Investments for growth or income

Prism

Thrugelmir said:

Prism said:

Flim said:

Hi all and many thanks for your replies. I am about 3 years away from pensions which should provide more than enough income without the need for any further drawdown from investments, so  Probably looking at 8% drawdown per year until  then.
What return would you normally expect to get from equities?

For what its worth Vanguards current forecast for a global collection of equities over the next 10 years is around 6.5% per year, minus any fees on top.

With a good drawdown plan including equities, cash, maybe property and bonds you should be able to deal with almost anything the next 10 years throws at us.

6.5% ?  That's at the top end of expectations.  UK equity at 4% - 6%.  Global excluding UK for sterling investors 3.5% - 5.5%. Fixed income is forecast at 0.5% -1.5% .

They have adjusted those mid year but the UK September report is currently broken for me. The US one has ex-US at around 8.5%. Anyway, the July report for the UK is 6.5% for UK and 6% for global.
https://www.vanguardinvestor.co.uk/articles/latest-thoughts/markets-economy/mid-year-global-economic-outlook

Flim

Hi all and thanks for your contributions. I had thought about the option of taking out 3 years of “cash”, (no tax implications as all our investments are within an ISA wrapper). Just not sure where we would put it? We are not bothered about passing any of it on as we plan to leave the house, so would be happy to draw it all down over a suitable time scale.

stephenadarglas

Flim said:

Hi all and thanks for your contributions. I had thought about the option of taking out 3 years of “cash”, (no tax implications as all our investments are within an ISA wrapper). Just not sure where we would put it? We are not bothered about passing any of it on as we plan to leave the house, so would be happy to draw it all down over a suitable time scale.

And there's the crux - no one knows what the 'suitable timescale is' in most cases.

Flim

stephenadarglas said:

And there's the crux - no one knows what the 'suitable timescale is' in most cases.

..thanks for the input, but the timescale I am concerned about is the next 3 years, after which we have more flexibility as our pensions should be  providing sufficient income.

Steve182

Thrugelmir said:

Prism said:

Flim said:

Hi all and many thanks for your replies. I am about 3 years away from pensions which should provide more than enough income without the need for any further drawdown from investments, so  Probably looking at 8% drawdown per year until  then.
What return would you normally expect to get from equities?

For what its worth Vanguards current forecast for a global collection of equities over the next 10 years is around 6.5% per year, minus any fees on top.

With a good drawdown plan including equities, cash, maybe property and bonds you should be able to deal with almost anything the next 10 years throws at us.

6.5% ?  That's at the top end of expectations.  UK equity at 4% - 6%.  Global excluding UK for sterling investors 3.5% - 5.5%. Fixed income is forecast at 0.5% -1.5% .

I'm confused as to why the forecast (for say 10 years or more) for Global excluding UK for sterling investors should be as low as 3.5% - 5.5% which is lower than UK equities at 4-6%? That implies to me that there is an assumption that we in the UK are going to somehow regain lost ground?

Thrugelmir

Steve182 said:

Thrugelmir said:

Prism said:

Flim said:

Hi all and many thanks for your replies. I am about 3 years away from pensions which should provide more than enough income without the need for any further drawdown from investments, so  Probably looking at 8% drawdown per year until  then.
What return would you normally expect to get from equities?

For what its worth Vanguards current forecast for a global collection of equities over the next 10 years is around 6.5% per year, minus any fees on top.

With a good drawdown plan including equities, cash, maybe property and bonds you should be able to deal with almost anything the next 10 years throws at us.

6.5% ?  That's at the top end of expectations.  UK equity at 4% - 6%.  Global excluding UK for sterling investors 3.5% - 5.5%. Fixed income is forecast at 0.5% -1.5% .

I'm confused as to why the forecast (for say 10 years or more) for Global excluding UK for sterling investors should be as low as 3.5% - 5.5% which is lower than UK equities at 4-6%? That implies to me that there is an assumption that we in the UK are going to somehow regain lost ground?

UK is currently undervalued by some. There are some quality companies headquartered in the UK. Market capitalisation isn't everything.  Markets generally are polarised. Have been for some time. 

Prism

Steve182 said:

Thrugelmir said:

Prism said:

Flim said:

Hi all and many thanks for your replies. I am about 3 years away from pensions which should provide more than enough income without the need for any further drawdown from investments, so  Probably looking at 8% drawdown per year until  then.
What return would you normally expect to get from equities?

For what its worth Vanguards current forecast for a global collection of equities over the next 10 years is around 6.5% per year, minus any fees on top.

With a good drawdown plan including equities, cash, maybe property and bonds you should be able to deal with almost anything the next 10 years throws at us.

6.5% ?  That's at the top end of expectations.  UK equity at 4% - 6%.  Global excluding UK for sterling investors 3.5% - 5.5%. Fixed income is forecast at 0.5% -1.5% .

I'm confused as to why the forecast (for say 10 years or more) for Global excluding UK for sterling investors should be as low as 3.5% - 5.5% which is lower than UK equities at 4-6%? That implies to me that there is an assumption that we in the UK are going to somehow regain lost ground?

Thats mainly because on valuations the US market is more expensive than most other markets so as soon as you throw it into the mix the expected growth rate drops. Obviously its just a forecast and like many others worth considering but maybe taking with a pinch of salt.

Eco_Miser

Flim said:

Hi all and thanks for your contributions. I had thought about the option of taking out 3 years of “cash”, (no tax implications as all our investments are within an ISA wrapper). Just not sure where we would put it? We are not bothered about passing any of it on as we plan to leave the house, so would be happy to draw it all down over a suitable time scale.

Put one third in the best two-year fixed rate account you can find, for year three.

Put one third in the best one-year fixed rate account you can find, for year two.

Put the other third in the best easy access account, possibly putting some in interest paying current accounts and/or premium bonds if the return is higher.

Ceme3000

Flim said:

stephenadarglas said:

And there's the crux - no one knows what the 'suitable timescale is' in most cases.

..thanks for the input, but the timescale I am concerned about is the next 3 years, after which we have more flexibility as our pensions should be  providing sufficient income.

Do whatever helps you sleep at night. If that means keeping 3 years in cash / premium bonds then you should do that.