Critique our updated 2023 retirement investment portfolio

GazzaBloom

pricedout_1 said:

US is heading for recession. Personally, I would rotate the US fund into a Global Equities fund with a lower allocation to US. Something like Vanguard LifeSTrategy100. But I would also allocate bonds as they are likely to outperform stocks in 2023 and at least will de risk further falls in stocks whilst providing a decent probability of at least a similar return even  if I'm wrong and equities don't all further.

Thanks, I'm not as sure of the 2023 outlook as you, I have no idea what will happen this year, do you expect the US to hit a recession in global isolation?

What makes you so sure bonds will out perform stocks this year? That's not what Vanguard's 2023 report suggests (not that they were correct with their 2022 predictions though) vemo-2023-gbp-en-pro.pdf (vanguard.co.uk). Last years unexpected bonds crash caught many bond holders out and it makes me doubly nervous buying then while interest rates face further increases.

This portfolio is designed for long term growth not just the immediate 12 months, more like the next 12 years and beyond. I'm not ready to hold bonds, I don't fully understand them and only really have access to bond/gilt funds via pensions and I need to understand more about holding a fund that is essentially a league table of debts before I launch in.

ColdIron

GazzaBloom said:

£10,000 per year into S&S ISA - may choose different funds each year from L&G Tech to increase diversification

It does need diversifying. If you are still looking at thematic funds rather than a global tracker maybe consider Legal & General Global Healthcare & Pharmaceutical. Not as volatile as the tech fund and nearly as much US
Just a suggestion

Richard1212

It's boring, Gazza ( and I think you may be looking for radical ideas on forum to help you improve on your current status and plans), but I have very little in the way of criticising your retirement portfolio as set out so clearly in your O/P.

As to your doubts about bonds vs stocks, I strongly advise BONDS. Just because you say you don't have enough knowledge about them ( and therefore distrust them), they seem ideal for your own conservative portfolio ( yes, stocks traditionally outperform bonds, but they are always prone to volatility, whereas bonds are safe safe safe). Why not take a bit of time to read up on them, especially as compared to stocks. I believe bonds will make a big comeback in 2023 as returns in the fixed income markets appear poised to rebound. They are also in keeping with your overall portfolio strategy of conservatism.

I agree with you about 70% US bias for the reasons you mentioned. And I agree with the sensible poster who mused as to the chances of US economy going to the dogs in isolation from ROW.

I think you are in an extremely healthy position, Gazza, and your portfolio management seems excellent. I wish I could give you some radical improvements but I have run your details past my financial adviser and he can't see any potential improvements either ; though to be honest, he is a great believer in stocks over bonds whatever market forces are at work.

At least you have gained from this forum the invaluable knowledge that 3% is higher than 1.5%

Thanks for sharing an interesting and well thought-out retirement portfolio. Good luck for a rosy future.

eskbanker

Richard1212 said:

As to your doubts about bonds vs stocks, I strongly advise BONDS. Just because you say you don't have enough knowledge about them ( and therefore distrust them), they seem ideal for your own conservative portfolio ( yes, stocks traditionally outperform bonds, but they are always prone to volatility, whereas bonds are safe safe safe). Why not take a bit of time to read up on them, especially as compared to stocks. I believe bonds will make a big comeback in 2023 as returns in the fixed income markets appear poised to rebound. They are also in keeping with your overall portfolio strategy of conservatism.

Unless it's something else I failed to pick up on, I don't recall OP positioning their strategy as conservative, what do you see in it that fits that description?

Richard1212

eskbanker said:

Richard1212 said:

As to your doubts about bonds vs stocks, I strongly advise BONDS. Just because you say you don't have enough knowledge about them ( and therefore distrust them), they seem ideal for your own conservative portfolio ( yes, stocks traditionally outperform bonds, but they are always prone to volatility, whereas bonds are safe safe safe). Why not take a bit of time to read up on them, especially as compared to stocks. I believe bonds will make a big comeback in 2023 as returns in the fixed income markets appear poised to rebound. They are also in keeping with your overall portfolio strategy of conservatism.

Unless it's something else I failed to pick up on, I don't recall OP positioning their strategy as conservative, what do you see in it that fits that description?

Well, what would you call it ? Cavalier ? Rash ? Daring ? Risky ? Silly ? Inappropriate ?
As, on this thread, you have merely questioned the wisdom of changing a 1.5% Cash ISA for a 3% Cash ISA, I wonder whether you may have misunderstood Gazza's overall portfolio and his long term intentions. 

eskbanker

Richard1212 said:

eskbanker said:

Richard1212 said:

As to your doubts about bonds vs stocks, I strongly advise BONDS. Just because you say you don't have enough knowledge about them ( and therefore distrust them), they seem ideal for your own conservative portfolio ( yes, stocks traditionally outperform bonds, but they are always prone to volatility, whereas bonds are safe safe safe). Why not take a bit of time to read up on them, especially as compared to stocks. I believe bonds will make a big comeback in 2023 as returns in the fixed income markets appear poised to rebound. They are also in keeping with your overall portfolio strategy of conservatism.

Unless it's something else I failed to pick up on, I don't recall OP positioning their strategy as conservative, what do you see in it that fits that description?

Well, what would you call it ? Cavalier ? Rash ? Daring ? Risky ? Silly ? Inappropriate ?

I wouldn't feel the need to attach a label to it but a portfolio almost exclusively (>95%) comprising equities would normally be considered fairly high risk rather than conservative.

P.S. You didn't answer the question.

