SIPP portfolio suggestions

investordude1

Hello Everyone,

New to this forum and looking for passive investment suggestions. I've spent a few hours reading this forum and some external websites but am none the wiser. Thankfully I've also read that I'm not the first to have 'investment paralysis' due to the information overload!

I hold a SIPP with Interactive Investor and am about 20 years away from retirement. Have substantial amount of cash in my portfolio and looking for ideas to invest. Have read through some of recommendations on the forum and Super 60 by Interactive Investor but with almost everything at an all-time high or thereabouts, I was wondering whether there are any alternatives? Before you say it, I know timing the market is a bad idea

I'm considering VLS 60 or 80 funds and some ETFs/Index funds and have a medium risk appetite.

Looking for low on-going cost with long term growth potential with the odd rebalancing every few years once I learn how to do that!

tacpot12

Investment paralysis is certainly a thing. The way around it is just to invest. Pick something that is ok, buy it and use the experience of holding it to learn more about what you have bought. The chances are that you will do reasonably well from VLS 60. When you are ready, you can sell a fraction of your holding and buy another fund. You will then have two investments you can compare to see show the perform over the time you hold them. 

You can also use one of the tools that allow you to construct a fictitious portfolio of funds you are considering buying, such as the Portfolio Tools on Trustnet or Morningstar, so that you can compare the performance of your fictitious portfolio to your real portfolio, to see if it is any better. 

dunstonh

I'm considering VLS 60 or 80 funds and some ETFs/Index funds and have a medium risk appetite.

So, medium risk puts you around 50-60% equities.
Do you have the knowledge and understanding to build a portfolio?  if no, then rule out ETFs and index funds and stick with multi-asset funds.

Bostonerimus1

dunstonh said:

I'm considering VLS 60 or 80 funds and some ETFs/Index funds and have a medium risk appetite.

So, medium risk puts you around 50-60% equities.
Do you have the knowledge and understanding to build a portfolio?  if no, then rule out ETFs and index funds and stick with multi-asset funds.

Just to clarify, many multi-asset funds (including the VLS series) contain index funds and will be rebalancing so you are getting a portfolio of funds wrapped up into a single fund. 

Alexland

Markets spend a lot of their time at or near all time highs and if you are 20 years away from starting drawdown (and given there is no advantage to holding an ETF on Interactive Investor) then I would look at a multi asset fund such as HSBC Global Strategy Dynamic (or VLS80 if you want the UK bias). Still if you want to be more cautions or perhaps tactical then as bonds are back to being a reasonable value proposition and there seems to be some scale of AI valuation bubble then maybe the Balanced (or VLS60) version which should still deliver a good long term return. But over 20 years you would probably do better with the circa 80% equities in Dynamic (or VLS80) even if it's a rougher ride. Depends how much of a drop you feel comfortable seeing along the way.

Exodi

investordude1 said:

but with almost everything at an all-time high or thereabouts, I was wondering whether there are any alternatives? Before you say it, I know timing the market is a bad idea

You and every investor before you has had the same thought.

It's not necessarily that it's a bad idea, it's more that it's impossible. No-one knows whether stocks will go up, down, or sideways. The one thing that we generally agree on is that the line goes up over time.

In the past when I obsessively tracked my portfolio performance, there are times stocks dropped soon after I invested, but there were also times were stocks boomed shortly after. In either case it wasn't particularly relevant as I didn't intend on selling. I no longer check the current stock price or trend when PCA'ing (DCA'ing) but my S&S ISA has an annualised rate of return ~10.5%, which is far higher than any savings account could offer so I'm happy.

investordude1 said:

Looking for low on-going cost with long term growth potential with the odd rebalancing every few years once I learn how to do that!

If you decided you wanted to be 60/40 equities/bonds you could either:

Buy £100 of VLS60 and forget about it. No need to balance, as it does it itself.

