Lower risk investments for spare cash?

C_Mababejive

please bear with me,i think ive been here before possibly with a similar question.

Ive been doing a nett worth audit and the current position is that im about 61% cash, 33.5% invested in funds/shares,about 6% in a SIPP.

I'm in my 50s and also have a DB pension with a very decent CETV if i want it.

I am reluctant to increase my pension SIPP as i may breach the LTA at some point.

Obviously given my age i also dont want to shove a load more cash on the table to go into 100 % equities when maybe the market could be a little overcooked.

We keep hearing of the end of a bull run etc and i dont want to get caught with my pants down ! Obviously if the market dipped a fair bit id be more confident at shoving that cash on the table.

Having said that, i dont want it hanging about in savings accounts.

I also keep reading that the bond market could turn wobbly..and gilt yields are crap ??

It seems there is no place to turn to,,or at least its not glaringly obvious to me.

I could keep pushing into my;

HSBC FTSE all world tracker
or

my HSBC Global strategy balanced 60/40 acc

But is there anything else i should consider which will give a decent yield but maybe a bit of shelter against a downturn?

I dont desperately need to access all this money so it can ride for another 5 years minimum

Essentially,what is lower risk but better than savings??

Thanks for any thoughts ...

pip895

You need to consider what the money is for - do you think you might want to retire early and use the cash to fund the period before the DB pension kicks in?

If you don't think you will use it for 10 years then it should be invested.

C_Mababejive

#2 yes indeed,what is it for? well it isnt for anything at the moment as i have working income and i have and do almost all i want. It just needs to be invested but not in something too risky or volatile.

DairyQueen

Given your age, pension situation and investment timescale, this may be better posted on the pensions/retirement board.

C_Mababejive wrote: »

Ive been doing a nett worth audit and the current position is that im about 61% cash, 33.5% invested in funds/shares,about 6% in a SIPP.

A bit of confusion here. A SIPP is a tax-efficient investment wrapper and not an asset type. 'Funds' are also not an asset type as you can invest in a wide spectrum of assets via funds. If you could provide a breakdown of your non-cash assets by percentages invested in: equities, gilts/investment grade bonds, corporate bonds (non investment grade), property funds, other, that would be helpful. Alternatively, list the fund names.

C_Mababejive wrote: »

I'm in my 50s and also have a DB pension with a very decent CETV if i want it.

Your age suggests that retirement planning should be a major consideration. The DB pension forms part of this but other investments are central to your retirement aims and lifestyle. Transferring a DB pension is a major decision and is not straightforward. For 90% of people it's a bad idea so chances are high that you will not receive a positive recommendation from the PTS IFA whose advice you must pay for (and it isn't cheap as this is a high-risk transaction). There is a wealth of info on such transfers available on the pensions board.

C_Mababejive wrote: »

I am reluctant to increase my pension SIPP as i may breach the LTA at some point.

There are several ways of managing this. How close are you? Which alternatives have you considered? The possibility of a future breach is not, in itself, reason to stop contributions.

C_Mababejive wrote: »

Obviously given my age i also dont want to shove a load more cash on the table to go into 100 % equities when maybe the market could be a little overcooked.

You are only in your 50s. Average life expectancy is 80s and, if married and healthy, you have a 25% chance of one of you living to 95+. The likelihood is that you will live at least another 30 years and you have decades to invest in equities if you choose to. Generally holding more cash than you plan to spend within 5 years (plus an emergency fund) will ensure that the cash surplus depreciates. Inflation will always devalue cash, and especially so in the medium/long-term. Your allocation to cash is very high and you are right to consider moving elsewhere.

Trying to time the market? Good luck with that. Yes, signals/media suggest that the markets are late cycle but nobody can call the next dip/crash. History suggests that each decade the markets will likely dip several times and that a major crash may occur once/twice, but also that, over the course of at least 10 years the markets will beat inflation.

Two years ago the media was full of how the USA was 'over-cooked'. Take a peek at how the USA has since performed.

C_Mababejive wrote: »

We keep hearing of the end of a bull run etc and i dont want to get caught with my pants down ! Obviously if the market dipped a fair bit id be more confident at shoving that cash on the table.

Having said that, i dont want it hanging about in savings accounts.

Then invest chunks on the dips. Devise a plan but don't delay too long. You can't have your cake and eat it, and with cherries on the top.

C_Mababejive wrote: »

I also keep reading that the bond market could turn wobbly..and gilt yields are crap ??

Yes and yes. Corporate bonds are behaving more like equities and investment-grade fixed interest is returning zilch-to-negative. However, fixed interest investments still generate income and they also reduce volatility They still have a place in most portfolios.

C_Mababejive wrote: »

It seems there is no place to turn to,,or at least its not glaringly obvious to me.

I could keep pushing into my;

HSBC FTSE all world tracker
or

my HSBC Global strategy balanced 60/40 acc

But is there anything else i should consider which will give a decent yield but maybe a bit of shelter against a downturn?

