Reputable funds for retirement portfolio?

Aged

Retired but not yet reached official retirement age. Considering my options for 'the way forward'. Say I were to invest directly in a handful of funds? Reliable, reputable funds that will safeguard my capital as much as possible, but also give some income and growth? I know, in an ideal world and all that. Any suggestions? 

Sorcerer2018

More info would help, what's your risk profile? I suspect low risk from what you say. How long are you planning on holding the funds, and why funds, and not Trusts or ETFs? What area's do you want to buy, Bonds, Equities etc. Which countries are you interesting in? Also to point out no fund will safe guard your capital, you capital is always at risk, how much depends on what it invests in?

Aged

My natural tendency is to be risk averse. I thought funds because it seems straightforward and simple for a DIY investor. I'd imagine a mix across the sectors would be the way to go. Just bouncing ideas around at this stage. Obviously I'll need to do a lot of research before deciding. 

tropic_of_Username

What sort of income are you hoping to draw, as a percentage of capital available to invest? Is the aim for the capital invested to broadly keep up with inflation, after paying that income?

And do you have pensions starting in N years time, which would replace some of this income? Because one less risky alternative is to plug the gap until pensions start by deliberately spending part of your capital at a planned rate over N years. This may well go against all your instincts, but can make sense.

dunstonh

Aged said:

Retired but not yet reached official retirement age. Considering my options for 'the way forward'. Say I were to invest directly in a handful of funds? Reliable, reputable funds that will safeguard my capital as much as possible, but also give some income and growth? I know, in an ideal world and all that. Any suggestions? 

What investment strategy are you planning to run?  (hopefully not hit and hope with no structure).
What is the timescale and objective with the money?

Aged

tropic_of_Username said:

What sort of income are you hoping to draw, as a percentage of capital available to invest? Is the aim for the capital invested to broadly keep up with inflation, after paying that income?

And do you have pensions starting in N years time, which would replace some of this income? Because one less risky alternative is to plug the gap until pensions start by deliberately spending part of your capital at a planned rate over N years. This may well go against all your instincts, but can make sense.

I'm not sure; I do need some extra income right now so would be interested to start putting an illustration together to get an idea of what might be possible. Yes I'd hope that capital would keep up with inflation, but I realise that may not be doable. My state pension will kick in in a few years time. You are right, drawing down capital is one option but it does go against the grain.

Aged

dunstonh said:

What investment strategy are you planning to run?  (hopefully not hit and hope with no structure).
What is the timescale and objective with the money?

I'll be honest, I don't know anything about 'investment strategies' but hopefully I'll pick it up as I go along? Keep monitoring and not taking any big risks. All I'm aiming to do is use what assets I have to provide a reasonable income for myself until I pop my clogs, whilst still having the security and peace of mind of a 'nest egg' behind me. I thought things like 'Lifestyle Funds' might fit the bill. 

Linton

With moderately risky investments you could reasonably hope for a sustainable annual income of 3.5% of your initial pot increasing with inflation.  By moderately risky I mean perhaps 25% falls in pot value during a severe collapse in share prices.  So you choose the level of risk that best meets your needs - lower risk leads to lower income.  The figures quoted are purely intended to give you a feel for what is possible, but cannot be guaranteed.

The amount you draw down could be increased if you are prepared to be flexible by reducing your income when share prices are low.

The easiest way of investing at a given level of risk is to buy a multi-asset fund where the manager chooses an appropriate set of well diversified underlying investments with minimal management needed by you.  Often suggested ranges of funds of this type include HSBC Global Strategy, L&G Multi-Asset, and Vanguard Life Strategy.  There are several others.

Aged

Linton said:

With moderately risky investments you could reasonably hope for a sustainable annual income of 3.5% of your initial pot increasing with inflation.  By moderately risky I mean perhaps 25% falls in pot value during a severe collapse in share prices.  So you choose the level of risk that best meets your needs - lower risk leads to lower income.  The figures quoted are purely intended to give you a feel for what is possible, but cannot be guaranteed.

The amount you draw down could be increased if you are prepared to be flexible by reducing your income when share prices are low.

The easiest way of investing at a given level of risk is to buy a multi-asset fund where the manager chooses an appropriate set of well diversified underlying investments with minimal management needed by you.  Often suggested ranges of funds of this type include HSBC Global Strategy, L&G Multi-Asset, and Vanguard Life Strategy.  There are several others.

That sounds reasonable. So would I only need to invest in one multi-asset fund?

Linton

Aged said:

Linton said:

With moderately risky investments you could reasonably hope for a sustainable annual income of 3.5% of your initial pot increasing with inflation.  By moderately risky I mean perhaps 25% falls in pot value during a severe collapse in share prices.  So you choose the level of risk that best meets your needs - lower risk leads to lower income.  The figures quoted are purely intended to give you a feel for what is possible, but cannot be guaranteed.

The amount you draw down could be increased if you are prepared to be flexible by reducing your income when share prices are low.

The easiest way of investing at a given level of risk is to buy a multi-asset fund where the manager chooses an appropriate set of well diversified underlying investments with minimal management needed by you.  Often suggested ranges of funds of this type include HSBC Global Strategy, L&G Multi-Asset, and Vanguard Life Strategy.  There are several others.

That sounds reasonable. So would I only need to invest in one multi-asset fund?

From a purely financial/investment point of view one multi-asset fund chosen to meet your needs is sufficient.  However if I was looking for a multi-asset fund solution and had say £200K to invest I may well choose 2 different funds on 2 different platforms, just as insurance in the very unlikely case of problems - eg the platform or fund manager going bust and it taking a while for access to the fund to be restored.

Albermarle

I have three multi asset funds ( due to still having more than one pension running ) that in theory are all similar with similar equity levels . Their performance does follow a similar trend but is not exactly the same . Also some have a fixed equity content ( like Life Strategy ) and some are targeted to a risk level and some have different regional bias.
So this could be another argument for having more than one , if significant sums are being invested. 
As well as the ones already mentioned there is also; Blackrock Consensus; Fidelity Multi Allocator & Architas ( higher charge than the others ) + some of the Pension insurers ( Aviva, Scottish widows etc ) have their own brand multi asset funds.