At what stage to you diversify?

Fatbritabroad

Timely post I'm just about to go over 50,k in lifestrategy 100 and was debating either buying a small companies fund and or some more concentrated funds like lindell train or Scottish mortgage. I use p2p as a diversifier but even that is split higher risk ablrate and 'lower risk' lending works I'll have about 10k left after topping cash and filling my isa this year. Torn between investing outside of isas or spreading across more 'lower risk' p2p fixed d for a year before putting into My isa next year.

Alexland

Fatbritabroad wrote: »

Timely post I'm just about to go over 50,k in lifestrategy 100 and was debating either buying a small companies fund and or some more concentrated funds like lindell train or Scottish mortgage. I use p2p as a diversifier but even that is split higher risk ablrate and 'lower risk' lending works I'll have about 10k left after topping cash and filling my isa this year. Torn between investing outside of isas or spreading across more 'lower risk' p2p fixed d for a year before putting into My isa next year.

Remember that the FSCS protection is increasing to £85k in 9 months time so is it really worth doing anything different just because you have hit £50k with Vanguard? SMT is an IT so has no FSCS protection. Personally I feel that P2P (again no FSCS protection on loans) offers a worse risk adjusted return than S&S. If my diversified pool of shares drop I just wait for them to recover. With P2P money is lost forever. Have you considered putting the £10k into your pension?

Alex

jsinc

Alexland wrote: »

Remember that the FSCS protection is increasing to £85k in 9 months time...

Thanks I didn't know that. Annoying though; they should cut then eliminate it. Would force a complete industry and individual reappraisal of risk and returns.

Fatbritabroad

Hi Alex yes i very much count even safe p2p as my higher risk investment. I have 10k in this as opposed to 15k cash and 30k p2p. I'm going to need the cash earlier than a pension and already put plenty in my pension. I suppose i should just go with a fixed rate cash account but the rates are so bad...

Fatbritabroad

When i say 'need i dont absolutely have to have it available in a year. Its purely too put into my isa in the new tax year

AimHigh

Thanks for the advice Alex!

FBA - how've your P2P investments performed out of interest? I've considered putting a small amount in (only £1-2000) as a means of diversifying but not convinced there's much point when my total investments are so low at the mo.

AH

System

If you're going to stay with Vanguard then go directly with them rather than through HL or whoever and it'll lower your fees.

chockydavid1983

Alexland wrote: »

Remember that the FSCS protection is increasing to £85k in 9 months time

Thanks Alex, hadn't seen that either.

Alexland

chockydavid1983 wrote: »

Thanks Alex, hadn't seen that either.

I can't really take the credit for discovering this. Someone else mentioned it first on another thread and it seems to checkout in a few places as correct.

Fatbritabroad

Alexland wrote: »

Remember that the FSCS protection is increasing to £85k in 9 months time so is it really worth doing anything different just because you have hit £50k with Vanguard? SMT is an IT so has no FSCS protection. Personally I feel that P2P (again no FSCS protection on loans) offers a worse risk adjusted return than S&S. If my diversified pool of shares drop I just wait for them to recover. With P2P money is lost forever. Have you considered putting the £10k into your pension?

Alex

AimHigh wrote: »

Thanks for the advice Alex!

FBA - how've your P2P investments performed out of interest? I've considered putting a small amount in (only £1-2000) as a means of diversifying but not convinced there's much point when my total investments are so low at the mo.

AH

All good at the moment. Tbh i started off with about 2k. You could do ratesetter (and i could refer you if you like so we both benefit) with 1000 and you get 100 bonus if you invest for 12 months for an effective return of 14% at the moment.

After that you have various choices. I use ablrate for high risk manually selected loan which return 13%to 15%. I would make sure you understand the borrower base (very interlinked atm) and i have no more than the interest earned in each COMPANY (not loan) and have 5k in this total which willl be 10% of my non pension investments. There's no getting away that this is a high risk area. I also use lending works which is both insurance and provision backed and gives 6%.i Have another 5k in this. P2p is not anything id put more than 5% of my total net worth in and then id spread across different platforms. Evem j the lending works and ratesetter i dont count as safe. I equate these to buying a single share because of platform risk.
Let me know if you decide to take the plunge and I'll pm you my details