - Aluminium - see the first few pages of this thread - I have some reservations.

But hang on- my house is a physical asset too, and certainly forms a large % of my total assets. More than 25%. So, I figure I don't need gold just yet, because I can think of house serving that role. 

And what about bonds?

4. Bonds

Bonds tend to hold value and provide a known income or yield. Well, I have a pension to look forward too one day, if I make it that far. This will provide steady income, much like the yield on a bond fund.

If my pension was worth less than 25% of my total assets, I'd top up this basket with bonds. But depending on how you value it, that's probably not the case.

 

So, in summary, the way I view my target asset allocation is:

Stocks, 25%;

Cash, 25%;

Physical assets and gold, 25%;  (I have no gold)

Pension and bonds, 25%; (I have no bonds)

Does that make any kind of sense?

I would be interested to know what you feel about this. In particular any criticisms. Do I have any blind spots? It may feel dull and risk averse to some people? But as I enter my late 40s, I feel at peace with being a little dull and risk averse. It seems to be helping me sleep well at night.

Right, I must go, it's nearly time to put on a wing suit and jump off Big Ben while juggling live chain saws.

***

 

Meanwhile in other news, this quarter I sat on my hands. No trades.

Mortgage now stands at £251,849

ISA investments stand at £359,627 as 55% VWRL, 45% cash.

 

***

 

Thanks for reading,

Ray

Type_45

Ray_Singh-Blue said:

Update #26 Q2 2021

There are all sorts of ideas out there about how to invest. 10 years ago, I would run around lapping them up like a puppy after spilt gravy. 

Not so much now. I stumbled across an approach I can live with. It matches my aims and ambitions, my tolerance for risk and my personality.

I still occasionally sniff around the kitchen floor. But these days I'm more like the old dog having a snooze in the sunny corner.

The approach I like is essentially the approach recommended by Harry Browne in his 1998 book "fail safe investing" - also known as "The Permament Portfolio".

The concept is to strike an equal balance between four different baskets of investments: equities, cash, gold and bonds.  25% , 25%, 25%, 25%.

1. Equities: the world index tracker VWRL does the job.

2. Cash: seeking the best return in fixed rate ISAs.

So far, I'm with Harry Browne. But here is where I start to think a little differently.

3. Gold:

Why does Harry Browne suggest investing in gold? Kind of niche, no? Well he explains it is because gold is a physical asset, the value of which is not directly correlated with movements in the stock markets, and which should hold value over time. Despite being a volatile and risky thing to invest in, it tends to bring ballast and stability to the overall portfolio & particularly helps it's performance in times of high inflation.

Hmm. Well after having a shocker with a different sort of metal - Aluminium - see the first few pages of this thread - I have some reservations.

But hang on- my house is a physical asset too, and certainly forms a large % of my total assets. More than 25%. So, I figure I don't need gold just yet, because I can think of house serving that role. 

And what about bonds?

4. Bonds

Bonds tend to hold value and provide a known income or yield. Well, I have a pension to look forward too one day, if I make it that far. This will provide steady income, much like the yield on a bond fund.

If my pension was worth less than 25% of my total assets, I'd top up this basket with bonds. But depending on how you value it, that's probably not the case.

 

So, in summary, the way I view my target asset allocation is:

Stocks, 25%;

Cash, 25%;

Physical assets and gold, 25%;  (I have no gold)

Pension and bonds, 25%; (I have no bonds)

Does that make any kind of sense?

I would be interested to know what you feel about this. In particular any criticisms. Do I have any blind spots? It may feel dull and risk averse to some people? But as I enter my late 40s, I feel at peace with being a little dull and risk averse. It seems to be helping me sleep well at night.

Right, I must go, it's nearly time to put on a wing suit and jump off Big Ben while juggling live chain saws.

***

 

Meanwhile in other news, this quarter I sat on my hands. No trades.

Mortgage now stands at £251,849

ISA investments stand at £359,627 as 55% VWRL, 45% cash.

 

***

 

Thanks for reading,

Ray

If you haven't already, you should have your own blog similar to Monevator's! Very entertaining, interesting and well written thread 👍

MX5huggy

Nice journey, even if the end result is all a bit mundane. 

I’ve avoided the stock picking stage and have gone in on VG FTSE Global All Cap and VG Global Bond Index 75/25 split. Hoping to have the nerve to stay to course if I’ve jumped in near the top. 

I find the Tesla thing interesting, if you had cashed in say 50% of your holding to take your profit and then let the rest run as a no cost bet, if I ever was in this position I think I might do this.

