How risk averse are you?

AnotherJoe

masonic wrote: »

I would say no, because it is still left to the customer to choose between them. In that respect, they don't really offer anything different from Vanguard Lifestrategy or L&G Multi Income, except for being more expensive and actively managed (both in terms of underlying holdings and asset allocation). Robo advice could be completely separate from an investment product. Essentially it is a mechanism from determining someone's risk profile and hence a suggested portfolio that doesn't involve dialogue with an expensive human advisor. But it needs to go considerably further than the classic "what is your risk tolerance on a scale of 1-10?"


Hmm, I think I'll pass on whatever the big banks are offering

Good points and I agree with your last sentence.

BananaRepublic

AnotherJoe wrote: »

I defintely read it. perhaps I misunderstood what you mean by "a company like Virgin Money"? Seriously, I"m not sure what the definition of such a company is.

Hargreaves Lansdown have 6 "ready made portfolios" do they count?

According to an article in the FT, "The UK’s biggest banks are planning to launch “robo-advisers” in a bold move to provide investment advice with a digital twist to thousands of consumers, only a few years after they were forced out of the market for mis-selling."

http://www.ft.com/cms/s/0/afb03182-c107-11e5-9fdb-87b8d15baec2.html#axzz46g2zSIr4

I was referring to househld names such as Virgin. Your last statement is interesting although I cannot read the link as it is a pay site. This can only be good news, as an IFA provides a valuable service, but at eye watering hourly rates that are shameful when you think what nurses and teachers earn.

BananaRepublic

As an aside, I tried the Standard Life risk profiler and it asked how others saw me, and cautious is the answer. What the hell does that have to do with my investment style? It also asked me how I rated myself. That is so subjective as to be useless. Hopefully robo advisers have less inane and subjective ways to asses the punter. I regard myself as a educated investor, which means I can invest in volatile funds, with good diversification, knowing that in the long term they will overall perform. And yet I am a cautious person. So, a person can be cautious, but invest in supposedly high risk assets, as they know that in the long term such assets have historically massively outperformed cautious low risk assets.

It seems to me that risk is often considered in too simplistic a manner, and timescales are ignored.

bowlhead99

BananaRepublic wrote: »

as an IFA provides a valuable service, but at eye watering hourly rates that are shameful when you think what nurses and teachers earn.

That sounds like you are confusing the total cost of providing a service with the take-home pay of employees and coming up with a sensationalist answer.

For example, the cost of running NHS England is a hundred billion pounds a year, so clearly healthcare is an expensive business. So maybe if I need an operation it might be priced at several hundred pounds or several thousand pounds if I hadn't already funded it upfront with thousands of pounds of income tax every year whether I need an operation in that particular year or not.

And yet a bottom-of-the-pay-scale nurse or teacher might only get £60 a day gross pay. This doesn't mean it would be scandalous or shameful for someone to need to pay several hundred or several thousand pounds for an operation any more than it would be scandalous for someone to need to pay several hundred or several thousand pounds for tailored financial advice for the circumstances in which they find themselves with more money than they understand how best to spend.

Glen_Clark

grey_gym_sock wrote: »

this is wasteful. but housing benefit costs £20bn or so a year. suppose their bad housing policy eventually adds £5bn to that. that's a small addition to total government spending. so not a big effect on overall government finances.

Well thats £25bn we can't afford and are borrowing. But I think it will be more than that. Rents are a cost to the productive side of the economy which has to compete with countries where rents are far lower. Since rents have overtaken the basic wage, the basic wage has to be topped up with housing benefit. Just like unemployment benefits have to be topped up with housing benefit - to the same level as people in work, taking away the financial incentive to work. We are creating a huge underclass whose only way to get housing is to have more kids to stay on benefits, which the country can't afford.

Sterling currency has been given a temporary boost by dirty foreign money buying up London properties - Britain's opaque property ownership laws make it a haven for unelected foreign dictators stashing their ill gotten gains, as a bolt hole in case they get ousted from their own countries. The House of Saud has bought mansions in London, after the red carpet was rolled out for them at Buckingham Palace - unelected monarchies supporting each other..
But what is going to prop up the pound when all that property is sold?
Productive industry which we need to pay off Osborne's debts, has been starved of investment by his making property speculation more profitable. Or by green taxes which makes it cheaper to import steel from countries that don't have green taxes, instead of making it here. Carbon emissions the same, so we have just shot ourselves in the foot.

