Using Wealth Preservation Trust as alternative to cash.

AnotherJoe

I had one, can't recall which I did post about it at the time, but Over a year and a bit its performance was underwhelming, generally I was losing out even if just by a % or 2, and that was in a  growing market, and my own investments were doing much better so I sold it. 

83705628

Albermarle said:

tcallaghan93 said:

Why not just buy what they buy? I think they're both basically a mix of government nominal and inflation linked bonds and some equity. VMVL or VMID aren't comparable but they may fulfil that kind of function.

Because I prefer to pay for someone who knows what they are doing . These mainly defensive portfolios can be quite complicated and in any case the fund charge is not that high and as it is an IT you have almost no platform charge with certain platforms. 

/
Well that goes back to the told active/passive debate. I don't trust the judgement of other human beings.

BritishInvestor

green_man said:

Just wondering if people tend to use Wealth Preservation Trusts ( I.e PNL (Personal Assets) and CGT (Capital Gearing Trust)) as a way of reducing the amount you hold in cash?

Further to the thread on amount of cash buffer to hold within your SIPP/pension or similar.  If let’s say you had decided you were going to hold 3 years withdrawals in cash,  Would instead holding 12 months cash and 2 years PNL  increase your risk profile significantly? Does anyone do this?

In the recent crash (March 2020) PNL lost around 15% but only very short term, it had gained around 10% in the previous year (cash would have given maybe 1%) 

We've already covered the potential downsides of holding too much cash. I'm not clear what problem you are attempting to solve. 
To minimise overall portfolio falls in choppy markets?
To ensure your portfolio outlines you?

green_man

BritishInvestor said:

green_man said:

Just wondering if people tend to use Wealth Preservation Trusts ( I.e PNL (Personal Assets) and CGT (Capital Gearing Trust)) as a way of reducing the amount you hold in cash?

Further to the thread on amount of cash buffer to hold within your SIPP/pension or similar.  If let’s say you had decided you were going to hold 3 years withdrawals in cash,  Would instead holding 12 months cash and 2 years PNL  increase your risk profile significantly? Does anyone do this?

In the recent crash (March 2020) PNL lost around 15% but only very short term, it had gained around 10% in the previous year (cash would have given maybe 1%) 

We've already covered the potential downsides of holding too much cash. I'm not clear what problem you are attempting to solve. 
To minimise overall portfolio falls in choppy markets?
To ensure your portfolio outlines you?

I guess the problem you are trying to solve is, not holding too much cash.  Can you hold less cash by holding instead PNL (or similar) .  So you are trying to ensure you don’t have to draw down on equities that have just crashed, without having to hold Too much cash.

The problem with holing something like HSBC Global Strategy (which is my plan) as a core holding is that in the event of a crash you may still need to liquidate some stock including the equity element. So without holding separate equity and bond funds holding a largish cash holding mitigates this. 

BritishInvestor

green_man said:

BritishInvestor said:

green_man said:

Just wondering if people tend to use Wealth Preservation Trusts ( I.e PNL (Personal Assets) and CGT (Capital Gearing Trust)) as a way of reducing the amount you hold in cash?

Further to the thread on amount of cash buffer to hold within your SIPP/pension or similar.  If let’s say you had decided you were going to hold 3 years withdrawals in cash,  Would instead holding 12 months cash and 2 years PNL  increase your risk profile significantly? Does anyone do this?

In the recent crash (March 2020) PNL lost around 15% but only very short term, it had gained around 10% in the previous year (cash would have given maybe 1%) 

We've already covered the potential downsides of holding too much cash. I'm not clear what problem you are attempting to solve. 
To minimise overall portfolio falls in choppy markets?
To ensure your portfolio outlines you?

I guess the problem you are trying to solve is, not holding too much cash.  Can you hold less cash by holding instead PNL (or similar) .  So you are trying to ensure you don’t have to draw down on equities that have just crashed, without having to hold Too much cash.

The problem with holing something like HSBC Global Strategy (which is my plan) as a core holding is that in the event of a crash you may still need to liquidate some stock including the equity element. So without holding separate equity and bond funds holding a largish cash holding mitigates this. 

I think it would be first worthwhile understanding whether you have a genuine problem before thinking about potential solutions. If you were to stick with your original plan (HSBC or similar), given your retirement plans and required income from the pot, what are the chances of that running out in your lifetime assuming you made periodic withdrawals irrespective of what the market was doing at the time?

cloud_dog

Isn't the issue here the term 'too much' as opposed to the word 'cash'?

You need to decide and be comfortable with what time period the cash emergency/negative growth holding needs to cover.  Once you have decided on that, and come to terms with it then the concept of 'too much' is mute; it is what it is for the purpose it is designed for.

My basic understanding from posters on here who are thinking about or who are doing much the same is that they tend to hold it outside of the pension wrapper in savings accounts so that they can at least mitigate the effects of inflation on this money as much as possible.

green_man

Deleted_User said:

Have a watch of this video, this got me really thinking about buckets of different risk etc Very informative
@16:12 they discuss how many years of cash should be in your strategy
 https://www.youtube.com/watch?v=NdcAjIu8W1w&t=1234s

Yeh a few good points in there. 

