early retirement - safety for funds

smojo

I'll be 57 next year and am planning to take early retirement. I won't have any pension income until I'm 60 and am planning to live on my savings and maybe do some low paid part time work to help out until they start to kick in. I am married and between us our savings are split in building society cash, cash ISA's and equity ISA's.

I want my money to work for me but be safe and easily accessible for drawing on for the next few years. I don't want to lose too much of my tax free shelters if I can help it. Should I move my ISA equities into something safer/less volatile (but keeping them in my ISA's) and more guaranteed now and what can anyone suggest? Guaranteed Bonds? Don't know much about them though. Thanks

jamesd

Given your timeline you should be looking to move the equity ISA money that you plan to use into lower volatility investments like corporate bond funds if you prefer low risk. You could leave some in medium risk areas like the UK equity income sector for the end of the period and move that later.

Better to use the money that is not in tax shelters if possible.

smojo

I've tried to develop a balanced portfolio and fairly recently bought into Japan and other areas that have'nt performed well. I was planning for the long term when I bought them but my decision to retire early changes the plan so would it make sense to start selling these non-performers first even though I would lose money on my original purchases?

purch

It always makes sense to me to sell non performers !!!

cheerfulcat

It might be worth considering gilts in this situation - you can hold gilts in a stocks and shares ISA if they have more than five years to run; there are two now trading slightly under par ( so no loss of capital if held to maturity ) with a gross redemption yield of 4.8-ish. If you can afford to take only the interest, it's a good way of holding cash in a S&S ISA. If you need to sell, you are taking a chance on the price but medium-term gilts shouldn't be terribly volatile.

dunstonh

What is a non performer? It is a fund that didnt perform well in a given period. That doesnt mean it wont perform well in the future. In the last few months UK Equity income has been a non performer but I bet people are still putting bucketloads into that.

Japan is one of those areas where you tend to get all or nothing. We have had a nothing period for some time now and we are probably due some growth soon as there is only so much it can go down before it turns into value.

Some of the best funds I have invested into in the past have been bottom performers. What goes up comes down and what goes down comes up. It is often worth looking at what has dropped the most to see if there is value down there.