Portfolio planning and allocation 5-10 years

buyhighselllow

A few weeks ago I sold out my funds taking some nice profit ( won't bore you with all the reasoning etc )

So I'm now a bit cash heavy.Its all working in various savings accounts, and I put some into a 3 yr NSI bond.
However the overall spread since the sell off at present now is ..

Cash ( regular savers, deposit, using wife's allowance ) 68%

P2P 18%

Equities ( mainly high yield shares and some in funds* ) 11%

Bonds ( NSI and corporate* ) 3%

* one of the funds is 80% bonds but a relative small holding at present

giving growth around 3% I guess overall ?

Aim is to retire in 5 years but pension and lump sum will be adequate hopefully for retirement years 1-5

From retirement years 5-12 will need to draw from the pot and all being well from year 12 when the State pension kicks in for both of us, needs will be met by the pensions. From then on in theory what would be left would be for major expenses only, new car, renovations etc.

Of the 68% Cash 25% is stoozed at 0% from credit cards, for at least another 2 years as I've just done a shuffle to secure an extension, the aim is to keep this pot churning around as long as possible on 0% just making minimum payments whilst earning on it but in relatively safe investments !

Obviously its also wise to ensure I have a few months salary to hand..although I have a policy that covers me should I be unable to work..

However as I don't hopefully need a chunk of this money for 10 years, I think I need to get some back out of cash

I'm able to add a few hundred a month to the pot. At present I am drip feeding a small amount each month into a Emerging markets tracker and mixed trust that is 80% bond 20% equities.
I think I need to add in a couple more trackers, probably S&P 500 and a UK one. However I'm a bit wary of lumping in as I feel markets are due a fall, so would feel more comfortable drip feeding unless there is a serious crash, I think... I'm waiting for the new financial year to start whatever I do within an ISA. Should I up contributions to the existing funds given the time scales involved ? Is there anything else I could do with the cash before drip-feeding in..eg more into bonds until I've drained out some of the surplus cash ? Any observations welcome

capital0ne

KISS - Keep it simple, from your description it all seems a bit hit and miss. A biut cash heavy, what does that mean?

What size portfolio are you trying to manage, A few thousand, or hundreds of thousands.

And drip feeding a few hundred a month, this is waste of time, even if a crash comes it wont make much difference if you buy ten more shares or not.

Tell us all what your portfolio contains, the rough amounts and what you're buying witha few hundred quid a month.

Good luck

bostonerimus

You need to do some reading and understand how to build a sensible portfolio to provide some growth and some income for retirement. Your asset allocation seems to be very ad hoc and you are not thinking long term.

Linton

I agree with bostonerimus that your portfolio is very ad hoc. There seems to be no overall strategy there.

Note that the NSI is not a bond, it's a fixed term savings account and so is merely a form of cash. For some reason banks call such things bonds, perhaps because they think it sounds better. Real bonds are very different.

Perhaps you could more clearly identify your needs over time. Keep anything you may need in say1-5 years plus an emergency fund of say 6 months living expenses in cash and NSI accounts. Money required in 5-10 years requirements could be in relatively cautious investments or possibly P2P and the rest in long term equity.

buyhighselllow

Linton wrote: »

I agree with bostonerimus that your portfolio is very ad hoc. There seems to be no overall strategy there.

Note that the NSI is not a bond, it's a fixed term savings account and so is merely a form of cash. For some reason banks call such things bonds, perhaps because they think it sounds better. Real bonds are very different.

Perhaps you could more clearly identify your needs over time. Keep anything you may need in say1-5 years plus an emergency fund of say 6 months living expenses in cash and NSI accounts. Money required in 5-10 years requirements could be in relatively cautious investments or possibly P2P and the rest in long term equity.

I agree, I need a strategy ! Will do some research into model and "lazy portfolios"..I have been looking over Vanguard products of late. At present after the "cash in" I just focused on making sure my money was in something relatively accessible and earning some interest. I need to focus on a longer term homes for it that will suite my low-moderate risk profile.

bostonerimus

buyhighselllow wrote: »

I agree, I need a strategy ! Will do some research into model and "lazy portfolios"..I have been looking over Vanguard products of late. At present after the "cash in" I just focused on making sure my money was in something relatively accessible and earning some interest. I need to focus on a longer term homes for it that will suite my low-moderate risk profile.

Make sure you don't apply the "lazy" label to how you research or manage your portfolio. Even if you settle on a simple 2,3, or 4 fund lazy portfolio make sure you understand your asset allocation and how it will support your financial goals and also monitor your fund values to see if you need to rebalance or make any strategic changes as your circumstances change.

buyhighselllow

bostonerimus wrote: »

Make sure you don't apply the "lazy" label to how you research or manage your portfolio. Even if you settle on a simple 2,3, or 4 fund lazy portfolio make sure you understand your asset allocation and how it will support your financial goals and also monitor your fund values to see if you need to rebalance or make any strategic changes as your circumstances change.

It does worry me gong into funds with lump sums at the moment though as I can only see the market heading down/correcting over the next few years

bostonerimus

Investing is a long term activity and time out of the market is usually to be avoided. If you are worried about the direction of the market then you are not ready to invest. Personally I put a lump sum in the market just before it fell 10%. I couldn't care much less as that money will stay invested for a long time generating dividends as well as capital gains. It will certainly be invested for long enough to make back any short term losses if historical data is any guide. Your comments lead me to believe that you need to do some reading and get comfortable with a little volatility before you invest.

Audaxer

bostonerimus wrote: »

Investing is a long term activity and time out of the market is usually to be avoided. If you are worried about the direction of the market then you are not ready to invest. Personally I put a lump sum in the market just before it fell 10%. I couldn't care much less as that money will stay invested for a long time generating dividends as well as capital gains. It will certainly be invested for long enough to make back any short term losses if historical data is any guide. Your comments lead me to believe that you need to do some reading and get comfortable with a little volatility before you invest.

I agree with you on the whole, but as I read that there is quite a high probability of at least a 30% correction within the next few years, is it not worth holding some cash back from lump sum investing at present, so as to benefit from lower prices when the correction comes?

Prism

Audaxer wrote: »

I agree with you on the whole, but as I read that there is quite a high probability of at least a 30% correction within the next few years, is it not worth holding some cash back from lump sum investing at present, so as to benefit from lower prices when the correction comes?

People have been saying this for years. My portfolio has made over 30% in the last 18 months. Even if the market had crashed 30% a couple of weeks ago rather than 10% I would have been better being fully invested than waiting for it to drop. Who's to say it won't be up another 30% before a crash.

economic

Audaxer wrote: »

I agree with you on the whole, but as I read that there is quite a high probability of at least a 30% correction within the next few years, is it not worth holding some cash back from lump sum investing at present, so as to benefit from lower prices when the correction comes?

When it comes? You mean IF it comes.

I find posts like this hilarious as it assumes with 100% certainty that something will happen to the market. The market does not work like that im afraid.

Whilst you may then think that a large correction is likely, there are many who think the opposite. Only time will tell who is right.