Richard1212 said:

As, on this thread, you have merely questioned the wisdom of changing a 1.5% Cash ISA for a 3% Cash ISA, I wonder whether you may have misunderstood Gazza's overall portfolio and his long term intentions. 

Yes, my reference to 'something else I failed to pick up on' was about that - I missed the mention of a relatively insignificant cash ISA within OP's original listing and the other poster didn't really spell it out IMHO.  Anyway, OP hasn't really gone into any detail about his long term intentions, so none of us really knows whether or not the portfolio is appropriate for them, but his question was more about allocation.

GazzaBloom

ColdIron said:

GazzaBloom said:

£10,000 per year into S&S ISA - may choose different funds each year from L&G Tech to increase diversification

It does need diversifying. If you are still looking at thematic funds rather than a global tracker maybe consider Legal & General Global Healthcare & Pharmaceutical. Not as volatile as the tech fund and nearly as much US
Just a suggestion

Good shout, I like trying different things with the ISA money, will look into that fund. Thanks

GazzaBloom

Richard1212 said:

It's boring, Gazza ( and I think you may be looking for radical ideas on forum to help you improve on your current status and plans), but I have very little in the way of criticising your retirement portfolio as set out so clearly in your O/P.

As to your doubts about bonds vs stocks, I strongly advise BONDS. Just because you say you don't have enough knowledge about them ( and therefore distrust them), they seem ideal for your own conservative portfolio ( yes, stocks traditionally outperform bonds, but they are always prone to volatility, whereas bonds are safe safe safe). Why not take a bit of time to read up on them, especially as compared to stocks. I believe bonds will make a big comeback in 2023 as returns in the fixed income markets appear poised to rebound. They are also in keeping with your overall portfolio strategy of conservatism.

I agree with you about 70% US bias for the reasons you mentioned. And I agree with the sensible poster who mused as to the chances of US economy going to the dogs in isolation from ROW.

I think you are in an extremely healthy position, Gazza, and your portfolio management seems excellent. I wish I could give you some radical improvements but I have run your details past my financial adviser and he can't see any potential improvements either ; though to be honest, he is a great believer in stocks over bonds whatever market forces are at work.

At least you have gained from this forum the invaluable knowledge that 3% is higher than 1.5%

Thanks for sharing an interesting and well thought-out retirement portfolio. Good luck for a rosy future.

Thank you, boring is good, that's reassuring feedback. I thought it was quite a risk on portfolio being 100% stocks save for the emergency fund, to be fair, no, I don't hold individual stocks or crypto, but I'm sure some will see this as a spicy enough portfolio as it is!

Noted on Bonds, I'm glad I missed the crash last year but am tempted now we appear to be through that, will read up and see if I can get an appetite...

Notepad_Phil

GazzaBloom said:

MX5huggy said:

Why have you gone massive on US? I don’t see any reason not to go Global Tracker which is big on US already. Same with UK really although home bias is often accepted vision.

Thank you - however, I don't believe we have gone 'massive' on US at 70%, that's the weight the largest market in the world holds globally at present.

A global tracker such as MSCI Global Index or VWRL hold circa 60-70% US. However, we are overweight on UK at 15% (rather than global cap weight of circa 4%), at the expense of some of the ROW allocation, which is my personal preference

Also, the fees for the 3 Vanguard separate funds is lower that the single VWRL fund which is 0.22% (VUSA is 0.07%, UK Equity 0.14% and Global ex-UK is 0.14%) plus the platform fee of 0.15%

If it wasn't for that we would probably be in a single global tracker each. 

70% USA and 15% UK leaves 15% for the rest of the world. Which is a big underweight of the approximately 40% that something like VWWL holds for the ROW - i.e. the December FTSE factsheet for the FTSE All-World Index has the USA at 58.78% and the UK at 4.15%.

I'm not going to argue with you if that is your preference as I've taken the opposite approach and am underweighting the USA and overweighting the ROW, but just wanted to check that you realise the amount that you're underweighting by.

GazzaBloom

Notepad_Phil said:

GazzaBloom said:

MX5huggy said:

Why have you gone massive on US? I don’t see any reason not to go Global Tracker which is big on US already. Same with UK really although home bias is often accepted vision.

Thank you - however, I don't believe we have gone 'massive' on US at 70%, that's the weight the largest market in the world holds globally at present.

A global tracker such as MSCI Global Index or VWRL hold circa 60-70% US. However, we are overweight on UK at 15% (rather than global cap weight of circa 4%), at the expense of some of the ROW allocation, which is my personal preference

Also, the fees for the 3 Vanguard separate funds is lower that the single VWRL fund which is 0.22% (VUSA is 0.07%, UK Equity 0.14% and Global ex-UK is 0.14%) plus the platform fee of 0.15%

If it wasn't for that we would probably be in a single global tracker each. 

70% USA and 15% UK leaves 15% for the rest of the world. Which is a big underweight of the approximately 40% that something like VWWL holds for the ROW - i.e. the December FTSE factsheet for the FTSE All-World Index has the USA at 58.78% and the UK at 4.15%.

I'm not going to argue with you if that is your preference as I've taken the opposite approach and am underweighting the USA and overweighting the ROW, but just wanted to check that you realise the amount that you're underweighting by.

Thanks for the feedback and yes, I note that the balance isn't quite same as a global tracker but it's a mix I'm comfortable with currently. I can tweak the balance between US and ROW by rebalancing or directing future contributions to one fund or the other easily enough though should I wish to as we plough through the coming years.

Good feedback!