ASI UK Smaller Companies Pension Fund and my retirement plan

tigerspill

GazzaBloom said:

What would you recommend as a sensible diversified portfolio for an assertive accumulation over say next 4-5 years? There are 330 funds I can choose from in my employers scheme with Standard Life and the highest performing are UK equities, US equities and UK property.

I am doing similar planning at the minute.  I have actually retired (April 2019) and my OH in 18 months.
In my plan, I am planning for CASH only (in ISAs, SIPP etc.) for 4-5 years out.  No investments.  If investing in this period, you need to model maybe a 50% drop at some point as that might happen.
Looking further out, I use funds such as Vanguard LifeStrategy (40 in my case) to provide diversity.  I will be adding some longer term investments in maybe VLS 60/80 to a blend.
I would be diversifying immediately - i.e. tomorrow.  I simply couldn't sleep at night with what you are doing.

bostonerimus

GazzaBloom said:

AnotherJoe said:

I'm finding it impossible to break up into multiple quotes to make reading a response easy so bear with this.

1. Yes, I know I need to diversify, but for the record I think the whole of Europe faces challenges as well without the UK as a member but never mind politics.

And the logic into picking out one small part of that area that "faces challenges" for ALL your investments is ??

2. There are 330 funds I can choose from in my employers scheme with Standard Life and the highest performing are UK equities, US equities and UK property.

You know that wording about "part performance doesn't ..." etc? Well, that's true.

They WERE the highest performing looking back. That says nothing about what they will be going forward. You, I and no one else knows how they will do this year next or over the next 20.

FWIW I'm in the same scheme with the same 330 choices.

My three picks (two of which I've held for some time, say 7 or 8 years ,  and recently added small companies are
SL ASI Global Smaller Companies Pension Fund

SL Vanguard SRI Global Stock Pension Fund

SL iShares Global Property Securities Eq Idx Pn Fd

Held 15% 70% 15 % respectively.

How will they do? As well as the world economy does. I think its a lot safer to bet on the world economy that the UK.

• If the world economy does badly, then so will the UK.
• If the UK does well, i reckon that means global must be OK.
• If the UK economy does badly that means either that global is bad, or its just the UK thats bad.

Look at it another way.

You already have your career and house in the UK

Why put all your eggs in one basket and put your whole pension in the UK as well? 

Yep your points make sense. 
The UK faces Brexit
Europe faces Brexit
US faces the Presidential election
China faces a growing virus and slowdown
Australia and developing countries face climate change catastrophes
How to do you pick your way through that?

You bet on multiple "horses" rather than betting on just one. You try to maximize the probability of success rather than maximizing the potential return. You have a couple of things working against you; your desire to retire at 55 and you said that you started planning quite late. Those two factors seem to have pushed you into a high risk strategy. There are good arguments for overweighting small cap in a portfolio, but not to the exclusion of other sectors and regions.

If we think back into the mists of history to the time of annuities and DB pensions then risk was not a factor in retirement. It is now and so it needs to be managed sensibly. There are going to be people who don't do this and we'll see stories in the newspapers of people losing 50% of their pot to falling markets. It's not complicated to avoid such mistakes, all it takes is some long term planning, regular saving and thrift and prudent asset allocation. 

bostonerimus

tigerspill said:

GazzaBloom said:

What would you recommend as a sensible diversified portfolio for an assertive accumulation over say next 4-5 years? There are 330 funds I can choose from in my employers scheme with Standard Life and the highest performing are UK equities, US equities and UK property.

I am doing similar planning at the minute.  I have actually retired (April 2019) and my OH in 18 months.
In my plan, I am planning for CASH only (in ISAs, SIPP etc.) for 4-5 years out.  No investments.  If investing in this period, you need to model maybe a 50% drop at some point as that might happen.
Looking further out, I use funds such as Vanguard LifeStrategy (40 in my case) to provide diversity.  I will be adding some longer term investments in maybe VLS 60/80 to a blend.
I would be diversifying immediately - i.e. tomorrow.  I simply couldn't sleep at night with what you are doing.