Or

Buy £60 of some equity fund and £40 of some bond fund. If some time later the equity fund has grown to £100 and the bond fund has grown to £50, you are now invested 66.7% in equities and 33.3% in bonds. You could then sell £10 of your equity fund to buy £10 of your bond fund to maintain the 60/40 split you wanted. Alternatively, if you are regularly topping up the account, you could invest in only the bond fund for a while until it balances again.

Doesn't just apply to equities and bonds. Could be that you decide you want to have 60% of your fund invested in US stocks, or particular sectors, etc.

dunstonh said:

I'm considering VLS 60 or 80 funds and some ETFs/Index funds and have a medium risk appetite.

So, medium risk puts you around 50-60% equities.
Do you have the knowledge and understanding to build a portfolio?  if no, then rule out ETFs and index funds and stick with multi-asset funds.

As dunstonh says, it's probably easier when starting to just stick with multi-asset funds which provide a good template and also re-balances for you.

Albermarle

Before you say it, I know timing the market is a bad idea 

Many people in your position hesitate in going 'all in' in case the markets drops soon afterwards, so they feel more comfortable drip feeding the cash into the investments.

Statistics show that on average the best result is gained by investing 100% of your cash today, rather than drip feeding. However you might be the unlucky one. A compromise can be say investing 40% today, 30% in say 3 months, and the rest a bit later.

Although in theory not the ideal way to do it, you might find it easier mentally.

Beddie

VLS 60 or HSBC Global Strategy Balanced are good solid funds that are probably in line with your risk levels. And there are plenty of others, but the more you look the more time you will waste, so don't spend too long on it.

If you're concerned about current valuations you could always invest some of the money now and add to it at regular intervals. Whether you'll do better or worse that way will only be known after the event, but it might make you worry a bit less. Of course others will say drop it all in, but do what's more comfortable for you.

investordude1

Wow! thanks a ton for all the really helpful suggestions. Who needs an IFA when you have the MSE forum to bounce ideas off of?

Given me something to read up on a weekend especially multi asset funds and the fact they rebalance automatically is definitely a plus. Will defo look up the mock portfolio as well.

Hoenir

investordude1 said:

Wow! thanks a ton for all the really helpful suggestions. Who needs an IFA when you have the MSE forum to bounce ideas off of?

Depends on what you are seeking. Personal circumstances and objectives differ widely. 

but with almost everything at an all-time high or thereabouts, I was wondering whether there are any alternatives?

There's no shortage of unloved sectors, individual companies etc out there. The media focuses on the now and what's in the news. Investing is about tomorrow and taking calculated risks. 

I'm considering VLS 60 or 80 funds

Start with what you are comfortable with. Markets when they turn will rip the shirt off your back. 

kempiejon

@investordude1 Keep learning. There's plenty enough out there for one who is interested enough to be self sufficient. It's not a rush, though for the long term too much cash will dent your ability to grow your wealth.

I started with a FTSE100 tracker then got clever and starting researching and picking under valued shares. Profitable but hard work and a bit stressful. These days a global tracker is good enough. Years of refining my strategy and I understand there is more to investing than picking the right shares or market or funds.
It's about my mind set. Should I keep investing when I have a mortgage I could pay down. SIPP can't get until 57+ or ISA no tax rebate? Can I sleep at night if my portfolio is half of it's recent highs (Covid) or the shares I bought drop 20% in a few days, what is the optimal distribution of assets. Yeah markets are high but rising markets - and that's why we invest in them - will often be at highs. In 20 years you'll look back and kick yourself not having gone all in today. But that seems impossible to do today. I understood that on average the best thing is to max in but it made me nervous
When I got a lump sum from collecting all my pensions into a single SIPP I invested it quarterly over a couple of years. Probably spent too long in cash as a consequence but it helped me sleep at night. These days I'm about 80% stocks I also have some gilts, gold coins, premium bonds, fixed interest, corporate bonds and plain old cash money in fixed term and regular savers.