There is no such thing as a risk-free investment.

How do the funds mentioned fit within your portfolio strategy? Nothing wrong with either but you give no rationale for holding either or both. There is duplication on equities, different risk profiles and both offered by the same fund manager. Do you have different investment timescales for each?

These funds are inconsistent with 'a decent yield' and 'shelter against a downturn'. It is therefore difficult to understand why they are mentioned as possible recipients for new money.

C_Mababejive wrote: »

I dont desperately need to access all this money so it can ride for another 5 years minimum

Essentially,what is lower risk but better than savings??

Thanks for any thoughts ...

Are you seeking growth or capital protection or income? All are hinted at or mentioned. What are you trying to achieve and why? Your post suggests that you don't have investment aims or a strategy to meet them. Until you are clear about your destination then you can't plan the route.

A good DB is a great foundation but retirement planning is more than just ticking the DB box. For most, retirement requires a lot of planning as it is now a decades-long phase of life - 30+ years isn't uncommon.

Begin with the fundamental questions: What do I want to do? When do I want to do it? How long could I live? How much income/capital will I need? Will I/spouse have sufficient income on the first death? Do I wish to leave an inheritance?

The answers will feed into timescales, and timescales will help shape your portfolio. Asset allocation and fund choice are the last stages of the investment process.

Malthusian

C_Mababejive wrote: »

Obviously given my age i also dont want to shove a load more cash on the table to go into 100 % equities when maybe the market could be a little overcooked.

We keep hearing of the end of a bull run etc and i dont want to get caught with my pants down !

Market timing doesn't work. If you invest more money which you don't intend to touch for the next 10+ years in the stockmarket and the market starts crashing the day after, you haven't been caught with your pants down, as the crash will be irrelevant. (Unless you panic and cash in.) You've still made a sensible decision that all historic data confirms will be proven correct eventually. (If a diversified non-geared stockmarket investment doesn't make a positive return after ten years, then we will be in a new Dark Age and you wouldn't be any better off if you'd dumped your money in cash for ten years.)

Why haven't you dumped your 33.5% currently in funds into cash so that you can invest it back in the market when it dips?

If you're capable of consistently timing the market then you can time the market. It's not the money in cash that has a special "being able to time the market" property that the money in funds doesn't have.

Ciprico

I was/am in similar situation...I bunged £50K into premium bonds. It's not exciting or sophisticated, but you should get about 1.5%, it's tax free, safe and can be accessed within a few days...

C_Mababejive

Yes thanks all,, i already have the max PBs. The clear message and one that im acutely aware of,is the lack of a strategic investment plan. That much is crystal clear. Of course at a base level ,the plan is to keep building wealth ,beat inflation, be widely diversified and dont take any high risks.

Just quoting the two funds i mention,well i bought them because they are widely diversified /global/have a chunk of bond/fixed interest assets in them and are low cost . Checking their history,well they are both well respected funds that have decent returns. global strat 51% return over last five years, HSBC global 78% over last five years. When the big dip comes i will not be panicking and pressing the sell button,,learned that lesson already True i need to look at proportions.

I'm slowly selling out large individual shareholdings and diversifying to lower risk.

part of me thinks i need to see an IFA to get a clearer vision and try to tidy it all up a bit. But then my destination is a little unclear so that might affect planning..

Albermarle

If you are nervous about equities and bonds ( understandable despite the logic to always stay invested ) but already have a lot of cash , there are some alternatives :
Property based funds
Gold, Silver etc
Commodities
Wealth protection investments - like certain Investment trusts and Absolute return funds .
Venture Capital /EIS
Antiques/fine wine/art
etc
All have their potential downsides of course, and all with some risk involved but at least diversified from the main equities/bonds.

eskbanker

123mat123 wrote: »

I was/am in similar situation...I bunged £50K into premium bonds. It's not exciting or sophisticated, but you should get about 1.5%, it's tax free, safe and can be accessed within a few days...

The chances of a 1.5% return are below 25%, so expectations should be set closer to 1.25% as an average, although obviously it's highly variable....

C_Mababejive

I'm just doing some portfolio analysis just for usefulness and to get some real figures. I already know what the big problem is and that is that i am massively oversubscribed in individual shares of two separate companies. Im slowly trying to unwind these holdings. but then what? keep it simple and dump it all in multi asset fund(s)? for future growth?

Malthusian

C_Mababejive wrote: »

part of me thinks i need to see an IFA to get a clearer vision and try to tidy it all up a bit. But then my destination is a little unclear so that might affect planning..

A good IFA will help you understand what you want your destination to be.

It is normal to go and see an architect without being able to draw a picture of what you want your extension to look like.

C_Mababejive wrote: »

I'm just doing some portfolio analysis just for usefulness and to get some real figures. I already know what the big problem is and that is that i am massively oversubscribed in individual shares of two separate companies. Im slowly trying to unwind these holdings. but then what? keep it simple and dump it all in multi asset fund(s)? for future growth?

Why not?