A few year's of cash and a diverse low cost portfolio of equities and bonds is not sexy, but it is sensible. Make sure you have a budget and a solid withdrawal strategy. I'm retired and I keep two year's of cash in the bank and have a 75/25 global index portfolio, but I have a DB pension and a rental property that covers my spending so I can take risk with my portfolio. Diversifying away from stocks and bonds is good, but it usually takes some early planning.

tigerspill

bostonerimus said:

tigerspill said:

GazzaBloom said:

What would you recommend as a sensible diversified portfolio for an assertive accumulation over say next 4-5 years? There are 330 funds I can choose from in my employers scheme with Standard Life and the highest performing are UK equities, US equities and UK property.

I am doing similar planning at the minute.  I have actually retired (April 2019) and my OH in 18 months.
In my plan, I am planning for CASH only (in ISAs, SIPP etc.) for 4-5 years out.  No investments.  If investing in this period, you need to model maybe a 50% drop at some point as that might happen.
Looking further out, I use funds such as Vanguard LifeStrategy (40 in my case) to provide diversity.  I will be adding some longer term investments in maybe VLS 60/80 to a blend.
I would be diversifying immediately - i.e. tomorrow.  I simply couldn't sleep at night with what you are doing.

A few year's of cash and a diverse low cost portfolio of equities and bonds is not sexy, but it is sensible. Make sure you have a budget and a solid withdrawal strategy. I'm retired and I keep two year's of cash in the bank and have a 75/25 global index portfolio, but I have a DB pension and a rental property that covers my spending so I can take risk with my portfolio. Diversifying away from stocks and bonds is good, but it usually takes some early planning.

bostonerimus said:

tigerspill said:

GazzaBloom said:

What would you recommend as a sensible diversified portfolio for an assertive accumulation over say next 4-5 years? There are 330 funds I can choose from in my employers scheme with Standard Life and the highest performing are UK equities, US equities and UK property.

I am doing similar planning at the minute.  I have actually retired (April 2019) and my OH in 18 months.
In my plan, I am planning for CASH only (in ISAs, SIPP etc.) for 4-5 years out.  No investments.  If investing in this period, you need to model maybe a 50% drop at some point as that might happen.
Looking further out, I use funds such as Vanguard LifeStrategy (40 in my case) to provide diversity.  I will be adding some longer term investments in maybe VLS 60/80 to a blend.
I would be diversifying immediately - i.e. tomorrow.  I simply couldn't sleep at night with what you are doing.

A few year's of cash and a diverse low cost portfolio of equities and bonds is not sexy, but it is sensible. Make sure you have a budget and a solid withdrawal strategy. I'm retired and I keep two year's of cash in the bank and have a 75/25 global index portfolio, but I have a DB pension and a rental property that covers my spending so I can take risk with my portfolio. Diversifying away from stocks and bonds is good, but it usually takes some early planning.

Not sexy is right.
I am still trying to understand my withdrawal strategy.  I know I likely have too much in cash.  I intend to not make any changes until I start my own DB pension when I turn 55 early next year.  I will likely start to plan some changes for after that time, but wont actually execute until that time.  I and very risk averse so will likely hold 4/5 years of cash and invest the rest.  I have been tracking every penny of spend for the past three years so know pretty much exactly what I will be spending.
I feel I am maybe too risk averse so may invest in some longer term investments with a higher equity split.  So splitting up into buckets (4/5 years cash; 6-15 years in something like VLS 40 and >15 in VLS 80.  
Currently I am trying to sort my OH's pension strategy for the next few years (in another thread).

Thrugelmir

GazzaBloom said:

What's a sensible growth rate to work with? all of the above funds appear to be doing better than 5% pa

Ultimately market performance will revert to the mean. Markets in the short term are based on human emotion. Longer term you cannot escape actual company fundamentals.