S&S Investment Balance

steelbru

I would say it depends on timescales and purpose.

If they are both being held until roughly the same point in the future, and the aim for both pots has the same significance to you ( eg both for your pension ) then fine to think of them all as one pot.

If however, they have quite different timescales, then if they have a completely different diversification and balance, then when you "cash in" the first one you would then need to completely restructure the remaining one.

Or if they are for completely different purposes, eg the ISA is a bit of a flutter to see if you can save up for a Lamborghini, but if it failed you'd be happy enough with a ford focus which is still a car to get from a to b, then keep the 2 completely separate and obviously the composition of the ISA would be different to the pension.

arbster

steelbru wrote: »

I would say it depends on timescales and purpose.

If they are both being held until roughly the same point in the future, and the aim for both pots has the same significance to you ( eg both for your pension ) then fine to think of them all as one pot.

Thank you - seems like sound advice. Currently 42, and hoping to retire between 55 and 60, I would expect that both the pension and the S&S ISAs will be drawn upon at about the same time. The intention upon retirement would be to sell the family home and move, thus needing to pay off the outstanding mortgage. The mortgage will be more than covered by the proceeds of the sale, but further funds may be required to purchase the desired long-term home. Hopefully, it should be possible to take this tax-free from my pension, but equally could draw on the S&S ISAs - who can say which will be the right choice in 15 years time?

I am minded to aim to balance across both pension and S&S, but to try to keep an element of balance individually by targeting future S&S investments accordingly. More analysis required...

arbster

Further to the above, I'm in the process of balancing my portfolio, but am struggling with the best way to invest in property. Most of the research I've done suggests I ought to be aiming for 10-12%. The funds I've found are all directly invested in property, which of course means they're actively managed funds with relatively high (0.65%-1.1%) annual charges and are very dependent upon the fund manager's decisions. They also tend to hold 10-20% in cash at any one time, which seems relatively inefficient.

So, is there an alternative? How do others do it? Is there any kind of more generic, index-like method of investing in property?

dunstonh

Most of the research I've done suggests I ought to be aiming for 10-12%.

Depends on your risk profile and how it balances with your overall portfolio but under 20% is typical.

The funds I've found are all directly invested in property, which of course means they're actively managed funds with relatively high (0.65%-1.1%) annual charges and are very dependent upon the fund manager's decisions.

Which is pretty obvious as how else could property be bought?

They also tend to hold 10-20% in cash at any one time, which seems relatively inefficient.

Without cash, how would they buy new properties and deal with outflows?

So, is there an alternative? How do others do it? Is there any kind of more generic, index-like method of investing in property?

How could bricks and mortar funds be passive?

arbster

dunstonh wrote: »

Which is pretty obvious as how else could property be bought?

Without cash, how would they buy new properties and deal with outflows?

How could bricks and mortar funds be passive?

Good questions - thanks for answering my questions with questions. Options might include investing in companies whose values are closely linked to property values (eg construction, housing associations, etc) or in a fund of funds, to spread the risk of property investment. I was trying to understand precisely what the "best practice" of investing a proportion of ones portfolio in property really meant.

Anyone else care to weigh in?

kidmugsy

If you already have lots of capital sunk into UK residential property, i.e. your house, I'd look elsewhere if you insist on owning further property. For example REITS investing in the commercial property in the UK, US, and Continental Europe. Maybe Japan and the rest of Asia too.

arbster

There seem to be plenty of funds that are invested in UK property, but I suppose it seemed that they were all invested in quite a "small" portfolio of commercial property locations. I wondered if there was any way to be invested more generally in property. I'm getting the sense that there isn't, and I need to do my due diligence and find a competent fund manager and go with it.

Linton

There are two types of property fund - direct and indirect. Direct funds invest in property and aim to derive a steady income from rents. Such funds are relatively cautious and provide some diversification from other equity funds. Most property funds are indirect, investing in property companies. These are more volatile and tend to closely follow the wider economy and so provide less diversification.

If you want to gain the advantages of investing in property look for direct funds. You can tell which funds are which by looking at trustnet to see what the funds are invested in.

Another suggestion - dont just focus on the UK. There are property funds covering all major world geographic areas.

arbster

InvestInPoker wrote: »

Don't arb, just bet one side - you will raise your long term return.

My arbing days are behind me, but they were exceptionally profitable while they lasted...

arbster

Linton wrote: »

If you want to gain the advantages of investing in property look for direct funds. You can tell which funds are which by looking at trustnet to see what the funds are invested in.

Another suggestion - dont just focus on the UK. There are property funds covering all major world geographic areas.

Thanks - this was what I was getting at.

I haven't been able to find many funds with direct non-UK property investments, but perhaps it's just the limitations of the two platforms at my disposal (AXA and L&G)?