Investment Allocation in Retirement

pip895

My OH & I retired early, He is getting his SP but I won't get mine for some years.  Our investment pot (SIPP, ISA + a BTL etc.) has gone down in value about 20% from its peak valuation in August 21.  Not unduly worried about that, I just got to wondering about asset allocation.  In particular I think my bond allocation is low, although perhaps most of the Wealth Preservation (mainly PNL) and even the BTL could also be considered fixed interest?  
I am minded to transfer more cash and some of the WP to bonds. What are peoples thoughts. Does the Equity allocation look OK - Its been a long term decision to overweight the UK - It probably hasn't served me particularly well but I'm sticking with it.
(Our home is unmortgaged and not included in this analysis)

Bostonerimus1

Have you run your portfolio through a retirement drawdown simulation? and what drawdown method are you using? I'm glad to see a health equity allocation as that should help the long term prospects of your portfolio and I wouldn't worry about your bond allocation given your cash and property...how much net income does the property contribute?

You might consider an annuity instead of bonds to provide guaranteed income. Back in 2013 I used a lot of my bond allocation to buy into a DB pension and with my retirement income needs covered my asset allocation can be almost entirely equity and I sleep well at night.

Marcon

pip895 said:

My OH & I retired early, He is getting his SP but I won't get mine for some years.  Our investment pot (SIPP, ISA + a BTL etc.) has gone down in value about 20% from its peak valuation in August 21.  Not unduly worried about that, I just got to wondering about asset allocation.  In particular I think my bond allocation is low, although perhaps most of the Wealth Preservation (mainly PNL) and even the BTL could also be considered fixed interest?  
I am minded to transfer more cash and some of the WP to bonds. What are peoples thoughts. Does the Equity allocation look OK - Its been a long term decision to overweight the UK - It probably hasn't served me particularly well but I'm sticking with it.
(Our home is unmortgaged and not included in this analysis)

What's your risk appetite and what are your objectives?

pip895

Bostonerimus1 said:

Have you run your portfolio through a retirement drawdown simulation? and what drawdown method are you using? I'm glad to see a health equity allocation as that should help the long term prospects of your portfolio and I wouldn't worry about your bond allocation given your cash and property...how much net income does the property contribute?

I haven't done a simulation other than the spreadsheet I generated when we started drawdown but if I include everything excluding the BTL then we are currently drawing down under 3% and that will reduce once my SP starts. The BTL is providing about 15% of our income. 

Bostonerimus1

pip895 said:

Bostonerimus1 said:

Have you run your portfolio through a retirement drawdown simulation? and what drawdown method are you using? I'm glad to see a health equity allocation as that should help the long term prospects of your portfolio and I wouldn't worry about your bond allocation given your cash and property...how much net income does the property contribute?

I haven't done a simulation other than the spreadsheet I generated when we started drawdown but if I include everything excluding the BTL then we are currently drawing down under 3% and that will reduce once my SP starts. The BTL is providing about 15% of our income. 

That's probably a safe withdrawal amount, particularly if it will fall when you take SP.

pip895

Marcon said:

pip895 said:

My OH & I retired early, He is getting his SP but I won't get mine for some years.  Our investment pot (SIPP, ISA + a BTL etc.) has gone down in value about 20% from its peak valuation in August 21.  Not unduly worried about that, I just got to wondering about asset allocation.  In particular I think my bond allocation is low, although perhaps most of the Wealth Preservation (mainly PNL) and even the BTL could also be considered fixed interest?  
I am minded to transfer more cash and some of the WP to bonds. What are peoples thoughts. Does the Equity allocation look OK - Its been a long term decision to overweight the UK - It probably hasn't served me particularly well but I'm sticking with it.
(Our home is unmortgaged and not included in this analysis)

What's your risk appetite and what are your objectives?

I'm pretty risk tolerant OH less so but he leaves the finances to me.  He is currently asking if we can afford a new car - I need to shift a little money around so got to thinking about asset allocation and if I had the balance right.

Bostonerimus1

pip895 said:

Marcon said:

pip895 said:

My OH & I retired early, He is getting his SP but I won't get mine for some years.  Our investment pot (SIPP, ISA + a BTL etc.) has gone down in value about 20% from its peak valuation in August 21.  Not unduly worried about that, I just got to wondering about asset allocation.  In particular I think my bond allocation is low, although perhaps most of the Wealth Preservation (mainly PNL) and even the BTL could also be considered fixed interest?  
I am minded to transfer more cash and some of the WP to bonds. What are peoples thoughts. Does the Equity allocation look OK - Its been a long term decision to overweight the UK - It probably hasn't served me particularly well but I'm sticking with it.
(Our home is unmortgaged and not included in this analysis)

What's your risk appetite and what are your objectives?

