FIREside Chats

OhIJustLostMyShoe

ElmoR said:

@greenbee @taka @edinburgher   thank you! 

Ed - what a simple, easy to understand explanation. Have you considered writing a short guide for the novice?

I do have the USS fund performance info - I want to compare it to other funds/pension schemes. I suspect I'm making it more complicated than it need be - one of the USS funds I'm in ended at minus 6% compared to the previous year (they valued on March 30th 2020). To compare it with others, you would therefore need to look at March 30th 2020 and see how up/down the others were. Maybe it means having to wait until next year/quarter? and seeing how they are doing then? Presumably every pension fund had taken a kicking on March 30th 2020.

This probably isn't the best date/year to be doing comparisons

Yes, March 2020 is a very strange time to use as a benchmark!

Bear in mind as well that directly comparing the return of a fund can be a bit of a fool's errand - Hale explains it better than I will.

Ultimately, you buy a fund to do a job.  If that's to protect you from a downturn, then you'd be a bit disappointed if it collapsed during a recession, irrespective of how great it had done in the previous 5 years.  As an analogy, if you asked a car dealer for something that could tow a 3 ton trailer, and they sold you a car that couldn't tow anything, the fact that it's got the highest top speed on the forecourt probably wouldn't cheer you up much.

If you sit there and compare funds you'll find all sorts of anomalies due to factors you weren't even aware of.  For instance, a fund tracking the US will look fantastic if sterling collapses.  That doesn't mean that when you retrospectively view funds, the US fund was better managed than your UK government bond fund.

Ideally from Hale you know what your strategy and objective is, and then you can see which funds (based on their objectives) fit each part of your strategy best.  For me, the US has outperformed the rest of my pension by miles, but I won't be piling into the US as a result.  I've picked my geographic exposure split for a reason already.

We've seen this recently with Scottish Mortgage Trust (SMT) which has been hailed for a stratospheric rise this year.  But my understanding is that they're very heavily into Tesla and Amazon, which have also been stratospheric.  I cannot imagine that it would truly be suitable for anyone to have their entire net worth tied up in SMT, but if you looked purely at returns it could well come across that way!

edinburgher

£59.08 paid into my SIPP (£73.85 after tax relief). I think that's all my tinkering until payday (roll on the 1st)

Suffolk_lass

Tilly tidied my accounts - £19.95 from one, £31,46 from the other. Bought £250 of PB (sub for Regular Saver) and checked the ISAs (one each and a managed one of mine) - all a bit more than they have been. 

While reading the finance pages (probably The Thunderer on Saturday), read something about one of my funds that I don't like. Rather than wait for another Woodford-fund scenario I need to keep an eye on things and potentially sell, at least some, to reduce exposure. I always knew it was more risky than other funds - need to check the make up of the fund I think - not sure if this meandering paragraph helps anyone else but DH glazes over if I start talking to him about any of this.

ElmoR

@Suffolk_lass May I ask what the warning signs are that you have spotted while reading?

Suffolk_lass

ElmoR said:

@Suffolk_lass May I ask what the warning signs are that you have spotted while reading?

@ElmoR Scottish Mortgage Trust (grown significantly this year) are heavily invested in crypto-currencies and Tesla. A bit high risk for me as a non-working pre-retiree - off to discuss with DH...

Top 10 Holdings

• 7%TENCENT HLDGS LIMITED
• 6%ILLUMINA INC
• 6%AMAZON.COM INC
• 5%TESLA INC
• 5%NIO
• 5%ALIBABA GROUP HLDG LTD
• 5%MEITUAN
• 4%ASML HOLDING NV
• 4%MODERNA INC
• 3%DELIVERY HERO SE

And top 10 by sector

• 40%Consumer Services
• 19%Consumer Goods
• 19%Technology
• 12%Health Care
• 7%Financials
• 3%Industrials
• 0%Money Market
• 0%Basic Materials
• 0%Fixed Interest

Karmacat

That's very interesting, SL, thanks for that.  

ElmoR

Thanks SL, it's interesting to hear folks thinking out loud.

Since the thread started, I think I may have gone around in circle at least twice now. Indecision paralysis switched with rapid changing my mind on what to do

The current thinking is this...the payments to the work pension via salary sacrifice is going up (to where I had it two months ago and changed my mind and decreased it! Up, down, up, down...). I'm not sure what that will grow into but am assuming that the work pension scheme keeps going in some format or another and this route takes full advantage of tax relief and the no fees involved (they are paid by the employer), meaning more chance of accumulation (while ignoring the ****storm surrounding the whole scheme). The main bulk of any remaining investment available money is going into the Vangu@rd TRA 2030, which is two years after I reach 60, the date of hopeful early retirement. A much smaller amount (about a tenth?) is going to trickle into a small number of investment trusts via H&L and I shall refer to this as my gambling pot. There is an emergency pot in a terrible interest savings account. Plus a bit of money in a Vangu@rd LS 60:40 ISA that I may try to add bits to once I get over the initial change of the salary reduction due to the OPs.

Have now read Tim Hale's book yet again - it doesn't stick very well. But I think I've now covered off the main principles he recommends? The bulk will now be in either the work pension (DB/DC hybrid) or the Van SIPP. Next part - he says don't keep checking them or worrying about them. Check them each year, or less. Not sure I can manage that?? What do your all do? How frequently do you monitor?

Thanks for listening (while I plod round in circles wearing out the carpet), ElmoR xx

Grogged

I think it depends on what you're invested in.
If it's accumulation funds, then you don't really need to look at them regularly.
Especially if you're auto investing.
My main pension is in ETF funds, which pay dividends.
As such I look every month and use the free reinvesting option to keep the portfolio in balance.
ETA that this is also cheaper than dividend reinvestment.

Zola.

Nice thread!

Why?

Safety, security, and a choice. I work in cloud computing, and the world is changing at a frightening pace. I was previously in web development for 10 years. I eventually got bored of that and the continuous upkeep needed to stay on top of your game.
3 years into cloud computing / CRM and it's much the same, although I find it more rewarding and refreshing, it still needs 100% effort every day and an appetite to keep developing and learning. 

I am in my mid-30s. In 10, 20 years' time will I still want to be doing IT work? For now, I would say maybe yes, but then who knows?
Having enough built up in investments gives the freedom to choose, money to support your kids, the freedom to make a change and not impact your family. 

How much?

It will be more than we all think, probably. Inflation is a real enemy and if you consider the cost of groceries from this year vs last year, it's a lot more than what is being reported in the news etc. I see so many groceries that I buy every week that were a quid last year, that are now 1.50 for example. This kinda terrifies me, to be honest. 

25 times annual spend is what I am aiming for - after the mortgage is cleared.

How am I doing it?

Vanguard Index Funds in ISAs, Private Pensions, Overpaying the Mortgage and a small bit of crypto (FOMO)

How long?

I have no idea... 20 years?  The key thing for me is eventually getting to the 'forever home', clearing that mortgage, and investing heavily as well, whilst giving my family the best life possible... no pressure!
 

South_coast

I keep hearing about food inflating in price, but I must be very fortunate that it's stuff I don't buy - can't think of any of my groceries that have gone up 🤔?