Thoughts on which fund(s) to sell

Hopingforthesimplelife

Hi all, hoping to gain some wisdom from you learned souls as I have up until this point always invested but never thought about withdrawing.

Our fixed rate mortgage ends in sept and we are inclined to pay it all off (c£65k) due to the current unappetising rates.

We have c. £50k in cash and c.£55k in s&sisa split as below.

hsbc adventurous - £18.7k

Hsbc dynamic - £13.6k

VG LS80 - £11.5k

Vg global all cap £7.6k

vg global small cap £2.3k

marlborough uk micro cap £1.9k

Argon ethical equity £700

What combination of cash and what shares would you sell to make up the £65k to clear the mortgage?

any thoughts or insight much appreciated.

sheslookinhot

If you only have £50k cash, I would be tempted to sell all S&S ISA funds, and some cash, to clear your mortgage.

EthicsGradient

I'd be inclined to sell the funds with the highest charges, which I'd guess would be the HSBC ones, the micro cap and the ethical (leaving the Vanguard ones). Sheslookinhot's point about retaining enough cash for your needs (emergency, change of direction) is where you should start, though - but, without a mortgage, your need for a cash buffer to see you through loss of a job etc. would be less.

Hopingforthesimplelife

Thanks both - interesting…. with stocks being mostly flat I thought the general consensus might be use up the cash then sell a small portion of the shares. 

Alexland

I think the question is how much cash do you feel you need to hold going forward once the mortgage is repaid and then what is your desired future S&S asset allocation based on your remaining investment objectives? You seem to have a lot of duplicaiton in the current holdings.

Beddie

vg global small cap £2.3k
marlborough uk micro cap £1.9k
Aegon ethical equity £700

These are all too small to matter, so unless you want to keep marlborough as a bit of "fun" they should go.

Other than that, I'd trim some off each of the rest to get about half of the amount needed, with the rest in cash. Or as said above, there is overlap, so you could get rid of one of the very similar larger HSBC funds. You will have the mortgage payments freed up, so perhaps that can be invested monthly to build up the investments.

Just my thoughts, there is no "right" answer!

[Deleted User]

Hi,

you say your fix ends in Sept, so if you pay mortgage off, it wont be what you are paying each month just now that you will have free, but whatever new rate is available then, possibly double what you are paying now.

Hopingforthesimplelife

re funds & duplication - yep fair points. Started off with the ls80, then changed to hsbc dynamic but then decided adventurous better suited. agree this will give a good opportunity to tidy them up.

frugal - its a good point, one that seems simple but yet my mind hadn’t actually worked out the maths of it until you said. c£630 going up to c.£800 does make a difference 

Eyeful

With only such a small amount invested, I am always surprised that people feel the need to put their money in so many different funds (7 in your case).

Have you tried to analysis your portfolio for duplication & its cost?

If you thought the correct share/bond split was the VLS 80, why did you not channel your money into just that one fund and forget about the other six? It would have made your investment life simpler & cheaper.

Remember the saying "the more investment decisions you make, the more chances of getting things wrong".

 At the present time, the government is looking to collect as much tax as possible. So The more you keep inside your S&S ISA , the more you will be sheltered from tax. Who knows they may reduce the amount you can put into an ISA each year or in total.

redux

Hopingforthesimplelife said:

Thanks both - interesting…. with stocks being mostly flat I thought the general consensus might be use up the cash then sell a small portion of the shares. 

That's what I thought. If you are gradually saving, and I assume so if you've accrued those investments, I'd reckon pay most of the cash to reducing the mortgage, and step up payments towards the remainder

Doing different than that depends on your opinions on whether the investments will pay their way compared to the borrowing cost. Sounds like some people here don't think so.

aroominyork

Beddie said:

vg global small cap £2.3k
marlborough uk micro cap £1.9k
Aegon ethical equity £700

These are all too small to matter, so unless you want to keep marlborough as a bit of "fun" they should go.

I agree that for a relatively small amount you are overly diversified between funds. If you truly enjoy the process then fine, but otherwise consider consolidating them into one or two index funds. It is easy to think that the more complex your portfolio the better your returns will be, but part of the maturing process as an investor (and I speak 5 years into DIYing so still a relative novice) is recognising the flaws in that approach.