Coming Up to Retirement - Portfolio Changes

dunstonh

In theory, using the 4% SWR as guidance, I can probably survive on a lower level of risk, but if I reduced my Vanguard holdings even further, what would I invest in/change the allocation to?

For a UK investor at age 58 you should be using 3% and not 4% in your modelling.     UK has historically higher inflation than the US and higher prices relatively speaking and you are adding an extra decade to your timescale.

Plus, it's worth noting that since the US study was originally done, both bonds and equities have suffered worse periods than appeared in the study.

xxd09

Just my tuppenceworth
you seem to have run a successful investment portfolio -why change it?
Some possible parameters as guidance 
£100000 in a 60/40 portfolio should give you a safe £3000 pa before tax -hopefully more if stockmarket does well
You would need to make sure you had 2-3 years living expenses in cash in case of the retiree’s nightmare scenario of a stockmarket drop at retirement 
You seem to be running a 70-80/30-20 asset allocation -could be a volatile portfolio for some investors in retirement -can you live with a big stockmarket drop in retirement? Some investors go as low as 30/70 -it’s a personal choice
xxd09

davethebb

Thank you everyone for all your comments. I also take note of Dunstonh comment about 3% and not 4% as the SWR.

FIREDreamer

dunstonh said:

In theory, using the 4% SWR as guidance, I can probably survive on a lower level of risk, but if I reduced my Vanguard holdings even further, what would I invest in/change the allocation to?

For a UK investor at age 58 you should be using 3% and not 4% in your modelling.     UK has historically higher inflation than the US and higher prices relatively speaking and you are adding an extra decade to your timescale.

Plus, it's worth noting that since the US study was originally done, both bonds and equities have suffered worse periods than appeared in the study.

I got an rpi jl annuity of 5% at age 60/59 so why bother with the stress? Won the game? Take your cards off the table.

Cus

FIREDreamer said:

dunstonh said:

In theory, using the 4% SWR as guidance, I can probably survive on a lower level of risk, but if I reduced my Vanguard holdings even further, what would I invest in/change the allocation to?

For a UK investor at age 58 you should be using 3% and not 4% in your modelling.     UK has historically higher inflation than the US and higher prices relatively speaking and you are adding an extra decade to your timescale.

Plus, it's worth noting that since the US study was originally done, both bonds and equities have suffered worse periods than appeared in the study.

I got an rpi jl annuity of 5% at age 60/59 so why bother with the stress? Won the game? Take your cards off the table.

If he can get an annuity that pays enough to cover all needs now and future, and as no dependants so maybe not so concerned about IHT etc, then why not, although if they carried on with investments then most likely they will have more

Early_Retire_Free

I don't like Vanguard funds because of their US bias and their bias towards the mega cap 7.  The US markets will (eventually) trend back to their long term valuation multiples.  So I would be looking for a more balanced global allocation perhaps via the Invesco MSCI World Equal Weight.

Also, given you have no dependents, I've no idea why you would stick to a 4% withdrawal rate.

Notepad_Phil

Early_Retire_Free said:

I don't like Vanguard funds because of their US bias and their bias towards the mega cap 7.  The US markets will (eventually) trend back to their long term valuation multiples.  So I would be looking for a more balanced global allocation perhaps via the Invesco MSCI World Equal Weight.
...

Not going to disagree about personally disliking a bias towards the mega cap 7 or even possibly the bias to the US, but to be fair to Vanguard they're not the only fund house that have that bias for funds aiming to do what the Vanguard funds are doing. The Invesco fund is one of a relatively small amount of passive funds that go Equal Weight and you are betting against the general consensus market view if you go that way, which is fine if you do, but you definitely need to know that is what you are doing,

Early_Retire_Free

Notepad_Phil said:

Early_Retire_Free said:

I don't like Vanguard funds because of their US bias and their bias towards the mega cap 7.  The US markets will (eventually) trend back to their long term valuation multiples.  So I would be looking for a more balanced global allocation perhaps via the Invesco MSCI World Equal Weight.
...

Not going to disagree about personally disliking a bias towards the mega cap 7 or even possibly the bias to the US, but to be fair to Vanguard they're not the only fund house that have that bias for funds aiming to do what the Vanguard funds are doing. The Invesco fund is one of a relatively small amount of passive funds that go Equal Weight and you are betting against the general consensus market view if you go that way, which is fine if you do, but you definitely need to know that is what you are doing,

Yes, you're right - I should have said global trackers rather than single out Vanguard (although Vanguard has become the darling or the amateur investing community).  My issue is that a lot of inexperiened investors look at a global tracker as giving them broad global exposure when in fact it does nothing of the sort.

leosayer

Early_Retire_Free said:

Notepad_Phil said:

Early_Retire_Free said:

I don't like Vanguard funds because of their US bias and their bias towards the mega cap 7.  The US markets will (eventually) trend back to their long term valuation multiples.  So I would be looking for a more balanced global allocation perhaps via the Invesco MSCI World Equal Weight.
...

Not going to disagree about personally disliking a bias towards the mega cap 7 or even possibly the bias to the US, but to be fair to Vanguard they're not the only fund house that have that bias for funds aiming to do what the Vanguard funds are doing. The Invesco fund is one of a relatively small amount of passive funds that go Equal Weight and you are betting against the general consensus market view if you go that way, which is fine if you do, but you definitely need to know that is what you are doing,

Yes, you're right - I should have said global trackers rather than single out Vanguard (although Vanguard has become the darling or the amateur investing community).  My issue is that a lot of inexperiened investors look at a global tracker as giving them broad global exposure when in fact it does nothing of the sort.

Global trackers do nothing more than supply exposure to the global market. They're not biased because the weightings are based on facts - market capitalisation.

I had a look at the relative performance of MSCI World vs MSCI Equal Weighted on the link below - the latter has underperformed the former over every time period measured, going back 30 years.
https://www.msci.com/documents/10199/255599/msci-world-equal-weighted-index.pdf

It would be a brave person who (to paraphrase Eugene Fama) talks themselves out of the market portfolio into such an arbitrary construct.

davethebb

My plan is to dilute the global tracker with the Global Income fund. This will not only dilute the geographical allocation away from the US but also the type of equity.