How risk averse are you?

masonic

chucknorris wrote: »

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

I'd say that puts you around the middle of the scale in terms of your actual risk exposure (the risk involved with the investment property will depend on the specifics, I wouldn't include your home as an investment unless you plan to crystallise gains in the future by downsizing). Your actual risk tolerance may be higher than that, of course.

Glen_Clark

chucknorris wrote: »

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

Looks safe enough to me
My diatribe was aimed at those with all their life savings in Sterling cash because they think it is safe.:(

chucknorris

Glen_Clark wrote: »

Looks safe enough to me
My diatribe was aimed at those with all their life savings in Sterling cash because they think it is safe.:(

I don't see cash as 'risky', risk implies that there is a possibility of something, I think cash is almost a guaranteed (comparative) loser to shares (in the long run of course). So cash IMO is way beyond risky.

chucknorris

masonic wrote: »

I'd say that puts you around the middle of the scale in terms of your actual risk exposure (the risk involved with the investment property will depend on the specifics, I wouldn't include your home as an investment unless you plan to crystallise gains in the future by downsizing). Your actual risk tolerance may be higher than that, of course.

I eventually included my home in my 'wealth spreadsheet' because I think that it does belong there (because some rent). I accept that an investment portfolio is different to a 'wealth stored statement'. I was going to say that it is just historical, how it ended up in my portfolio, but the reality is that it was laziness, as I could have easily taken it out, in fact I might do that, as it does look out of place.

EDIT: Here it is (slightly adjusted) less the home:

12% investment property
50% shares - something like Vangaurd's VHYL ETF
12% corporate bonds (2 or 3 bonds, something safe(ish like utilities)
20% DB/fixed pension/annuity
6% cash

Glen_Clark

chucknorris wrote: »

I don't see cash as 'risky', risk implies that there is a possibility of something,

The risk is the return of high inflation which Governments often use to default on their debts.
Osborne has doubled the 300 year old National Debt in 5 years and its even worse than shown in the National Debt clock because that doesn't include PFI.:eek:

chucknorris

Glen_Clark wrote: »

The risk is the return of high inflation which Governments often use to default on their debts.
Osborne has doubled the 300 year old National Debt in 5 years and its even worse than shown in the National Debt clock because that doesn't include PFI.:eek:

I know, I'm saying that it isn't risky because IMO it is beyond risky (i.e. even worse than merely risky)! On top of that when compared to shares in the long run, it just doesn't stack up. Currently I hold less than 1% in cash (although my wife does have a fair bit of cash in her portfolio, so there is an emergency source there on tap). But when I retire, I will hold more cash.

economic

Glen_Clark wrote: »

The risk is the return of high inflation which Governments often use to default on their debts.
Osborne has doubled the 300 year old National Debt in 5 years and its even worse than shown in the National Debt clock because that doesn't include PFI.:eek:

i wouldnt be so sure that goverments default through inflation - in weimer republic and zimbabwe yes however in major economies like US and UK (much like ancient Rome did) they will msot likely default by deflation. which is far far worse. they will raise taxes more and more and hard default on certain or all liabilities.

chucknorris

economic wrote: »

i wouldnt be so sure that goverments default through inflation - in weimer republic and zimbabwe yes however in major economies like US and UK (much like ancient Rome did) they will msot likely default by deflation. which is far far worse.

Cash is a poor performer in the long run anyway, when compared to say property or shares.

economic

chucknorris wrote: »

I eventually included my home in my 'wealth spreadsheet' because I think that it does belong there (because some rent). I accept that an investment portfolio is different to a 'wealth stored statement'. I was going to say that it is just historical, how it ended up in my portfolio, but the reality is that it was laziness, as I could have easily taken it out, in fact I might do that, as it does look out of place.

EDIT: Here it is (slightly adjusted) less the home:

12% investment property
50% shares - something like Vangaurd's VHYL ETF
12% corporate bonds (2 or 3 bonds, something safe(ish like utilities)
20% DB/fixed pension/annuity
6% cash

thats a good balanced portfolio. in your preevious post when you had included your own home at 12%. thats very low. i am personally at about 50%. i imagine a lot (especially Londoners like me) are even higher given the property prices and having put in most or all their savings as a deposit. i wonder historically what this % has been on average. i suspect over 50% is way too high.

chucknorris

economic wrote: »

thats a good balanced portfolio. in your preevious post when you had included your own home at 12%. thats very low. i am personally at about 50%. i imagine a lot (especially Londoners like me) are even higher given the property prices and having put in most or all their savings as a deposit. i wonder historically what this % has been on average. i suspect over 50% is way too high.

It isn't that the house would be low in value, it is because the portfolio value is quite high, and my wife will also be buying half the house when I have reached state pension age, so that would increase it to 24%. I haven't included any of my wife's investments in the figures, we invest separately. She has about the same wealth as me. Also we wouldn't live in London (like you do), which adds quite a bit too.