As far as I can see, no other country has all these problems because no other country has Britain's obsession with house prices. This is not a currency in which I would risk 100% of my savings. Thats why I think a world tracker ETF is safer than Sterling currency.

chucknorris

masonic wrote: »

Well I seem to recall Nutmeg was charging 1% in the recent past, but now seems to charge on a sliding scale from 0.95% if you have <£25k invested all the way down to 0.3% if you have half a million. So they no longer look expensive compared to an IFA, which of course they did in the past for larger portfolios.

I might have a look at this, at around state pension age, I was thinking of just investing in Vanguard's VHYL ETF which has a 0.29% fee, and it seems reasonably diversified, and it would only be 40% of my overall portfolio anyway (and that doesn't include my wife's portfolio). But if nutmeg can also offer diversity for only 0.3% it might be worth a look, would there be any initial fees to pay on top of that 0.3%?

EDIT: I had a look, and I don't really like the way that it works, it invests partly in Gov bonds ( don't want these), I don't want to build my portfolio that way.

At state pension age I want to end up with is something like this:

12% investment property
40% shares - something like Vangaurd's VHYL ETF
10% corporate bonds (2 or 3 bonds, something like utilities)
12% home
20% DB/fixed pension/annuity
6% cash

I'm not looking for a ready made portfolio, in that they provide the overall portfolio mix, I want to do that. I think I'm more hands on, than I realised.

BananaRepublic

bowlhead99 wrote: »

That sounds like you are confusing the total cost of providing a service with the take-home pay of employees and coming up with a sensationalist answer.

No. That is an absurd remark.

bowlhead99 wrote: »

For example, the cost of running NHS England is a hundred billion pounds a year, so clearly healthcare is an expensive business. So maybe if I need an operation it might be priced at several hundred pounds or several thousand pounds if I hadn't already funded it upfront with thousands of pounds of income tax every year whether I need an operation in that particular year or not.

And yet a bottom-of-the-pay-scale nurse or teacher might only get £60 a day gross pay. This doesn't mean it would be scandalous or shameful for someone to need to pay several hundred or several thousand pounds for an operation any more than it would be scandalous for someone to need to pay several hundred or several thousand pounds for tailored financial advice for the circumstances in which they find themselves with more money than they understand how best to spend.

That is an absurd comparison. Anything used in an operation costs a fortune because it must be certified for use in that scenario. If you don't know how much surgical grade items cost, do some research. Surgeons and anaesthetists cost a fortune because they went through a 6 year medical training, followed by years of apprenticeship to gain their skills and knowledge.

BananaRepublic

Excellent, an off topic political rant by Glen Clark.

Glen_Clark wrote: »

Well thats £25bn we can't afford and are borrowing. But I think it will be more than that. Rents are a cost to the productive side of the economy which has to compete with countries where rents are far lower. Since rents have overtaken the basic wage, the basic wage has to be topped up with housing benefit.

That is true, but what is your solution?

Glen_Clark wrote: »

Just like unemployment benefits have to be topped up with housing benefit - to the same level as people in work, taking away the financial incentive to work. We are creating a huge underclass whose only way to get housing is to have more kids to stay on benefits, which the country can't afford.

And yet you have slammed Thatcher for selling off council housese to the occupants thereby turning dependents into home owners.

Glen_Clark wrote: »

Sterling currency has been given a temporary boost by dirty foreign money buying up London properties - Britain's opaque property ownership laws make it a haven for unelected foreign dictators stashing their ill gotten gains, as a bolt hole in case they get ousted from their own countries. The House of Saud has bought mansions in London, after the red carpet was rolled out for them at Buckingham Palace - unelected monarchies supporting each other..

