100% Equity vs Equity/Bond

point5clue

https://www.portfoliovisualizer.com/

Brilliant - just what I wanted - really helpful to be able to put in a set of 10 year periods and see that some show its better to be in bonds. Average returns of a mix is very useful too. For me a -10pc anual return worst case for a 40pc equities product seems a good compromise - any views on how similar UK numbers are ? Not looking to be accurate here, just a sense of similar or different.

bowlhead99

point5clue wrote: »

Brilliant - just what I wanted - really helpful to be able to put in a set of 10 year periods and see that some show its better to be in bonds. Average returns of a mix is very useful too. For me a -10pc anual return worst case for a 40pc equities product seems a good compromise - any views on how similar UK numbers are ? Not looking to be accurate here, just a sense of similar or different.

Broadly, looking around the world, equities have performed worse than bonds in certain ten year periods but not really in twenty or thirty-year ones. But whether or not historic returns in UK were similar to historic global returns, you are perhaps not using a model that incorporates all the relevant prevailing market factors. Looking at history shows the worst scenarios that happened to occur, rather than the worst that could occur.

For example, one problem is that going back for the last century you won't find any ten, twenty or thirty year data sets where global bond markets started the period with such low yields / such high prices as you would be buying in at today.

point5clue

For example, one problem is that going back for the last century you won't find any ten, twenty or thirty year data sets where global bond markets started the period with such low yields / such high prices as you would be buying in at today.

Which brings us nicely to the OP's question - 100pc equity or mix in some bonds ? What are the other alternatives that can balance bouncy equites ? :j

coastline

point5clue wrote: »

Which brings us nicely to the OP's question - 100pc equity or mix in some bonds ? What are the other alternatives that can balance bouncy equites ? :j

Who knows what will happen next ? We do know we have high P/E values in equities unless earnings begin to grow?

http://www.multpl.com/

Read pages 1 and 2 below..

https://www.seeitmarket.com/history-says-bull-market-room-run-higher-stocks-16372/

Have a cup of tea and watch the next 10-12 minutes..

https://www.youtube.com/watch?v=sHk7P5HuGJo

Then 10 minutes of this..

https://www.youtube.com/watch?v=GN3FEwBAPJI&feature=youtu.be&t=26s

A link about bonds and some comments below..

http://canadiancouchpotato.com/2011/07/07/holding-your-bond-fund-for-the-duration/

jdw2000

The difference in people's tolerance to risk is amazing.

Just chatting to a friend who would take no risk at all. Premium bonds or bank accounts only. Says he lost £1K on a Virgin Pep years ago and learnt his lesson.

StellaN

point5clue wrote: »

Which brings us nicely to the OP's question - 100pc equity or mix in some bonds ? What are the other alternatives that can balance bouncy equites ? :j

Yes, I think that's why I am definitely going to change my portfolio from 100 per cent equity to 60 per cent and then 30 per cent in strategic bonds and the other 10 percent in property especially because I am now coming up to the 'young' age of 59.

I think overall this is a wise decision but really 'who knows'?

MPN

StellaN wrote: »

Yes, I think that's why I am definitely going to change my portfolio from 100 per cent equity to 60 per cent and then 30 per cent in strategic bonds and the other 10 percent in property especially because I am now coming up to the 'young' age of 59.

I think overall this is a wise decision but really 'who knows'?

Which strategic bond/s and property fund did you settle on?

I assume the equitiy part of your portfolio is an All World Tracker as you previously mentioned?

I personally feel this sounds a fairly well balanced asset allocation for somebody of your age but I'm still learning about my own investments so I think the more experienced investors on this forum will be able to comment much better than I can at this stage.

point5clue

Thankyou Coastline - the link below was just the sort of thing I needed to understand bond funds vs individual bonds risk.

http://canadiancouchpotato.com/2011/07/07/holding-your-bond-fund-for-the-duration/

Which leads us to the key message for investors: as long as your time horizon is at least as long as the duration of your bond fund, you won’t lose any capital.

(not sure on the etiquette of quoting from a link, please let me know if this is frownable?)

Would anyone disagree with the average duration anaylsis of a bond fund? I've got about 10 years to go, and a reasonable large chunk of cash to put by now that I need to be accessible at retirement in case markets are crashing then (with my luck you can almost guarantee it).
Oh, and my analysis of the bond funds in VLS40 is they are below 10 years on average.

MPN

point5clue wrote: »

Thankyou Coastline - the link below was just the sort of thing I needed to understand bond funds vs individual bonds risk

(not sure on the etiquette of quoting from a link, please let me know if this is frownable?)

Would anyone disagree with the average duration anaylsis of a bond fund? I've got about 10 years to go, and a reasonable large chunk of cash to put by now that I need to be accessible at retirement in case markets are crashing then (with my luck you can almost guarantee it).
Oh, and my analysis of the bond funds in VLS40 is they are below 10 years on average.

I wouldn't worry too much about bonds in general most people IMHO tend to be more concerned with their risk in equities!

Thrugelmir

point5clue wrote: »

Which brings us nicely to the OP's question - 100pc equity or mix in some bonds ? What are the other alternatives that can balance bouncy equites ? :j

With interest rates at record lows. Asset classes have become correlated in a chase for yield (income). Rising interest rates leave few places to shelter from the impending storm.