Stock market, property or both?

csgohan4

d_barratt said:

Hi all,
Thanks for the comments - super useful.
In summary, it seems that my best options are as follows:

• Increase pension contributions
• Max out ISA's
• Invest in relevant funds
• Be careful about BTL - not the best investment for my circumstances

I have a few grand in an HL account - specifically in a Lindsell Train Global Equity fund. Moving forward, typically are mutual funds, index funds or ETF's a more effective vehicle for capital growth and a steadily increasing income?
Thanks again

Crystal ball time, who knows, all three have their strengths but with the right trusts/funds, and have a strategy to hand, it will be the long term. 

Have a look at the monevator website for a good explanation

dunstonh

I have a few grand in an HL account - specifically in a Lindsell Train Global Equity fund. Moving forward, typically are mutual funds, index funds or ETF's a more effective vehicle for capital growth and a steadily increasing income?

"mutual funds" is a term used more in the US rather than the UK.  Some have tried to use it over here but its best not to.

It can also create confusion. For example you say mutual funds, index funds or ETFs.  Well an index fund could be a mutual fund or an ETF.

There are also a number strategies to utilise a steadily increasing income and income is not necessarily required.  Total return can be very effective.  It is easier to run a balanced portfolio with total return than it is one that focuses on income.

d_barratt

Hi all,
It's been a few weeks since I replied to this thread, so I wanted to provide a quick update. I took the advice on board to speak to an IFA, and we've done a few things that I'd love to have your feedback on - primarily around my fund selection and % allocation.

1) Significantly increased monthly pension contributions.
2) Set-up investment account for S+S ISA (maxed out ISA this year so normal investment account with Aviva for now), with the following allocation:
- BlackRock Cash D Acc: 9%
- BlackRock Corporate Bond D Acc: 15%
- Rathbone Global Opportunities I Acc: 23%
- Baillie Gifford American B Acc: 23%
- Liontrust Income Acc: 15%
- Santander Equity Income R Acc: 15%
I have put a lump sum in to begin with and will be contributing £1,500 / month thereafter.

3) Emergency cash will be put into premium bonds
4) I decided to do this one - overpaying mortgage by £500 / month. I know this isn't the best use of the money in financial terms, but I like the positive psychological element of paying it down more quickly.

Moose1960

Lots of recommendations to increase pension contributions, but at earnings in excess of £200k OP is at or close to the full taper level, so limited to contributions of £10k per year. At £800/month he is already pretty much maxing out.

d_barratt

Moose1960 said:

Lots of recommendations to increase pension contributions, but at earnings in excess of £200k OP is at or close to the full taper level, so limited to contributions of £10k per year. At £800/month he is already pretty much maxing out.

Thanks for your response. The understanding I got from my IFA is that I have some previous years allowances that I hadn't used up, so can eat into them!

AnotherJoe

d_barratt said:

Hi all,
It's been a few weeks since I replied to this thread, so I wanted to provide a quick update. I took the advice on board to speak to an IFA, and we've done a few things that I'd love to have your feedback on - primarily around my fund selection and % allocation.

1) Significantly increased monthly pension contributions.
2) Set-up investment account for S+S ISA (maxed out ISA this year so normal investment account with Aviva for now), with the following allocation:
- BlackRock Cash D Acc: 9%
- BlackRock Corporate Bond D Acc: 15%
- Rathbone Global Opportunities I Acc: 23%
- Baillie Gifford American B Acc: 23%
- Liontrust Income Acc: 15%
- Santander Equity Income R Acc: 15%
I have put a lump sum in to begin with and will be contributing £1,500 / month thereafter.

3) Emergency cash will be put into premium bonds
4) I decided to do this one - overpaying mortgage by £500 / month. I know this isn't the best use of the money in financial terms, but I like the positive psychological element of paying it down more quickly.

Fair enough on the mortgage plus you are restricted on what you can do with your pension anyway in terms of your earnings. 

My immediate response to your portfolio is At your age I think your choice of investments is far too cautious. You have plenty of time to recover from Market falls, so I would not have the bond funds or the cash. 
Neither would I choose income funds. The trouble with income funds is that the underlying investments tend to be companies that have higher dividends and that rules outa whole section of the stock market, eg fast growing companies that Pay small or no dividends.  Think Tesla Apple amazon etc.
Also in your case you don't need an income so all you will be doing is reinvesting so why choose an income fund and then reinvest? At the least you could have an accumulating fund that does that for you. Anyway, bottom line your investment choices are too cautious. They are more like I'd expect to see some old f**t like me choose ! Or to put it another way if you asked a random selection of (people who know about investments) to guess about the person was who had a portfolio like yours , they'd probably say a cautious person aged 50+ looking towards retirement in a few years. 

