Thoughts on Bonds versus Stocks & Shares

german_keeper

Apologies if I have missed it but are you currently taking full advantage of your PTA?

Albermarle

incus432 said:

As I get older I think my tolerance to a big market crash is now much lower, and I wanted to protect most of the gains I've made and sleep soundly. I don't like the look of the US market atm and the fact that every Reddit post is people throwing money into the S&P500 is a big red flag to me.  

I have good DB pension plus SP so I don't need the money any time soon but can take an income from it to spend on hols and treats. So I have moved the majority of my investments from equities to bonds and gilts.

Only you know what you feel though.

The old saying was when the taxi driver starts giving you share tips, that is the time to sell.

Dornfield

Hoenir said:

Out of interest which managed global fund do you hold? 

Purisima Global Total Return B, via Fisher Investments.  Although they charge, I'm very impressed by the degree of engagement I get from them, and I'm slated to meet 1 on 1 for some personal advice (which costs a few hundred, but gets me a full 12 months of ongoing personalised advice.

Hoenir

Dornfield said:

Hoenir said:

Out of interest which managed global fund do you hold? 

Purisima Global Total Return B, via Fisher Investments.  Although they charge, I'm very impressed by the degree of engagement I get from them, and I'm slated to meet 1 on 1 for some personal advice (which costs a few hundred, but gets me a full 12 months of ongoing personalised advice.

Be better advice than from some random strangers on the internet. 

aldershot

ex gilt trader here, so I may be biased!
When interest rates were near zero, it was near impossible to find any rational reason to hold fixed income in a long term portfolio. Now, the world is different. Rates are no longer zero. It's also different for equities as well. A low cost global equity fund is now 74% in the US (MSCI index). The magnificent 7 tech stocks now make up 33% of the S&P500. So your diverse global equity fund is now nothing of the sort. It's a massive bet on AI technology and momentum. It may be right or it may not be. I don't know, and nor do you. What do you want from a portfolio? It should be to make long term real returns. Gilts currently offer real returns, and index linked gilts will even fix that real return if you worry about rampant inflation. 
I think gilts, or other bonds are very attractive now, compared with equities at these levels and I've been top slicing the huge equity returns I've made over the past decade from equities into gilts so now I'm nearer 55/45. I sleep well. 
(Disclosure: I'm retired, my SIPP is in drawdown and we live off it and other assets. The overall portfolio generates more cash that we spend) 

Alexland

incus432 said:

I don't like the look of the US market atm and the fact that every Reddit post is people throwing money into the S&P500 is a big red flag to me.  

It's the same with US YouTubers. I don't mind them talking about 100% equity investments but they don't seem to talk about the risks that people would need to accept and be ready for when the next crash happens. Reminds me of the euphoria leading up to the dot com crash.

Aylesbury_Duck

Alexland said:

My view is that having a multi asset portfolio looks attractive again now bond yields have recovered in recent years. High valuations on US shares may lead to lower returns going forwards so there doesn’t seem to be enough likely additional compensation for carrying the risk of going 100% equities.

I agree.  With my S&S ISAs (which I intend to use to bridge the gap between retirement and drawing pensions, possibly as soon as in 5 years' time), I've just switched some more from all-equities to Vanguard's VLS60 product.  I've had a really good run in the last few years, so I'm hopefully consolidating some of that, accepting I may miss out on more gains in the coming weeks/months/years.

Dornfield

This is all good ammunition to try to avoid my consultation in a couple of weeks trying to convince me to remain 100% equities. The cynic in me anticipates that, as I imagine it is lucrative for the SIPP provider! But to be fair to them, averaging over 20% for the past couple of years, it has been a beneficial place to be. 
The point about my "global" portfolio being dominated by US stocks is well made, and something I was aware of. Those global stocks are indeed dominated by the magnificent 7, and they are at record highs.  It can't continue forever, and the uncertainty visited upon the whole world by the changing of the guard in Washington gives me pause as well.
Thank you all for your comments.

Dornfield

german_keeper said:

Apologies if I have missed it but are you currently taking full advantage of your PTA?

I'm still getting familiar with the terminology: PTA = personal tax allowance? Do you mean withdrawing £16,760 from the SIPP in each tax year (I have no other taxable ncome), meaning that withdrawal pays no income tax at all? £12,570 personal allowance and £4,190 as a 'tax free lump sum'. I am arranging that at the moment, before the end of the tax year.

bjorn_toby_wilde

Dornfield said:

german_keeper said:

Apologies if I have missed it but are you currently taking full advantage of your PTA?

I'm still getting familiar with the terminology: PTA = personal tax allowance? Do you mean withdrawing £16,760 from the SIPP in each tax year (I have no other taxable ncome), meaning that withdrawal pays no income tax at all? £12,570 personal allowance and £4,190 as a 'tax free lump sum'. I am arranging that at the moment, before the end of the tax year.

I’m sure that’s what german_keeper means