Portfolio Critique Help

flopsy1973

Hi Everyone
Sorry been a while since responding to this, still looking at some options for the HL portfolio transfer, but have realised i have more than i thought 425K sitting in various notice, cash ISA accounts. This i urgently need to get working for me to keep ahead of inflation etc I was thinking about some of the the wealth preservation funds CGT or Troy as a starting point ???

Linton

flopsy1973 said:

Hi Everyone
Sorry been a while since responding to this, still looking at some options for the HL portfolio transfer, but have realised i have more than i thought 425K sitting in various notice, cash ISA accounts. This i urgently need to get working for me to keep ahead of inflation etc I was thinking about some of the the wealth preservation funds CGT or Troy as a starting point ???

I use both CGT and Troy Trojan to provide safe-ish inflation matching with anything beyond that a bonus.  They seem to me to be the best option for that purpose now that very safe bonds provide very low returns,.Whether they are suitable for you depends on your objectives and how those funds fit in with the rest of your investments.

I would have thought £425K of such funds was unnecessarily cautious.

flopsy1973

 I agree I was just thinking for some of this,  My objectives are to retire at 60 so few years of investment and most of this is to supplement my income there especially the gap between retirement and getting state pension at 68

masonic

Wealth preservation funds would be suitable for capital you intend to live on in the medium term (i.e. not for spending within the next 2-3 years and not to remain invested for 10+ years). You might choose to hold more if you can't tolerate the long term capital being invested in 100% equities. That would also depend on what proportion of your basic needs will be met by the state pension. In practice the lower risk assets (including cash) would normally be used as a safety net to be drawn down on if the higher risk assets have crashed.

flopsy1973

There is the good possibility that i will not need it in next few years if we decide not to move and i dont want this money sitting in cash ISA doing nothing and thought the next best thing would be WP ??

masonic

flopsy1973 said:

There is the good possibility that i will not need it in next few years if we decide not to move and i dont want this money sitting in cash ISA doing nothing and thought the next best thing would be WP ??

If you might need the money to move house within the next few years, then I don't think such WP funds are appropriate - they are generally about 40% equities and the balance is mostly medium risk assets, so the probablility of a loss over a few years is not negligible! A 20-30% loss would, I think, be in the realms of possibility.

flopsy1973

Yes but there may be no house move either and if we did decide maybe we would only need around 200K. I did not want this money sitting doing nothing and as it part of my pension provision need to do something with it ?

masonic

flopsy1973 said:

Yes but there may be no house move either and if we did decide maybe we would only need around 200K. I did not want this money sitting doing nothing and as it part of my pension provision need to do something with it ?

It's hard to make useful suggestions while information is being drip-fed. If you only (maybe) need £200k cash and you have £425k now, you could keep £200k in cash and invest the rest alongside your other pension provisions. Or you could invest all £425k in WP funds and accept there is a risk it might only be worth £300k when you need to access it and that you'll be crystallising an £83k capital loss to raise that £200k. Of course the loss might be smaller than that or you might be in profit. Such is the unpredictability of medium risk investments and why the general wisdom is they should be held for a minimum of 5 years.

Have you considered sitting down with an IFA and making a proper financial plan? With the amounts under consideration it would be good value for money and may give you peace of mind.

aroominyork

masonic said:

flopsy1973 said:

There is the good possibility that i will not need it in next few years if we decide not to move and i dont want this money sitting in cash ISA doing nothing and thought the next best thing would be WP ??

If you might need the money to move house within the next few years, then I don't think such WP funds are appropriate - they are generally about 40% equities and the balance is mostly medium risk assets, so the probablility of a loss over a few years is not negligible! A 20-30% loss would, I think, be in the realms of possibility.

'Possible' is a broad term, whether or not within the dominion of a realm. You, Flopsy and I have today been on a thread I started about Capital Gearing Trust, and I think a huge number of things would have to go wrong for it to deliver a 30% loss over a few years. 

flopsy1973

masonic said:

flopsy1973 said:

Yes but there may be no house move either and if we did decide maybe we would only need around 200K. I did not want this money sitting doing nothing and as it part of my pension provision need to do something with it ?

It's hard to make useful suggestions while information is being drip-fed. If you only (maybe) need £200k cash and you have £425k now, you could keep £200k in cash and invest the rest alongside your other pension provisions. Or you could invest all £425k in WP funds and accept there is a risk it might only be worth £300k when you need to access it and that you'll be crystallising an £83k capital loss to raise that £200k. Of course the loss might be smaller than that or you might be in profit. Such is the unpredictability of medium risk investments and why the general wisdom is they should be held for a minimum of 5 years.

Have you considered sitting down with an IFA and making a proper financial plan? With the amounts under consideration it would be good value for money and may give you peace of mind.

I have sat down with IFA  but didn't really feel he could offer me much more than what I was doing now with high fees on top , also saw FA and he suggested VCT to offset my income tax and suggested a investment bond for my holdings !!!!