portfolio equity allocation

eastmidsaver

hi -  i just did a portfolio analysis of my Stocks & Shares ISA on the HL Wesbite.   it was quite interesting to look at the breakdowns.
however, what i noticed is my portfolio has roughly 79% equity.
my pensions are split different platforms, but i am guessing it is roughly a 67% equity split at the moment.
considering i am in late 30's ,  would you say these are OK equity allocations?

Type_45

I'm assuming the remainder is in bonds? (As oppose to GOLD/SILVER ETFs or cash or property etc)

It sounds like it's the kind of split which is recommended by many (ie, 60-80% enquites).



Personally I'm more risk tolerant, plus I have no immediate need for my savings, so I prefer more in equities. 

Albermarle

70 to 80% equities is fine as long as you think you can tolerate potential short term drops in your funds of say 30%.
If you think you would panic and take the money out , especially when it seemed it might fall further , then you should reduce the equity %.
If you are more highly risk tolerant and realise it is a long term strategy then you could increase the %.

Alexland

It really depends on when you intend to withdraw the ISA money but if it's at least 10-15 years away then going around 80% equities should be fine if you can tolerate the drops. On the pension that seems a bit conservative for your age and like others I would prefer to take more volatility and bigger crashes for greater likely long term reward.

Holding a percentage in bonds isn't the only way to manage risk there are other options such as using more defensive equity assets (if they are reasonably priced) or another less talked about method is just accumulating far more money that you are likely to need so the risk of it not meeting your objectives is lower.

eastmidsaver

thanks for the comments.
it was interesting doing the analysis on HL website, as before i never really knew how it was split between equities and other assets. 
i think the remaining is mainly bonds,  but also some other assets as well.
i do agree that my SIPP seems lower than i thought it was in equities, and i will probably look to increase the the allocation. one of the funds was a default fund from a previous employer - but i think that fund is quite low in the equity split which is maybe why.

bostonerimus

The question is "are you ok with your equity allocation"? Is it right for your investment goals and can you sleep at night? You need to understand the level of risk and return that your financial plan requires. Most people don't have an idea of that and just want "the best investment" or "as much return as I can get". So think about the rate of return you actually require and the risk you are prepared to take. Failing that you could fall back on the old "your percentage of bonds should be equal to your age", so for you that would be roughly 40%.

Moe_The_Bartender

The old adage about holding a percentage of bonds equal to your age is exactly that - old. Bonds are rightly described as a 'return free risk' nowadays. The OP hasn’t said what his investment horizon is but if it’s ten or more years, he should be 100% equities.

Thrugelmir

Moe_The_Bartender said:

The old adage about holding a percentage of bonds equal to your age is exactly that - old. Bonds are rightly described as a 'return free risk' nowadays. The OP hasn’t said what his investment horizon is but if it’s ten or more years, he should be 100% equities.

Some Government bonds have never been any different. I'm far from convinced that many opting these days for 100% equity portfolios are prepared for the potential volatility that lies ahead. 

NedS

Thrugelmir said:

Moe_The_Bartender said:

The old adage about holding a percentage of bonds equal to your age is exactly that - old. Bonds are rightly described as a 'return free risk' nowadays. The OP hasn’t said what his investment horizon is but if it’s ten or more years, he should be 100% equities.

Some Government bonds have never been any different. I'm far from convinced that many opting these days for 100% equity portfolios are prepared for the potential volatility that lies ahead. 

I don't think you'll ever really know until you live through it.

Taper Tantrum: Panicked and sold everything

Brexit: Held my nerve and my investments recovered

Covid: Fill your boots, bargains abound

Thrugelmir

NedS said:

Thrugelmir said:

Moe_The_Bartender said:

The old adage about holding a percentage of bonds equal to your age is exactly that - old. Bonds are rightly described as a 'return free risk' nowadays. The OP hasn’t said what his investment horizon is but if it’s ten or more years, he should be 100% equities.

Some Government bonds have never been any different. I'm far from convinced that many opting these days for 100% equity portfolios are prepared for the potential volatility that lies ahead. 

I don't think you'll ever really know until you live through it.

Taper Tantrum: Panicked and sold everything

Brexit: Held my nerve and my investments recovered

Covid: Fill your boots, bargains abound

You've a lot more to experience yet in your investing lifetime. The saying "Financial disasters happen when the last person who can remember what went wrong last time has left the building", springs to mind. 

Alexland

The problem with employer default fund choices is they are trying to balance the need for growth against keeping a reasonably stable valuation such that the letter they send each year shows a growing prediction of future income.
Members may find it hard to plan or maintain confidence in scheme if the letters are giving completely different numbers each year.
However as a private investor with some understanding and expectation of equity market volatility its possible to see through current valuations because you know when fundamentals are high future returns are likely to be lower and when the market has dropped future returns are likely to be higher so whatever happens to the unit prices over the short term you should be able to maintain a fairly static forecast of future income.