Retirement asset allocation

Marine_life

Tell me what you think of my retirement asset allocation. I am not clever enough to post this is a nice neat table however the first figure represents the allocation % (out of 100% of course) and the second represents my assumed rate of return.

Cash 1,0% 0,0%
Short term saving (easy access) 5,0% 0,7%
Fixed bond - 12 month 2,5% 1,0%
Fixed bond - 24 month 2,5% 1,9%
Fixed bond - 36 month 2,5% 1,5%
Fixed bond - 60 month 2,5% 2,7%
Bonds 30,0% 2,5%
Property funds 5,0% 3,0%
Shares - funds 25,0% 3,5%
Shares - individual 10,0% 4,0%
Peer-to-Peer 5,0% 4,0%
Peer-to-Peer 4,0% 7,0%
Fixed asset investments 5,0% 6,0%

In aggregate this portfolio shows a total return of 3.2% per annum which would cover most of our expenses.

A couple of other points:

1. I am aiming to hold about three years expenses in easily accessible cash.
2. most of the above are not yet locked in other than my two year and five year bond as well as my fixed asset investments.
3. The bonds and shares are partly in place and i am currently moving out of cash.
4. I've only just started investing in peer to peer.

Overall I feel not too bad about the mix. i would like to have slightly more in fixed cash investments but with the current interest rates I simply can't justify it (so would welcome any suggestions of safer homes for my cash paying slightly higher interest).

Thoughts?

Linton

I am confused by your table as your explanation identifies 2 numbers per investment type whilst I can see 4 and none seem to add up to 100%. There are lots of doubts and questions but it would be premature since my interpretation of the numbers may be totally wrong.

Marine_life

Linton wrote: »

I am confused by your table as your explanation identifies 2 numbers per investment type whilst I can see 4 and none seem to add up to 100%. There are lots of doubts and questions but it would be premature since my interpretation of the numbers may be totally wrong.

You can see 4?

So... it should work as follows.

e.g. for bonds I assume my allocation will be 30% and that returns will be 2.5%

Does that make sense?

bigadaj

What do your fixed asset investments represent?

Are you looking at this from a German or uk perspective as that may have soem influence.

Overall seems reasonable and fairly conservative, both in allocation and projected returns.

You seem to have sufficient in cash in my opinion, the bind allocation looks high given the issues around yield and asset prices for this investment class and potential for negative returns. I would have more in equities and p2p personally but we are all different.

MoneySavingUser

Linton wrote: »

I am confused by your table as your explanation identifies 2 numbers per investment type whilst I can see 4

The OP has used a , instead of a full stop.

i.e. 2,5% = 2.5%

Marine_life - are all of these items inside a pension wrapper?

AnotherJoe

Depends how old you are but let's say 60-65 with a 25-30 year life expectancy, at that sort of age, for me it's far too conservative. A very high proportion, approaching 40% is in bonds which over the next few years as they mature, will not have those same rates available again. So the yield will inevitably drop to well under 3%. Maybe 2.5%.

As you seem to be very conservative and cash focussed I'd suggest putting more in peer to peer which you are familiar with. At least doubling the allocation which will make up for the drop in bond yields.

Marine_life

bigadaj wrote: »

What do your fixed asset investments represent?

There's a bunch of stuff in there including aircraft leases, containers, infrastructure etc. They are generally long term and I've had them for a few years. Generally they seem to be paying a decent return although I'm not sure I would want to up the proportion too much.

bigadaj wrote: »

Are you looking at this from a German or uk perspective as that may have some influence.

A little bit of both. We have about a quarter of our retirement assets in Sterling and transferred some more money to the UK over the last few months when the rate has been so favourable.

bigadaj wrote: »

The bond allocation looks high given the issues around yield and asset prices for this investment class and potential for negative returns. I would have more in equities and p2p personally but we are all different.

Yes, I do think that's a concern.

Thanks for the feedback

Marine_life

MoneySavingUser wrote: »

The OP has used a , instead of a full stop.

i.e. 2,5% = 2.5%

That's right....sorry....German excel!

MoneySavingUser wrote: »

Marine_life - are all of these items inside a pension wrapper?

They are not - although having recently moved to another country I am in the process of working out exactly what to do best.

Marine_life

AnotherJoe wrote: »

Depends how old you are but let's say 60-65

I am 52.

One of the thing that concerns me about putting too much in equities is the relatively high valuation at the moment. I have been searching for value and building an HYP of relatively high yielding shares and I may well decide to drip feed some more money in over the coming months (pound cost averaging).

AnotherJoe

Marine_life wrote: »

I am 52.

One of the thing that concerns me about putting too much in equities is the relatively high valuation at the moment. I have been searching for value and building an HYP of relatively high yielding shares and I may well decide to drip feed some more money in over the coming months (pound cost averaging).

In that case (age 52) i think you are being far too conservative but each to their own.(apart from the fixed assets, maybe you know about that area, but all I see here when anyone invests in these type of things is that ultimately they end up being scams)

If you aren't going to invest more in the markets, then p2p is probably your only option, other than the HYP route though that still leaves you exposed to the market. You could go for income investment trusts or funds with a good record perhaps. I've dabbled with HYP but at the end of the day my growth funds and shares have far out passed them, but I appreciate the philosophy so maybe that fits your style better.

Marine_life

AnotherJoe wrote: »

Apart from the fixed assets, maybe you know about that area, but all I see here when anyone invests in these type of things is that ultimately they end up being scams)

Thanks.

It's quite a well established asset class here in Germany. Clearly there are some that make unrealistic promises and the headlines are always grabbed by some little old lady who put all her money into (and lost). But provided you research well, diversify and understand the risks then I think its a worthwhile small part of a portfolio.