I'm pretty risk tolerant OH less so but he leaves the finances to me.  He is currently asking if we can afford a new car - I need to shift a little money around so got to thinking about asset allocation and if I had the balance right.

I'm a bit less confident in your preparation and plan after your last post. You should have factored large expenses into your planning already and tactical changes in asset allocation to produce extra income or free up capital can harm your long term strategy.

pip895

Bostonerimus1 said:

pip895 said:

Marcon said:

pip895 said:

My OH & I retired early, He is getting his SP but I won't get mine for some years.  Our investment pot (SIPP, ISA + a BTL etc.) has gone down in value about 20% from its peak valuation in August 21.  Not unduly worried about that, I just got to wondering about asset allocation.  In particular I think my bond allocation is low, although perhaps most of the Wealth Preservation (mainly PNL) and even the BTL could also be considered fixed interest?  
I am minded to transfer more cash and some of the WP to bonds. What are peoples thoughts. Does the Equity allocation look OK - Its been a long term decision to overweight the UK - It probably hasn't served me particularly well but I'm sticking with it.
(Our home is unmortgaged and not included in this analysis)

What's your risk appetite and what are your objectives?

I'm pretty risk tolerant OH less so but he leaves the finances to me.  He is currently asking if we can afford a new car - I need to shift a little money around so got to thinking about asset allocation and if I had the balance right.

I'm a bit less confident in your preparation and plan after your last post. You should have factored large expenses into your planning already and tactical changes in asset allocation to produce extra income or free up capital can harm your long term strategy.

It’s not quite as chaotic as it might sound - we do have a large expenditures fund external to our “Investments” but it got a little depleted by our decision to invest in solar and a battery system last year.  His car is over 10 years old so it would seem a little churlish to say no😄

JohnWinder

Q1. BTL wouldn’t be considered ‘fixed interest’ in my view. They’re different asset classes. FI is a contract to return your money and pay interest regularly until that time. 

Q2 and Q3 (the ones without question marks). It’s usually easy to identify a crazy-bad portfolio, but impossible to identify the perfect one in advance, and many different ones would be equally good choices. That’s how I see yours, in the latter category not the former.

But you know the ‘rules’ as we all do: be diversified; don’t have more in risky assets than you can tolerate and perhaps need; keep costs low; don’t over-complicate it without good reason; stick with the plan (unless there’s compelling reason you were ill-prepared to make a good plan). You can measure up yours against those.

Albermarle

pip895 said:

My OH & I retired early, He is getting his SP but I won't get mine for some years.  Our investment pot (SIPP, ISA + a BTL etc.) has gone down in value about 20% from its peak valuation in August 21.  Not unduly worried about that, I just got to wondering about asset allocation.  In particular I think my bond allocation is low, although perhaps most of the Wealth Preservation (mainly PNL) and even the BTL could also be considered fixed interest?  
I am minded to transfer more cash and some of the WP to bonds. What are peoples thoughts. Does the Equity allocation look OK - Its been a long term decision to overweight the UK - It probably hasn't served me particularly well but I'm sticking with it.
(Our home is unmortgaged and not included in this analysis)

Without a full analysis it is difficult to be sure but a 20% drop since August 2021 seems a lot for this portfolio?
If you were a lot heavier in bonds, I could believe it more easily.
For sure August 2021 to December 2021 was a kind of peak period, but I am surprised to see a drop more than 10% to today. Have you worked out the drop of each portion ?

pip895

Albermarle said:

pip895 said:

My OH & I retired early, He is getting his SP but I won't get mine for some years.  Our investment pot (SIPP, ISA + a BTL etc.) has gone down in value about 20% from its peak valuation in August 21.  Not unduly worried about that, I just got to wondering about asset allocation.  In particular I think my bond allocation is low, although perhaps most of the Wealth Preservation (mainly PNL) and even the BTL could also be considered fixed interest?  
I am minded to transfer more cash and some of the WP to bonds. What are peoples thoughts. Does the Equity allocation look OK - Its been a long term decision to overweight the UK - It probably hasn't served me particularly well but I'm sticking with it.
(Our home is unmortgaged and not included in this analysis)

Without a full analysis it is difficult to be sure but a 20% drop since August 2021 seems a lot for this portfolio?
If you were a lot heavier in bonds, I could believe it more easily.
For sure August 2021 to December 2021 was a kind of peak period, but I am surprised to see a drop more than 10% to today. Have you worked out the drop of each portion ?

Your right to question that - I didn't exclude the withdrawals we made in those figures. If I add those back in then the drop was only 12%.  That's probably on the high side because the equity (particularly the UK part) is overweight small companies and the holding in SMT didn't help much either!