One last thing, why the cash account? Unless it's specifically to buy some more investments after a crash Or soon, then if you maintain that ratio into the future it will simply act as a boat anchor on your investment growth. It would  be better in premium bonds not your pension. 

HarryGray

d_barratt said:

Hi all,
It's been a few weeks since I replied to this thread, so I wanted to provide a quick update. I took the advice on board to speak to an IFA, and we've done a few things that I'd love to have your feedback on - primarily around my fund selection and % allocation.

1) Significantly increased monthly pension contributions.
2) Set-up investment account for S+S ISA (maxed out ISA this year so normal investment account with Aviva for now), with the following allocation:
- BlackRock Cash D Acc: 9%
- BlackRock Corporate Bond D Acc: 15%
- Rathbone Global Opportunities I Acc: 23%
- Baillie Gifford American B Acc: 23%
- Liontrust Income Acc: 15%
- Santander Equity Income R Acc: 15%
I have put a lump sum in to begin with and will be contributing £1,500 / month thereafter.

3) Emergency cash will be put into premium bonds
4) I decided to do this one - overpaying mortgage by £500 / month. I know this isn't the best use of the money in financial terms, but I like the positive psychological element of paying it down more quickly.

9% of your allocation is in a cash fund? Lol

Thrugelmir

HarryGray said:

d_barratt said:

Hi all,
It's been a few weeks since I replied to this thread, so I wanted to provide a quick update. I took the advice on board to speak to an IFA, and we've done a few things that I'd love to have your feedback on - primarily around my fund selection and % allocation.

1) Significantly increased monthly pension contributions.
2) Set-up investment account for S+S ISA (maxed out ISA this year so normal investment account with Aviva for now), with the following allocation:
- BlackRock Cash D Acc: 9%
- BlackRock Corporate Bond D Acc: 15%
- Rathbone Global Opportunities I Acc: 23%
- Baillie Gifford American B Acc: 23%
- Liontrust Income Acc: 15%
- Santander Equity Income R Acc: 15%
I have put a lump sum in to begin with and will be contributing £1,500 / month thereafter.

3) Emergency cash will be put into premium bonds
4) I decided to do this one - overpaying mortgage by £500 / month. I know this isn't the best use of the money in financial terms, but I like the positive psychological element of paying it down more quickly.

9% of your allocation is in a cash fund? Lol

Usefull to have some ammunition at the ready. 

zcrat41

You don't mention your wife in your update. Will she be returning to work or a SAHM. 

Once baby arrives look at paying into a pension for it. Could be the greatest gift you ever give with the benefit of compound interest! 

What are your thoughts on child costs? Childcare? Private school? 

d_barratt

Thrugelmir said:

HarryGray said:

d_barratt said:

Hi all,
It's been a few weeks since I replied to this thread, so I wanted to provide a quick update. I took the advice on board to speak to an IFA, and we've done a few things that I'd love to have your feedback on - primarily around my fund selection and % allocation.

1) Significantly increased monthly pension contributions.
2) Set-up investment account for S+S ISA (maxed out ISA this year so normal investment account with Aviva for now), with the following allocation:
- BlackRock Cash D Acc: 9%
- BlackRock Corporate Bond D Acc: 15%
- Rathbone Global Opportunities I Acc: 23%
- Baillie Gifford American B Acc: 23%
- Liontrust Income Acc: 15%
- Santander Equity Income R Acc: 15%
I have put a lump sum in to begin with and will be contributing £1,500 / month thereafter.

3) Emergency cash will be put into premium bonds
4) I decided to do this one - overpaying mortgage by £500 / month. I know this isn't the best use of the money in financial terms, but I like the positive psychological element of paying it down more quickly.

9% of your allocation is in a cash fund? Lol

Usefull to have some ammunition at the ready. 

It's an interesting point though, so i'll take that and ask the IFA the question. I suspect his answer is to have a safety net during this period, but considering I have emergency cash and a regular income I probably don't need the safety net too much.