Too cautious?

downshifted

We're in our 60s and will have a very comfortable income once all our pensions come into payment over the next 5 years. At present it is just ok, but we manage. No mortgage or debts.

I have been reviewing our savings and two thirds are in cash (cash Isas, Santander 123, Premium Bonds etc) and one third in S&S Isas (Mainly Vanguard Life Strategy 80, but a few others such as Woodford funds). I'd be surprised if we ever needed to access that one third - if one of us is left alone and has to eventually go into care maybe.

I think I am being too cautious and should come out of Premium Bonds and put more into S&S Isas (we have not used this year's allowances as cannot save on current income - should be able to save again once all pensions kick in).

Any views on appropriate proportions and investments please?

jimjames

I'd certainly move more into S&S ISAs if I was in your position. Really depends what 2/3 of the total is but if you have enough cash savings then I'd probably move to 50:50 or even 60:40 invested:cash. If you need more income then you can get 4% on equity income or investment trusts although obviously capital will vary day to day.

downshifted

Thank you. I guess I worry about timing the market..... but I suppose nothing ventured nothing gained

bowlhead99

For most people who might live another 30 years, two thirds cash is high.

However, sounds like your 'not cash' money is mostly invested in equities which is the higher-risk and more volatile end of the scale rather than bonds, real estate etc etc.

So, you might benefit from moving some of your cash - especially things like premium bonds which are not designed to protect against inflation, and are just a low interest rate with the interest gambled on the wheel of fortune - into investment funds ; but give yourself a lower overall risk profile on the new funds you buy so you have a bigger total investment portfolio but not one that's got 80-100% equities.

I guess I worry about timing the market.....

Well, effectively you should worry less about 'timing the market' if you have a broader portfolio, and are invested more evenly across different types of markets, rather than just (for example) a high-equity tracker and an equity income fund and whatever other fashionable funds you bought into.

moneyfoolish

If you are a basic rate taxpayer and are married to a non-taxpayer which is my case and I suspect many others, I calculate that by using the maximum number of high interest accounts from the top current accounts on the Moneysaving Expert best high interest accounts list, you could have accounts worth £132,500 which would produce an after tax interest rate of 3.04% easily beating inflation and with no risk at all.

jimjames

moneyfoolish wrote: »

If you are a basic rate taxpayer and are married to a non-taxpayer which is my case and I suspect many others, I calculate that by using the maximum number of high interest accounts from the top current accounts on the Moneysaving Expert best high interest accounts list, you could have accounts worth £132,500 which would produce an after tax interest rate of 3.04% easily beating inflation and with no risk at all.

No risk apart from losing out to inflation. It's also far more time consuming to manage that number of accounts than to just have an income coming in from a balanced portfolio.

BLB53

I agree with others, 2/3rds in cash is probably too high. If it was me, I would be holding just 1/3rd in cash and balance up your Vanguard LS80 with VLS40.

The returns from this should be averaging ~5% p.a. over the next 20 yrs and well ahead of the 1% or 2% available from cash deposits.

Obviously take advantage of current year ISA allowances for you and wife!

downshifted

Thank you all for your helpful input. You are correct in that we have gone for "higher risk" investments for the one third in funds - on the basis that it is not money we are likely to need. The funds we are in (as a result of some old, longstanding investments as well as more sensible trackers once we saw the MSE light) are as follows:

55% Vanguard Lifestrategy 80
19% Woodford Equity
13% Vanguard Lifestrategy 60
4% Invesco Perpet Global Eq
3.3% Invesco Perpet European Eq
3.3% Invesco Perpet UK Growth
2.3% Invesco Perpet Global Smaller Cos

I will certainly reduce the Premium Bonds to invest further in ISAs - any views on particular "lower risk" funds to consider? I don't know anything about Investment Funds

As for high interest accounts, we are opening a second Santander Account next week.

Many thanks

downshifted

TheTracker

jimjames wrote: »

No risk apart from losing out to inflation.

In the 12 years or so I've lived in the UK I can't recall a single year where you couldn't have had tens of thousands of pounds of cash at inflation plus 2% albeit sometimes with 6/12 months notice.

Eco_Miser

downshifted wrote: »

As for high interest accounts, we are opening a second Santander Account next week.

Santander is the lowest paying of the 'high' interest current accounts, effectively 2.7%. You could be getting 6% on some of your money.
see Special Saver's new thread https://forums.moneysavingexpert.com/discussion/5374614 for actual amounts.