Quite. Britain is seen as a safe haven, as we allow foreigners to buy property here, and avoid tax as long as they are resident for a minor part of the year. Plus property in London is seen as a sound investment given the huge gains in value. I also wonder if we do anything to prevent dirty money flooding in. When I bought a house, I had to prove that it was honest money. I bet when Mr Foreign Gunrunner buys a house, there are no checks on the source of the money as it comes from overseas.

Perhaps we should restrict home ownership, but how? Many Brits live in the States, for example, or have second homes in France, or Italy.

Glen_Clark wrote: »

But what is going to prop up the pound when all that property is sold?
Productive industry which we need to pay off Osborne's debts, has been starved of investment by his making property speculation more profitable. Or by green taxes which makes it cheaper to import steel from countries that don't have green taxes, instead of making it here. Carbon emissions the same, so we have just shot ourselves in the foot.

It isn't the green taxes that are the problem, it is the cost of energy, green taxes simply add to the misery. There is also talk that China dumps steel at or below the cost of production, which the EU has not tackled. And yes it is said that the UK argued against the EU tackling this issue.

Glen_Clark wrote: »

As far as I can see, no other country has all these problems because no other country has Britain's obsession with house prices. This is not a currency in which I would risk 100% of my savings. Thats why I think a world tracker ETF is safer than Sterling currency.

Shares in markets such as the US and the UK always beat cash long term.

Glen_Clark

BananaRepublic wrote: »

Excellent, an off topic political rant by Glen Clark.

These are factors which will affect the value of the pound in which some people are risking their life savings for a derisory interest rate. That is not off topic!!!!

BananaRepublic wrote: »

That is true, but what is your solution?

Sack the planning committies (a recipe for corruption if ever there was one) to increase housing supply in line with the demand, withdraw Osborne's housing market subsidies, and have a free market in housing to bring housing costs back into proportion to the rest of the economy We may have to slay some sacred cows like the so called 'Green Belt' 'Wild Bird Habitat' etc to give housing the masses, and reducing the deficit, a higher priority than a nimbys view of a green field.
Our foreign competitors can pay their workers less because they have lower housing costs, and lower taxes because they don't have to pay so much in housing benefit.
We are sentencing the younger generation to a life of poverty to pay off a mortgage on an overpriced house, then leave it to someone who hasn't earned it - tax free.

BananaRepublic wrote: »

And yet you have slammed Thatcher for selling off council housese to the occupants thereby turning dependents into home owners.

Its the way she went about it. I am all in favour of home ownership. But
Thatcher sold public housing far below market value and stopped us building more. Why did Dame Shirley Porter get done for Gerrymandering when Thatcher got off with it?
I really don't like the idea of subsidised housing - deciding who gets it is as much a recipe for corruption as the planning system. I just want to see a free market to make housing affordable for all, lower the costs to industry, and relieve the taxpayer of the burden of paying so much housing benefit.

BananaRepublic wrote: »

Quite. Britain is seen as a safe haven, as we allow foreigners to buy property here, and avoid tax as long as they are resident for a minor part of the year. Plus property in London is seen as a sound investment given the huge gains in value. I also wonder if we do anything to prevent dirty money flooding in. When I bought a house, I had to prove that it was honest money. I bet when Mr Foreign Gunrunner buys a house, there are no checks on the source of the money as it comes from overseas.

Perhaps we should restrict home ownership, but how? Many Brits live in the States, for example, or have second homes in France, or Italy.

Just make property ownership easier to trace. Much council tax is uncollected in London because even the Council can't find the owners behind a web of foreign shell companies. Just seize the property until the owners appear and declare their ownership.

BananaRepublic wrote: »

It isn't the green taxes that are the problem, it is the cost of energy,.

Green taxes add to the cost of energy

chucknorris

masonic wrote: »

Essentially it is a mechanism from determining someone's risk profile and hence a suggested portfolio that doesn't involve dialogue with an expensive human advisor. But it needs to go considerably further than the classic "what is your risk tolerance on a scale of 1-10?"

Where would this portfolio place me the 1 to 10 risk scale (anyone)?

12% investment property
40% shares - something like Vangaurd's VHYL ETF
10% corporate bonds (2 or 3 bonds, something safe(ish like utilities)
12% home
20% DB/fixed pension/annuity
6% cash