Investment and Savings split

Huggy_Bear

Good evening

I'm in the process of sorting out my savings and investments. I am being cautious* with my investments and intend to invest a sum in the vanguard LS 40% and I've just put a small sum in Lindsell Train Global Equity and shortly Fundsmith (small sum) - the largest proportion will be in VLS and the remaining in fixed term savings accounts.

As a cautious investor what % do you think is sensible to hold in investments and FTS - currently its 33% savings and 66% Investment (which I think is the wrong way round hence my need to sort things out)

I intend to invest for 5 years + and the aim of my portfolio is to diversify funds. I am a beginner with investment

Many thanks

*I've had my fingers burnt by Woodford

pip895

I would say you are in cautious territory already.  If we assume that your LT & Fundsmith funds take your equity up to 50% (from the 40% in LS40) then you have 33% Cash, 33% Bonds & 33% Equity.  
Whether this is sensible depends on what you intend to do in 5 years + and how much flexibility you have for example if in 6 years it turns out to be a poor time to cash in investments.

Linton

I would not look at it as a simple % split.  in my view the more important factor is when you want to access the money.  Anything you need in the next 5 years or so should be in cash, money needed in 5-10  years say could be in cautious investments, and the long term could reasonably be in equities.  The time periods arent cast in stone, I just chose them as an example of something reasonable.  So your 5years+ is a bit of an awkward time frame.  Can you split it further?

Having your fingers burnt by Woodford should not be a driving factor for your strategy since the circumstances were specific to that fund and something you would be very unlucky to meet again.  The risks with that fund very different to those one tries to ameliorate by investing in bonds and cash.

Thrugelmir

Investments at least aim to hold for 10 years and longer. A shorter timeframe may prove disappointing. If you have a specific requirement for the money.  Hold in cash savings what you actually need. Don't be fixated on %'s. Little point in having to borrow money to meet short term needs. 

Huggy_Bear

pip895 said:

I would say you are in cautious territory already.  If we assume that your LT & Fundsmith funds take your equity up to 50% (from the 40% in LS40) then you have 33% Cash, 33% Bonds & 33% Equity.  
Whether this is sensible depends on what you intend to do in 5 years + and how much flexibility you have for example if in 6 years it turns out to be a poor time to cash in investments.

Thank you thats been helpful so I've now considered the bond element as well