HSBC Global & VLS60

Prism

ValiantSon wrote: »

Very high risk strategy and well beyond the comfort level of most investors. If it suits you then great, but I wouldn't be advising someone fairly new to investing to be going down that road unless they were absolutely certain about their risk tolerance.

I was being a bit flippant by using the word advise. However the OP did ask for recommendations. and in my opinion a 60/40 or 70/30 fund for a 15-20 investment is too conservative. Other posters recommending that are basing it partly on their own risk profiles. I am recommending 100% partly based on mine. Only the individual can decide, however thats tricky unless they have been through something like the financial crisis.

Alexland

Prism wrote: »

Only the individual can decide, however thats tricky unless they have been through something like the financial crisis.

I agree - when we look back at big market drops it's easy to forget that at the time we didn't know where the bottom of the market was or with certainty that there would be a recovery. With the 24x7 media coverage forcasting all possible outcomes then the 'this time it might be different - we might all be screwed' message might get the most hype and influence people's decisions.

Also even for those of us who have invested during previous crashes the sums involved were probably significantly smaller than our current accumulated investments so seeing your life savings go down the pan with less life ahead to replenish them might create a new behavioural response.

Alex

Prism

bostonerimus wrote: »

Owning 100% stock through the 1970s and 2000s gave worse return than 100% bonds (using broad US indexes). Of course the other recent decades would have seen the best returns from 100% equities. I can't find the numbers, but I bet 100% equities from 1970 to 2010 would have been pretty rough. Of course you could pick many other time spans and do really well. Moderation is probably best for most people, so some equities and some cash and bonds to keep their blood pressure down.

I use these two calculators to compare US stocks and bonds. Not whole world by any means but at least it can give a rough idea of past performance

http://dqydj.com/sp-500-return-calculator/
https://dqydj.com/treasury-return-calculator/

The 1970s look about even.
40 years from 1970 to 2010 is in favour of equities 4201% to 1793%
Equities from the peak of the dot com bubble to 2010 is pretty bad -6%
It took about 5 years from the start of 2008 for equities to gain parity with bonds

fun4everyone

Audaxer wrote: »

Most people do not have the risk tolerance for 100% equities. I'm sure a respected IFA on here recently said that he had no clients with 100% equity portfolios.

Whilst I would agree it's not for your average investor, I used an IFA a good decade ago when I had quite a lot of spare cash I wanted to invest but didn't have any idea how to do it. After filling out the multiple choice answer risk assessment quiz and having an interview I was set up with a 100% equities portfolio, which was added to several times. That was entirely the advisors recommendation and I had no input into the level of risk apart from the quiz.

Eventually I read and learned enough to be confident in DIY going forward and moved my portfolio to my own choices but IFA's do recommend 100% equities if the situation is right. For me I had a long time frame, an ability not to touch the money, and an understanding heavy drops would occur.

economic

if you have a 20year time horizon, aren't bonds pretty much guaranteed to lose money in which case why would you hold any if you are investing now with a 20yr time horizon?

ValiantSon

Prism wrote: »

I was being a bit flippant by using the word advise. However the OP did ask for recommendations. and in my opinion a 60/40 or 70/30 fund for a 15-20 investment is too conservative. Other posters recommending that are basing it partly on their own risk profiles. I am recommending 100% partly based on mine. Only the individual can decide, however thats tricky unless they have been through something like the financial crisis.

Isn't that the point though? The OP is (from what I can see) relatively new to investing and probably hasn't been through a major financial crisis or market fall, and therefore they are more likely to panic in such a situation if their entire investment is in equities and they see the value go through the floor. Taking risk assessment questionnaires and doing some soul-searching are part of the answer, but until they see the investments tank they cannot really be sure how they will react, so taking the very volatile approach of 100% equities is super high risk because it might just have the impact of causing them to sell and crystalise those losses. Instead taking a more cautious (although still risky) approach at 70%, or even 60%, equities is more likely to see them ride the storm out, remain invested, and even, possibly invest more at low prices. Learning from this, they may even adjust their view of risk and increase the equities proportion of their investments.

Alexland

economic wrote: »

if you have a 20year time horizon, aren't bonds pretty much guaranteed to lose money in which case why would you hold any if you are investing now with a 20yr time horizon?

I agree that's the current prevailing theory but it is by no means certain or proven. In the right circumstances things could change and bonds could become even more popular. Who knows what will happen? I know enough to say I don't know so I hedge my bets.

economic

Alexland wrote: »

I agree that's the current prevailing theory but it is by no means certain or proven. In the right circumstances things could change and bonds could become even more popular. Who knows what will happen? I know enough to say I don't know so I hedge my bets.

Whats your portfolio allocation like at the moment?

Alexland

economic wrote: »

Whats your portfolio allocation like at the moment?

70% global equities, 20% bonds and 10% cash. The cash fund generates a small return but delivers most of it's benefits from the magic of rebalancing.

economic

Alexland wrote: »

70% global equities, 20% bonds and 10% cash. The cash fund generates a small return but delivers most of it's benefits from the magic of rebalancing.

How old are you?