Rebalancing

20122013

I am rebalancing my financial portfolio and I was going to use another IFA  but there is no guarantee they will beat the index tracker, and hence this post. 

My portfolio:

- 29 funds S&S ISA (looking to switch all to passive funds) 

- 9 funds  work pension (stopped contributions) both S&S and Pension were selected by my ex IFA in 2005 and 2011 with 

high fees and low returns and S&S valuation in 2025 is still below 2021. 

-  CASH ISAs 

- Cash is savings account - separate pot to live off till 04/2027

I have 10 years to invest and have stopped work and have no income and not started withdrawing from my pension and I will look into annuinties.

I hope my BTL will be sold by 10/2026  and depends on my funds performance, I may need to keep one year spend for  04/2027 and  invest the remaining in equities and / lower risk bonds (?) or alternatives.

Some posters who have an income and have budgeted for 1 - 3 year spend,  As I have no income (apart from some bank interest) so I may have over budgeted my spending money to 8 years . (2 years in easy access savings and 6 years in ISA accounts  all on minimum 4.15% due to expire from 04/2025)

Q1. Although  the fund fact sheet does state the aim of the funds but no one knows what the actual return to expect. Hence, I am unsure whether I have over budgeted or whether I can make my money worker harder by investing it and  still get the income I need, rather than earning 4.15% interest which is guarantee?  This will help me work out  whether I should invest my cash ISA if so, what percentage?  Will taking an income after 2 years of investment be ok? or leave it to invest and live off my savings? As worse case I have credit cards and can sell some of my investments. 

Q2. Is it any risker to invest all my S&S ISA  into one passive (global or all world) index tracker or do a split, I know this will lead to higher fees but may give me better sleep : 

The split may look like this (as there may be more suitable passive funds or may change the split) as I write I think splitting maybe helpful, so if I need to sell I have a choice.

SPLIT 1

30% one passive index tracker global   (Global equity – developed world and emerging markets (All-World)

30% one passive index tracker all world (HSBC FTSE All-World Index Fund C (GB00BMJJJF91))

30% Vanguard Life strategy 80/20  (if I do not invest my cash ISA then I should invest more in equity)? 

5% Gold 

5% Multi asset fund - passive (as I am looking to invest in 1 to 2 index trackers,  will it be better to buy government bonds, keeping some cash instead of investing in this type of fund?) 

or

SPLIT 2

40% one passive index tracker global 

40% one passive index tracker all world 

10% Vanguard Life strategy 80/20  

5% Gold 

5% Multi asset fund - passive 

If I lose all my S&S ISA (I need to be realistic),  I will have to take more risk with any future investment to get a higher return as I will not be able to trim down my spending and less time to invest 

Appreciate your comments

masonic

What about...

90% one or two passive index trackers all world

5% gold

5% global bond fund

for a total of 3-4 funds. You could probably drop the 5% in bonds as it won't make much difference to the portfolio. I add it only because you had some small allocation to bonds through the multi-asset funds, and you might wish to increase the weighting over time.

It probably isn't worth splitting between two funds of the same type, unless there is good reason to favour different funds in different accounts. It won't necessarily lead to higher fees though, so if it helps you to sleep at night you could do it. This amount in equities is very high risk, and would only usually be appropriate if you have alternative sources of income to fall back on should markets fall into a prolonged depression. It looks like you'd be covering that with savings. Investments are very likely to outperform savings over periods greater than 10 years, even based on the situation today.

I guess the main thing to consider is how much you will be drawing down from your investments/savings per year, as this will be a major determinant of your success probability.

Hoenir

20122013 said:

I am rebalancing my financial portfolio and I was going to use another IFA  but there is no guarantee they will beat the index tracker, 

IFA's aren't investment managers. Why do believe that you personally have the skill set to beat an "index tracker" ? 

dunstonh

I am rebalancing my financial portfolio and I was going to use another IFA  but there is no guarantee they will beat the index tracker, and hence this post. 

Index trackers can follow many different benchmarks.  Which benchmark do you think will be best?

MX5huggy

Plot your All world options on Trustnet next to each other you will there is no point holding 2 or more. 

Eyeful

29 Funds! Far too many funds.

1.  Academic research repeatedly shows that after charges are applied, most active fund manager fail to bet a  Major Global World Index. 
If the professionals cannot beat such an an index, I am sure you will not either.
That you allowed yourself to be talked into so many funds, suggest you do not have any experience with investing. 
You can make investing as simple or as complicated as you like.

2. Do yourself a big favour, 
(a) Watch this video first:  https://www.kroijer.com/
(b) Now consider "Simple Investing",.
Here you chose a "Low cost Global Multi Asset Fund" and all you need to do is choose the share/ bond spilt you are happy with.
Examples:
https://www.hsbc.co.uk/investments/products/hsbc-global-strategy-portfolios/
https://www.vanguardinvestor.co.uk/investing-explained/what-are-target-retirement-funds

3 This may be of interest to you.
https://www.biglawinvestor.com/meet-the-gotrocks-family/
https://monevator.com/passive-fund-of-funds-the-rivals/

Eyeful

This may help you understand Multi Asset Funds better, I suggest you watch it:

https://www.youtube.com/watch?v=lGQ9KyQq8Jw

20122013

masonic said:

What about...

