Stock market, property or both?

d_barratt

zcrat41 said:

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? 

She won't work for the first couple of years and will then likely return to part time work once the baby is old enough to go to nursery and then school. We're fortunate that both sets of our parents live within 5 mins of us, so no child care costs will be needed.

Down the line, we're not sure if Private school will be the route we go down or not, but i'm saving towards that in case. I personally didn't go to a private school but my partner did, so i'm on the fence with it. Regarding savings towards the baby's future, i've been weighing up whether to go down the pension route or a standard S+S ISA in my partner's name (as i'll max mine out annually), but haven't decided yet.

A JISA could also be an option, but i'm not sure i like the fact that the child automatically has full rights to the funds at 18.

dunstonh

cash and gilts are risk reduction assets.  Corp bonds can be to an extent but not so much as the moment.   
However, BG American is a higher risk US equity fund.  So, if you wanted to reduce risk, you could use less on BG American and go for a more core option.
All adviser built portfolios should have some governance behind them explaining how they are built.  This usually focuses on the asset weightings in particular when a portfolio of single sector funds is used.   So, you could ask for the background info on how the portfolio is built and why.

AnotherJoe

Please don't get a pension for your child. You are locking that money away for maybe 60 years when there's so much they might wish or need to do with it before then. Education, travel, health , job, house for starters. And for a real downer, there's a 10% or so chance they won't be around to collect it. And if they are, they might not be so grateful as you'd think, given perhaps that money would have let them buy a better house (or a house, full stop) or train for a new career,  or whatever. 

If you are worried about them having access at age 18 then just invest in your name, earmarked for them, and give it when you think they are ready. The extra tax you'll pay is the fee for having flexibility with it. 

AnotherJoe

To me that looks like a portfolio that would either be chosen by a very cautious person or an IFA looking to CYA (or CTA I suppose) 

Are you super cautious ? Did the IFA discuss your thoughts on risk and such like and you indicated you would be liable to panic and demand he sells everything as soon as it dips in value?

Thrugelmir

d_barratt said:

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.

Cash is simply a way of diversification. Many equities can be described as frothy currently. With the shape of any future recovery a complete unknown. 

coachman12

I agree with most other posters that your chosen portfolio definitely looks too unambitious. You can afford better O/P. 
I totally agree with staying clear of real estate----that did not work for me and was time-consuming  (which you said you didn't want) , plus it was not earning as much as shareholdings. 
Nor, as many on MSE know, am I a fan of ISAs. I prefer an independent  share portfolio , built up over time, based on as many sectors as possible, diversification being the ruling factor. I have reached a stage where I only have to "tinker" at the edges of the shares' portfolio now and trade infrequently-----though by chance I am currently making a rare purchase of 1,000 Unilever shares to fill a "gap" in my shares' portfolio. I counter any dangers of shares collapse by using NS&I savings : that is my portion of caution, and caution has to be catered for.
I am also a great believer in collecting gold and objets d'art.
Whilst I agree with much that has already been said in this thread, such as maximising your pension contributions (up to the tapered annual allowance) , emergency fund, have income protection and life assurance, I go for the share portfolio outside the ISA "shelter" together with "physical belongings" tucked away in safe deposit boxes. I get ridiculed on MSE for my way of managing and retaining wealth but it works for me.
Finally, you may already be in the exceptional category ( or perhaps in due course) where you need a personal wealth manager rather than the run of the mill IFA----an asset as valuable as anything else you have.  
You must do what works best for you O/P. You seem to have such a bright present and a stellar future if all proceeds as it should, and I wish you and your family a long, healthy and happy life.
 

d_barratt

AnotherJoe said:

Please don't get a pension for your child. You are locking that money away for maybe 60 years when there's so much they might wish or need to do with it before then. Education, travel, health , job, house for starters. And for a real downer, there's a 10% or so chance they won't be around to collect it. And if they are, they might not be so grateful as you'd think, given perhaps that money would have let them buy a better house (or a house, full stop) or train for a new career,  or whatever. 

If you are worried about them having access at age 18 then just invest in your name, earmarked for them, and give it when you think they are ready. The extra tax you'll pay is the fee for having flexibility with it. 

Makes sense, and agreed, this is why I've been on the fence. No doubting the tax benefits of getting a pension for the child, but locking money away for 60 years for a child not yet born isn't something that I will likely do.

d_barratt

AnotherJoe said:

To me that looks like a portfolio that would either be chosen by a very cautious person or an IFA looking to CYA (or CTA I suppose) 

Are you super cautious ? Did the IFA discuss your thoughts on risk and such like and you indicated you would be liable to panic and demand he sells everything as soon as it dips in value?

I'm not super cautious, and comments like this made me glad I shared this online. During my risk assessment I came out as moderate to adventurous (age and financial situation probably guides my risk tolerance) so I'm slightly surprised why the IFA has taken such a defensive position.

Something to inquire about for sure - i'm really committed to not selling my investment for a good 20-30 years!

AnotherJoe

coachman12 said:

Nor, as many on MSE know, am I a fan of ISAs. I prefer an independent  share portfolio , built up over time, based on as many sectors as possible, diversification being the ruling factor. 
 

I'm missing something there. Why can't you have that within an ISA ?

AnotherJoe

d_barratt said:

AnotherJoe said:

To me that looks like a portfolio that would either be chosen by a very cautious person or an IFA looking to CYA (or CTA I suppose) 

Are you super cautious ? Did the IFA discuss your thoughts on risk and such like and you indicated you would be liable to panic and demand he sells everything as soon as it dips in value?

I'm not super cautious, and comments like this made me glad I shared this online. During my risk assessment I came out as moderate to adventurous (age and financial situation probably guides my risk tolerance) so I'm slightly surprised why the IFA has taken such a defensive position.

Something to inquire about for sure - i'm really committed to not selling my investment for a good 20-30 years!

Maybe Dunstonh can comment but I have a feeling few IFAs would recommend a "really" adventurous portfolio because clients will say they want adventurous then complain when values fall.  Plus, the sort of people that really would be happy with adventurous are the sort who know what they want and won't use an IFA anyway so the IFA will have little experience with such portfolios. 

Or, more cynical View, say you were put into 2 or 3 global index funds, well then you might say to the IFA "I could have done that myself" whereas if you are ina selection of different funds some of which require reinvestment and rebalancing every now and again you might think your IFA is earning their money whereas you might not if they just leave things as is, even if that's best for you.