All world tracker

7685

I am restarting my investment at a later stage in life and it had taken me a long time to take the leap to move from over 25 managed funds into one all world Index tracker. The rest of my money are in savings and outside the ISA as no allowance left . As the fund value has dropped so the ration is  55/45. I have a separate amount for my cash ladder)

In terms of time, I have at least 11 years to invest and will start living off this amount from year 12.

As such, I would like to get some defence funds, as I don't understand  much about index linked gilts, mmf, will investing in a multi asset fund (MAF) make sense?

I asked is because when I was looking into the All World fund which I have accepted that it is very risky and volatile in contrast to the  MAF.   But what other passive funds / index tracker I have missed? (I did consider gold and bond but went back to MAF).

 

RecliningInPeace

You could consider these two ETFs. I hold them in my risk ladder for the buffer between cash and all equity.

iShares Moderate Portfolio UCITS ETF GBP Hedged (Acc) - ISIN IE00BLLZQ797 - Ticker MAMG) - quite low risk (by my risk attitude)

iShares Growth Portfolio UCITS ETF GBP Hedged (Acc) ISIN IE00BLLZQ912 | Ticker MAGG) - moderate risk by my risk attitude 

SVaz

You could use a low cost ‘volatility managed’  fund like HSBC’s  global strategy range as an alternative to a MAF.   They have a balanced and cautious version, I have the Dynamic version. 

AJ Bell do MAFs of various flavours including cautious as do most other pension firms.  Depends how cautious you want to go really.

I’ve been looking at Orbis cautious MAF which is 70% bonds but it’s expensive at 1.2% 

I would say that as you’re not planning an income for 12 years, at least 60-80% in  a Global tracker like Fidelity Index World makes sense,  you need the growth.  

7685

Appreciate the replies.
If I need £30,000 pa net (excl State Pension) for spending money for 45years will £1.2million in today's money cover it? 

QrizB

£30k x 45 makes £1.35M, so you'll be relying on real growth to get there.

You'll probably be OK.

Edit: You mention savings and ISAs. Do you have a pension?

7685

QrizB said:

£30k x 45 makes £1.35M, so you'll be relying on real growth to get there.

You'll probably be OK.

Edit: You mention savings and ISAs. Do you have a pension?

My mistake - it should be 40 years (not 45 years), so £1.2million in today's money ? I am not sure how to factor in inflation?  (I have got my SP as a backup plan.
In terms of real growth, no PB or gilts ? 
I had a small work pension around £90K, not sure whether to leave it to 'grow' or withdraw it as the fees (SW) is not low and also if I have closed my pension I will not be able to contribute £2880 per year?

7685

SVaz said:

You could use a low cost ‘volatility managed’  fund like HSBC’s  global strategy range as an alternative to a MAF.   They have a balanced and cautious version, I have the Dynamic version. 

AJ Bell do MAFs of various flavours including cautious as do most other pension firms.  Depends how cautious you want to go really.

I’ve been looking at Orbis cautious MAF which is 70% bonds but it’s expensive at 1.2% 

I would say that as you’re not planning an income for 12 years, at least 60-80% in  a Global tracker like Fidelity Index World makes sense,  you need the growth.  

I agree I need the growth. As I already have a HSBC all world index fund and looking in where to invest my cash savings ideally a different type of fund, Will investing in the 'Global tracker like Fidelity Index World' you had mentioned work? 
 
The HSBC Dynamic, would you mind sharing which version you have? 
 

QrizB

7685 said:

QrizB said:

£30k x 45 makes £1.35M, so you'll be relying on real growth to get there.

You'll probably be OK.

Edit: You mention savings and ISAs. Do you have a pension?

My mistake - it should be 40 years (not 45 years), so £1.2million in today's money?

Yes, £1.2M in today's money.

7685 said:

I am not sure how to factor in inflation?

Relatively conservative investments should be able to keep up with inflation over 40 years, Or you could buy an RPI-linked annuity and forget about investment risk entirely.

Someone who is 55 could currently secure £30k pa, increasing with uncapped RPI, for the rest of their life (however long that might be) for an up-front spend of £730k. That's quite a lot less than £1.2M.

https://www.hl.co.uk/retirement/annuities/best-buy-rates

I have got my SP as a backup plan.

Most people would count SP as part of their Plan A.

7685 said:

In terms of real growth, no PB or gilts ?

Index-linked gilts currently have a positive return, and are as safe as any £-denominated investment.

https://lategenxer.streamlit.app/Gilt_Ladder

A 40-year index-linked gilt ladder, paying £30k pa and commencing in 2037, would cost around £710k at current prices. That's also quite a lot less than £1.2M.

7685 said:

I had a small work pension around £90K, not sure whether to leave it to 'grow' or withdraw it as the fees (SW) is not low and also if I have closed my pension I will not be able to contribute £2880 per year?

Are you still working? Can you contribute more to a pension? The tax relief is likely to work in your favour.

SVaz

FTSE All World index includes emerging markets, Fidelity Index World doesn’t,  that’s the only difference. Both all equities. 

I use HSBC Global strategy Dynamic, it’s around 65-70% equities,  Balanced is obviously fewer equities, cautious even fewer.   They are very cheap for managed funds.

7685

QrizB said:

7685 said:

I am not sure how to factor in inflation?

Relatively conservative investments should be able to keep up with inflation over 40 years, Or you could buy an RPI-linked annuity and forget about investment risk entirely.

Someone who is 55 could currently secure £30k pa, increasing with uncapped RPI, for the rest of their life (however long that might be) for an up-front spend of £730k. That's quite a lot less than £1.2M.

https://www.hl.co.uk/retirement/annuities/best-buy-rates

7685 said: 
That's good to hear. is there a way to know when is a good to buy annuity?  

I have got my SP as a backup plan.

Most people would count SP as part of their Plan A.

7685 said: 
Me included.. 

In terms of real growth, no PB or gilts ?

Index-linked gilts currently have a positive return, and are as safe as any £-denominated investment.

https://lategenxer.streamlit.app/Gilt_Ladder

A 40-year index-linked gilt ladder, paying £30k pa and commencing in 2037, would cost around £710k at current prices. That's also quite a lot less than £1.2M.

7685 said: 
From your calculations, index linked gilts appear to be better value but annuities has more certainty but less flexibility?  Annuity I read that you have to go through a broker?  

7685 said:

I had a small work pension around £90K, not sure whether to leave it to 'grow' or withdraw it as the fees (SW) is not low and also if I have closed my pension I will not be able to contribute £2880 per year?

Are you still working? Can you contribute more to a pension? The tax relief is likely to work in your favour.

7685 said: 
Not at the moment but I am trying to get back into work as I have some months to make up to join the pension scheme. I will keep looking. 

Bostonerimus1

You've got a decade so I'd make sure you had 1 year of spending in a MMF for emergencies and then use something like a 60/40 mix of equites and fixed income. If you have a substantial pot already you might be able to take a bit more risk. Don't forget about annuities when it comes to retirement. Also pay off any debt before you retire, that takes a lot of pressure off your need to generate income.