90% one or two passive index trackers all world

5% gold

5% global bond fund

for a total of 3-4 funds. You could probably drop the 5% in bonds as it won't make much difference to the portfolio. I add it only because you had some small allocation to bonds through the multi-asset funds, and you might wish to increase the weighting over time.

It probably isn't worth splitting between two funds of the same type, unless there is good reason to favour different funds in different accounts. It won't necessarily lead to higher fees though, so if it helps you to sleep at night you could do it. This amount in equities is very high risk, and would only usually be appropriate if you have alternative sources of income to fall back on should markets fall into a prolonged depression. It looks like you'd be covering that with savings. Investments are very likely to outperform savings over periods greater than 10 years, even based on the situation today.

I guess the main thing to consider is how much you will be drawing down from your investments/savings per year, as this will be a major determinant of your success probability.

This is the type of information including some points I have not thought about.  

I have looked at the gold prices and I am wondering whether it is good to buy? with 10 - 15 years to invest, enough to see a return.   

Splitting:

I am thinking of

47.5% one global index trackers

47.5% one Multi asset fund ( as I am a newbie and have read the helpful link below)

5% gold if not need to find an alternative

https://forums.moneysavingexpert.com/discussion/6262775/global-muliti-assett-fund-global-index-tracker-difference?utm_source=community-search&utm_medium=organic-search&utm_term=global+tracker

20122013

dunstonh said:

I am rebalancing my financial portfolio and I was going to use another IFA  but there is no guarantee they will beat the index tracker, and hence this post. 

Index trackers can follow many different benchmarks.  Which benchmark do you think will be best?

I had read that the funds they are trying to track should not be use a benchmark?

https://www.trustnet.com/news/13378861/the-best-trackers-for-each-major-index

I cannot see HSBC FTSE All-World Index Fund listed

How would you decide on a bench mark, please?

how will be bench marking help? see whether it is on track?

masonic

20122013 said:

masonic said:

What about...

90% one or two passive index trackers all world

5% gold

5% global bond fund

for a total of 3-4 funds. You could probably drop the 5% in bonds as it won't make much difference to the portfolio. I add it only because you had some small allocation to bonds through the multi-asset funds, and you might wish to increase the weighting over time.

It probably isn't worth splitting between two funds of the same type, unless there is good reason to favour different funds in different accounts. It won't necessarily lead to higher fees though, so if it helps you to sleep at night you could do it. This amount in equities is very high risk, and would only usually be appropriate if you have alternative sources of income to fall back on should markets fall into a prolonged depression. It looks like you'd be covering that with savings. Investments are very likely to outperform savings over periods greater than 10 years, even based on the situation today.

I guess the main thing to consider is how much you will be drawing down from your investments/savings per year, as this will be a major determinant of your success probability.

This is the type of information including some points I have not thought about.  

I have looked at the gold prices and I am wondering whether it is good to buy? with 10 - 15 years to invest, enough to see a return.   

Splitting:

I am thinking of

47.5% one global index trackers

47.5% one Multi asset fund ( as I am a newbie and read the helpful link below)

5% gold if not need to find an alternative

https://forums.moneysavingexpert.com/discussion/6262775/global-muliti-assett-fund-global-index-tracker-difference?utm_source=community-search&utm_medium=organic-search&utm_term=global+tracker

To me the gold price looks very high. But I thought it was high a year ago before it went up another 35%. People tend to hold gold as a store of value and inflation hedge, as over centuries it is unlikely to lose spending power. However, it can swing from very overvalued to very undervalued, or remain depressed for long periods of time. If you bought at the 1980 peak, you'd have been waiting until 2006 just to break even in nominal terms. How it will perform over the next 10-15 years is anyone's guess. That is one reason it is recommended to keep the allocation fairly low.

I don't know why you'd want to get your bonds exposure via a multi-asset fund and then buy a separate equities tracker. If you would be using the bonds to avoid selling equities at a loss during a crash, then it would make sense to keep them separate. The argument for a multi-asset fund is simplicity, but adding an additional overlapping equity fund negates that.

Eyeful

1. You seem to be missing the point.
You are thinking about 
47.5% one global index trackers

47.5% one Multi asset fund ( as I am a newbie and read the helpful link below)

This is just not needed.

2. The whole point of a Global Multi Asset Fund is that you are buying a Global Index Fund & bonds
(also other assets maybe), all in one go. You only need to chose the Share/bond split you are happy with.
This allows you to see what is going on and control the amount of risk you are willing to take.
Watch the "Just one Fund" video I mentioned in my last post above!

3. The Global Index Tracker is for
(a) Those who can take higher risk and have a long time frame to retirement, (lets say 30 to 40 years).
(b) Who know what they are doing when constructing a more complex investment portfolio.
Your previous post suggest to me neither of the above apply to you.
This is why I suggest the "Simply Investing" approach.

4. Some people like gold in their portfolio some don't
If you do buy gold, like masonic above keep it low, you do not have the time to wait if things go wrong.
I suggest don't go over 5%.