Moving from single company shares to a broader investment base

alk29

Hi All.

My partner and I have taken advantage of company share incentive schemes. Now time has passed, they have matured, and we have been able to extract the shares from the schemes and move into S&S ISA’s.

After a few years doing this there's now a big (for us) chunk of shares sitting in the ISA’s but the vast majority is still in shares of one (large, stable) company

It’s by no means a bad place to be but we know that this isn’t the most sensible to have quite so many eggs in the one basket and so we need to do something about it. The question is what

We already have funds elsewhere to cover emergencies, etc and we both have a DB pension and put in AVC’s.

The aim is to use this money to cover any gap between when we would like to retire and when we can claim the pension without a massive reduction for taking it early (it's also a bit of future proofing so we can still stop work when we like even if the pension fund and/or government change the rules again). So I don’t want to increase AVC contributions over where they are at present even though it is a great deal from a tax POV

So the initial plan is to sell the company shares and move the money to low cost tracker funds and then basically not mess much (barring occasional reviews/ rebalancing) for the next 15-20 years until we want to use it.

I know there’s a few different firms offering this sort of tracker that we could use and preferably we would not both go with the same one to help with diversification but does anybody have any opinions on the main differences between them? / alternative suggestions ?

MarkCarnage

Your core strategy makes sense, as even large and stable companies can very quickly become small and unstable or even dead.

There is not a lot of point in trying to diversify index trackers as by definition they are diversified vehicles. That's assuming that you intend to buy something like a global equity index tracking fund as offered by Vanguard, LGIM, Blackrock etc. You could buy more specialist trackers for individual markets or regions, but IMO the only advantage in that would be using them to tilt your allocation to a specific market, e.g. UK if you wanted to do that.

As an example, you could have 75% in a global tracker, 25% in UK which would give about a 70/30 split overall. Lots of ways to slice and dice, and you could also widen it to a low cost multi asset tracker fund and include bonds to the extent you want.

As I said on another thread recently, be clear what 'diversification' actually is. No point in buying three or four different funds which all do pretty much the same thing.

Albermarle

I know there’s a few different firms offering this sort of tracker that we could use and preferably we would not both go with the same one to help with diversification but does anybody have any opinions on the main differences between them? / alternative suggestions ?

You have to choose which trackers but also which platform offering S&S ISA's to hold them with .
Platform charges vary and are a little bit horses for courses ( eg some are better for ISA's . some better for SIPPS, some better for funds, some better for shares/ETF's etc )
https://monevator.com/compare-uk-cheapest-online-brokers/