PaulGBO

racing_blue said:

************************************************************

Hello.

I'm an amateur investor with a stocks and shares ISA account since 2006. This is a diary type thread to share my thoughts and to chart the ups and downs.

The diary started on 31st December 2014, and I update it at the end of each quarter. I am particularly grateful for advice from other investors & take it on board.

Thankyou for reading.

RB, June 2016

Original post follows:



*************************************************************

These were my investments at the close of play on 31st December 2014:

Cash, 28.2%
Tesco, 15.5%
UK all share ETF, 11.8%
Aluminum ETF, 10.1%
BRIC 50 ETF, 5.3%
Oil ETF, 5.2%
Electricitie De France, 5.0%
Sainsbury (J), 4.2%
Gamesa, 3.5%
Emerging Markets Small Cap ETF, 3.5%

There are a few smaller ones too, but they only form 8% of the portfolio in total.

While the current portfolio is not necessarily one I would choose from scratch today, it is what it is after a few years of watering and pruning. I’m looking for 60% equities with a mainly buy and hold intention. On 31/12/14 was roughly on track with 57% equities.

To minimise the chance of making bad decisions… I don’t make many decisions. I chew them over good and proper and allow no more than three trades per quarter.

So far in 2015 I have done nothing, but am steering towards:
1. Selling some Tesco which is too prominent & needs trimming;
2. Buying a Nasdaq tracker to get some exposure to US tech companies in the long term
3. Buying a Greece index tracker (GREK) for a bit of white water… the Greek index is languishing at around 20% of where it was 4 years ago.

Should I reveal the value of the portfolio? It is not really important in performance terms. But just for perspective, it was worth £85,726 on New Years Eve 2014. I expect to some this will seem like a lot and to others it will seem like small change.

So there you have it, hope that is of passing interest to someone, will update from time to time, grateful for any comments of course- “you are no Warren Buffet”, “that lot’s going to Hell in a handcart”- and the like. Please feel free to slap me with a wet fish for buying £10,000 of aluminium, I still cannot recall exactly why but it seemed like a good idea at the time.

Regards RB

Why have you got Tesco in the first place?
The US stock market is where the money is.

MX5huggy

PaulGBO said:

racing_blue said:

************************************************************

Hello.

I'm an amateur investor with a stocks and shares ISA account since 2006. This is a diary type thread to share my thoughts and to chart the ups and downs.

The diary started on 31st December 2014, and I update it at the end of each quarter. I am particularly grateful for advice from other investors & take it on board.

Thankyou for reading.

RB, June 2016

Original post follows:



*************************************************************

These were my investments at the close of play on 31st December 2014:

Cash, 28.2%
Tesco, 15.5%
UK all share ETF, 11.8%
Aluminum ETF, 10.1%
BRIC 50 ETF, 5.3%
Oil ETF, 5.2%
Electricitie De France, 5.0%
Sainsbury (J), 4.2%
Gamesa, 3.5%
Emerging Markets Small Cap ETF, 3.5%

There are a few smaller ones too, but they only form 8% of the portfolio in total.

While the current portfolio is not necessarily one I would choose from scratch today, it is what it is after a few years of watering and pruning. I’m looking for 60% equities with a mainly buy and hold intention. On 31/12/14 was roughly on track with 57% equities.

To minimise the chance of making bad decisions… I don’t make many decisions. I chew them over good and proper and allow no more than three trades per quarter.

So far in 2015 I have done nothing, but am steering towards:
1. Selling some Tesco which is too prominent & needs trimming;
2. Buying a Nasdaq tracker to get some exposure to US tech companies in the long term
3. Buying a Greece index tracker (GREK) for a bit of white water… the Greek index is languishing at around 20% of where it was 4 years ago.

Should I reveal the value of the portfolio? It is not really important in performance terms. But just for perspective, it was worth £85,726 on New Years Eve 2014. I expect to some this will seem like a lot and to others it will seem like small change.

So there you have it, hope that is of passing interest to someone, will update from time to time, grateful for any comments of course- “you are no Warren Buffet”, “that lot’s going to Hell in a handcart”- and the like. Please feel free to slap me with a wet fish for buying £10,000 of aluminium, I still cannot recall exactly why but it seemed like a good idea at the time.

Regards RB

Why have you got Tesco in the first place?
The US stock market is where the money is.

@PaulGBO they don’t any more that was 2015! It’s the story of their investment journey they just hold VWRL and cash now so have lots of US exposure.