Reputable funds for retirement portfolio?

Aged

Thanks for this info. I think it may be the way to go with cash currently held in NS&I Income Bonds, given that the interest rate will shortly be slashed from 1.15% to 0.7%.

Audaxer

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?

You would only need one multi asset fund as it would give you a globally diversified portfolio at a risk level of your choice. As Linton says if you have a significant sum to invest, it would be best to split the investment between a couple of multi asset funds. You will need to sell capital annually to provide your income, and I agree 3.5% a year increasing with inflation is a good level of income to take to ensure you don't run out of capital throughout retirement. 

AnotherJoe

Aged said:

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.

Is that because you ARE planning to take it with you ?
a few points to ponder. 

Take more initially  you can cut back when SP cuts in
Spend more overall initially because after 75 or so spending typically declines anyway

Aged

AnotherJoe said:

Is that because you ARE planning to take it with you ?
a few points to ponder. 

Take more initially  you can cut back when SP cuts in
Spend more overall initially because after 75 or so spending typically declines anyway

I guess that's just my cautious nature. I'm afraid that once I start spending capital, I'll run out or won't be able to generate sufficient income.

OldMusicGuy

Aged said:

I guess that's just my cautious nature. I'm afraid that once I start spending capital, I'll run out or won't be able to generate sufficient income.

So first thing you should do is to make a financial plan for 30 years plus to see what income you need to fund retirement. That way you can see how much you can afford to spend and determine how much you want to have left to pass on or fund care home fees.

The second thing to do is to educate yourself about how investment funds work. You need to understand the difference between active and passive funds, trackers, single sector funds, multi-asset funds and investment trusts. Just looking for a "reputable" fund isn't enough, because even the most "reputable" funds can end up in trouble - are you aware of the Woodford fiasco?

This book is a good place to start: "DIY Simple Investing: A Guide to Simple but Effective Low Cost Investing" by John Edwards. He also does one on DIY pensions. If you don't want to read and educate yourself, you should consider engaging an IFA (not a tied FA).

Aged

OldMusicGuy said:

So first thing you should do is to make a financial plan for 30 years plus to see what income you need to fund retirement. That way you can see how much you can afford to spend and determine how much you want to have left to pass on or fund care home fees.

The second thing to do is to educate yourself about how investment funds work. You need to understand the difference between active and passive funds, trackers, single sector funds, multi-asset funds and investment trusts. Just looking for a "reputable" fund isn't enough, because even the most "reputable" funds can end up in trouble - are you aware of the Woodford fiasco?

This book is a good place to start: "DIY Simple Investing: A Guide to Simple but Effective Low Cost Investing" by John Edwards. He also does one on DIY pensions. If you don't want to read and educate yourself, you should consider engaging an IFA (not a tied FA).

Thanks OMG. I already have an idea about how funds work and the different types etc. I have been using the services of an IFA for a number of years and tbh I'm not impressed, that's why I'm thinking of taking things into my own hands. Funny you should mention 'the Woodford fiasco' - that was the straw that broke the camel's back. I've written about the experience in another thread. I have to start somewhere, just trying to pluck up the courage to take the plunge. I'll check out the book. 

Audaxer

Aged said:

OldMusicGuy said:

So first thing you should do is to make a financial plan for 30 years plus to see what income you need to fund retirement. That way you can see how much you can afford to spend and determine how much you want to have left to pass on or fund care home fees.

The second thing to do is to educate yourself about how investment funds work. You need to understand the difference between active and passive funds, trackers, single sector funds, multi-asset funds and investment trusts. Just looking for a "reputable" fund isn't enough, because even the most "reputable" funds can end up in trouble - are you aware of the Woodford fiasco?

This book is a good place to start: "DIY Simple Investing: A Guide to Simple but Effective Low Cost Investing" by John Edwards. He also does one on DIY pensions. If you don't want to read and educate yourself, you should consider engaging an IFA (not a tied FA).

Thanks OMG. I already have an idea about how funds work and the different types etc. I have been using the services of an IFA for a number of years and tbh I'm not impressed, that's why I'm thinking of taking things into my own hands. Funny you should mention 'the Woodford fiasco' - that was the straw that broke the camel's back. I've written about the experience in another thread. I have to start somewhere, just trying to pluck up the courage to take the plunge. I'll check out the book. 

Smarter Investing by Tim Hale is also a very good book, mainly about the benefits of passive investing. 

Aged

Audaxer said:

Smarter Investing by Tim Hale is also a very good book, mainly about the benefits of passive investing. 

I think I have that one already, will dig it out, thanks.

cfw1994

I’d recommend watching the videos on http://kroijer.com/

gm0

McClung - Living off your money.  A fairly difficult read but has some depth to it and he supports what he says with the backtesting and simulation results he used to test it.  Is it the answer - no of course not. 

But as a guide to options on mechanics of what to do and and analysis of which options are better or worse than others I have yet to find better.  He is quite good at defining terms but the book is quite jargon rich if you are just starting out on investing topics.   Recommended.