Pristine Investment, how do I know if I have made a mistake?

Stirfry

bowlhead99 wrote: »

If you are happy with it, no harm in putting your head in the sand until October as you suggest. I mean, if one of the funds goes up 5% or down next week, does that prove it was right to have it, or wrong to have it? You won't know.

If you look at Murray International for example, it's up 13.5% since early February, and up 46% since mid June last year (in both cases including dividends). So next week or month or year or could be radically different. If Murray, now at £12.73 a share, went back to last June's price of £9.00 a share, that would be a drop of 30% from today's price. No reason it couldn't do that over the next year or so. From 2000 to 2003, its capital value dropped over 50%. Presumably you are ok with that, and would even welcome it, so that the next time you are putting more in to the funds you get more shares for your money.

You mention you were trying for geographical balance. You seem to have very little in Japan, given that the Japanese investible stock market is about 30% larger than the UK's. Probably about 2% of your portfolio will be in Japan, vs about 40% of your portfolio being in the UK.

It's understandable that you will want some home bias if you are aiming for a stream of sterling income, and with negative base interest rates, Japanese bonds certainly aren't paying much these days (with currency risk too). Still, it can be worth considering whether it was an active choice to deprioritise that country or whether you accidentally thought that Murray or Henderson or Scot American would be covering it for you. You do have a bunch of Asia but largely missing that bit, it seems (other than a little part of the equities in the VLS).

Obviously using certain funds which are specialising in (e.g.) high income equities​, or UK listed equities, or high growth Asian stocks, or a concentrated portfolio of blue chip largecaps (like Fundsmith) you will probably miss some sectors although the use of the Lifestrategy fund in your OH's portfolio will get you some general broad largecaps exposure.

If you're looking specifically at generating income, property and other types of alternatives to mainstream stocks and bonds can be useful. ScotAm has some fraction of its holdings in property investments for example but their whole trust is only a seventh of your portfolio so you're hardly stuffed to the gills with it as an excuse for not wanting any more.

But really it's difficult to say whether it's right or wrong, as we are not you - and weren't inside your brain when you made the decisions you made - to know what you're really looking to do other than make some income in the short term and, presumably, growth over a long term. If this is only the first £55k tip of a £500k+ iceberg there is plenty of scope to rejig it if you know what you're doing and realise it's not quite what you were looking for once you have re-reviewed everything.

If the goal is just to generate some income and growth, you'll probably get what you wish for over the long term - on the basis that the target is merely to generate £1200pm or under 3% income after tax (presumably you want to preserve this in real terms too). It's not overly ambitious for this sort of portfolio if you're willing to take all the downs that go with the ups and to draw some of your cashflow needs from capital rather than purely the natural income.

Firstly I would like to thank you for taking the time to reply. I really appreciate it.

I missed Japan but can correct that in October perhaps. This is where I am struggling what percentage should I be holding? What funds do you suggest I look at?

Have been wondering about property although funds are expensive. Should I up my percentage in Scot Am in October?

The problem is I don't know what I am doing and am learning as I go along. This is purely for retirement income for the next 30 years. AM I happy with 50% losses at any one given time, of course I am not (knowone likes to loose money) but on 55k invested so far, if it happens this year or next I will still have further funds to invest and take advantage. When and if it happens on a 500k plus portfolio I will hopefully be able to shrug my shoulders and dig in for the following 3 years until the market recovers.

I have been debating whether holding 30k in cash is enough, but by the time I am fully invested (next 4 years) we will have one full state pension and 7.5k in other pension payments. My state pension kicks in 6 years from now. We are looking for 30K+ income in todays money.

If I can get the bones of the portfolio right without being too ambitious I will have to learn about rebalancing as I go. I am just worried that I have not started out by making any glaringly obvious mistakes that I cannot see. In any case I have some homework to do until October when I will be investing a further 150k.

Please feel free to comment further.