In fact as they suggest I will be balancing my cash element with a higher risk element of small companies and emerging markets as Global Strategy is very light in this area.  In addition I have an additional pot for 20+ years in a fund of 85% equities.

So maybe in my case the Cash element should not be as much worry from a drag perspective due to the higher risk elements.    Overall though this is my portfolio for the next 20 years and will just consist of (currently planned) 4 elements:
Cash 15%
HSBC GS (Balances) 70%
small company fund 7.5%
emerging market fund 7.5%

criticise as you see fit

green_man

BritishInvestor said:

green_man said:

BritishInvestor said:

green_man said:

Just wondering if people tend to use Wealth Preservation Trusts ( I.e PNL (Personal Assets) and CGT (Capital Gearing Trust)) as a way of reducing the amount you hold in cash?

Further to the thread on amount of cash buffer to hold within your SIPP/pension or similar.  If let’s say you had decided you were going to hold 3 years withdrawals in cash,  Would instead holding 12 months cash and 2 years PNL  increase your risk profile significantly? Does anyone do this?

In the recent crash (March 2020) PNL lost around 15% but only very short term, it had gained around 10% in the previous year (cash would have given maybe 1%) 

We've already covered the potential downsides of holding too much cash. I'm not clear what problem you are attempting to solve. 
To minimise overall portfolio falls in choppy markets?
To ensure your portfolio outlines you?

I guess the problem you are trying to solve is, not holding too much cash.  Can you hold less cash by holding instead PNL (or similar) .  So you are trying to ensure you don’t have to draw down on equities that have just crashed, without having to hold Too much cash.

The problem with holing something like HSBC Global Strategy (which is my plan) as a core holding is that in the event of a crash you may still need to liquidate some stock including the equity element. So without holding separate equity and bond funds holding a largish cash holding mitigates this. 

I think it would be first worthwhile understanding whether you have a genuine problem before thinking about potential solutions. If you were to stick with your original plan (HSBC or similar), given your retirement plans and required income from the pot, what are the chances of that running out in your lifetime assuming you made periodic withdrawals irrespective of what the market was doing at the time?

Good point.  I don’t THINK I have a genuine problem as such, but you can always think of a scenario that would make you uncomfortable, but if we have 50% crash sustained for 5+ years lots of strategies would struggle and we would all be in annuities.

green_man

cloud_dog said:

Isn't the issue here the term 'too much' as opposed to the word 'cash'?

Absolutely it is ‘too much’.  But too much could be any cash (see my posts on the ‘how much cash’ thread). In almost all scenarios no cash is the most advantageous long term strategy. But you need a hell of a nerve to commit to it!! 

I have been convinced that cash is worthwhile it’s just how to use it effectively. Hence my - can I reduce it by using PNL!?

BritishInvestor

green_man said:

BritishInvestor said:

green_man said:

BritishInvestor said:

green_man said:

Just wondering if people tend to use Wealth Preservation Trusts ( I.e PNL (Personal Assets) and CGT (Capital Gearing Trust)) as a way of reducing the amount you hold in cash?

Further to the thread on amount of cash buffer to hold within your SIPP/pension or similar.  If let’s say you had decided you were going to hold 3 years withdrawals in cash,  Would instead holding 12 months cash and 2 years PNL  increase your risk profile significantly? Does anyone do this?

In the recent crash (March 2020) PNL lost around 15% but only very short term, it had gained around 10% in the previous year (cash would have given maybe 1%) 

We've already covered the potential downsides of holding too much cash. I'm not clear what problem you are attempting to solve. 
To minimise overall portfolio falls in choppy markets?
To ensure your portfolio outlines you?

I guess the problem you are trying to solve is, not holding too much cash.  Can you hold less cash by holding instead PNL (or similar) .  So you are trying to ensure you don’t have to draw down on equities that have just crashed, without having to hold Too much cash.

The problem with holing something like HSBC Global Strategy (which is my plan) as a core holding is that in the event of a crash you may still need to liquidate some stock including the equity element. So without holding separate equity and bond funds holding a largish cash holding mitigates this. 

I think it would be first worthwhile understanding whether you have a genuine problem before thinking about potential solutions. If you were to stick with your original plan (HSBC or similar), given your retirement plans and required income from the pot, what are the chances of that running out in your lifetime assuming you made periodic withdrawals irrespective of what the market was doing at the time?

Good point.  I don’t THINK I have a genuine problem as such, but you can always think of a scenario that would make you uncomfortable, but if we have 50% crash sustained for 5+ years lots of strategies would struggle and we would all be in annuities.

It might be worth ensuring you are comfortable with 85% equity exposure, especially with potential extra volatility of EM and small cap if we were to have, for example, a 5 year return such as 1916-1920.
Do you need that much equity exposure to ensure you don't run out of money?

https://finalytiq.co.uk/lessons-118-years-capital-market-return-data/