Critique our updated 2023 retirement investment portfolio

GazzaBloom

Yep noted, splitting hairs though, for now, if that's all that's wrong I'll get the cigars out...

masonic

Is the lack of emerging markets a deliberate choice?

GazzaBloom

masonic said:

Is the lack of emerging markets a deliberate choice?

Yeah, not a big fan of EM volatility so consciously omitted. Could be something to introduce in the future as a satellite holding.

JohnWinder

You're clearly up to doing a good job yourself. You haven't reached the 'simplicity' stage of investing enlightenment yet but the Elysian fields start before that.

Question you own view, if it is yours, that what's in the news is a useful pointer to how to invest. That's market timing.

You do yourself a disservice not understanding bonds, because they have characteristics different from stocks that can be an advantage for investors: asset diversification of a stock portfolio; usually more stable values, less cause to panic; you can duration match to spending; better returns than cash; inflation protection available.

GazzaBloom

JohnWinder said:

You're clearly up to doing a good job yourself. You haven't reached the 'simplicity' stage of investing enlightenment yet but the Elysian fields start before that.

Question you own view, if it is yours, that what's in the news is a useful pointer to how to invest. That's market timing.

You do yourself a disservice not understanding bonds, because they have characteristics different from stocks that can be an advantage for investors: asset diversification of a stock portfolio; usually more stable values, less cause to panic; you can duration match to spending; better returns than cash; inflation protection available.

Thanks for the feedback I'm not sure I fully understand your first point though…😀 

I'm not a fan of market timing or think I could achieve it successfully

Agreed on bonds, but I would have far easier access to bond funds rather than individual bonds within pension wrappers so I need to understand more about a bond funds holdings and how it works first.

JohnWinder

It was a too oblique reference to Ferri's four stages in the education of an index investor:

4. Simplicity – you realize that none of the complexity matters, it is all about asset allocation. Complexity provides more money for the financial-industrial complex.

https://www.fiphysician.com/the-education-of-an-index-investor-an-future-book-by-rick-ferri/

Elysian fields? There has to be some benefit from a classical education.

JohnWinder

Agreed on bonds, but I would have far easier access to bond funds rather than individual bonds within pension wrappers

Individual bonds and funds are tricky enough, and your tax is beyond me but do individual bonds need to be in a lower tax wrapper?  Currently yields are very low on inflation protected bonds so there wouldn't be much tax. If there's a CGT exemption for the first £12k/year in capital gains, you'd need a lot of linkers maturing each year to exceed that; approximately £10k worth which will mature in 10 years of 8%/year inflation.

GazzaBloom

JohnWinder said:

It was a too oblique reference to Ferri's four stages in the education of an index investor:

4. Simplicity – you realize that none of the complexity matters, it is all about asset allocation. Complexity provides more money for the financial-industrial complex.

https://www.fiphysician.com/the-education-of-an-index-investor-an-future-book-by-rick-ferri/

Elysian fields? There has to be some benefit from a classical education.

LOL, got it!   

NoviceInvestor1

Big US overweights aren't for me personally. 

Would people be as keen to overweight the US if it had been the worst performing stock market for the last 10 years rather than the best?

dunstonh

Big US overweights aren't for me personally. 

Would people be as keen to overweight the US if it had been the worst performing stock market for the last 10 years rather than the best?

1 - Ignoring other influences, rising Sterling and falling dollar will create a loss for UK investors in US funds that are not currency hedged.  So, you need a lot of extra growth to show profit.
2 - Historically, global equity and US equity take it in turns in cycles more often than not.    The last cycle US equity was the clear winner.   The cycle before, US equity failed to show any gains over 10 years, yet global equity did.   The next cycle is expected to favour global equity.   The future is always unknown  and variable but growth stocks are not expected to recover in the short term and may continue to fall.   US is heavy in growth stocks compared to value stocks.    We won't know without hindsight but that cycle could already have started.  US equity has been amongst the worst performing areas, for UK investors, since October.

Going too heavy in any one area brings additional risk.   Do not rely on recent past performance to decide that the US is the best place and do not rely on data and research aimed at US consumers who do not need to concern themselves with currency fluctuations.