Is a 60/40 fund out of date for a Retirement

plumb1_2

Alexland said:

plumb1_2 said:

Aged 68 
so my question is a 60/40 fund a sensible choice given life expectancy is about 82. As iam not in the best of health or Mrs Plum

Remember your life expectancy goes up as you get older because you didn't die young. According to some old date from the ONS the average 68 year old male will live to 86 with a 25% chance of 92 and 2.5% chance of 100.

Now bonds yields are much higher there is less long term opportunity cost to being diversified so having your investments 60/40 (alongside some other stable income streams) sounds like you are generally in the right ballpark provided you are happy to see 25%ish valuation crashes?

If you health is not good would that give you any advantage on lifetime annuity rates?

I suppose if there was a 25% correction, I would be affected if I was in any form of equites, unless I put it in a MM fund. But I do want growth.
sorry I don’t understand when you say bonds are higher so less long term opportunities to being diversified? 

I did reduce from 100% to the 60/40 fund, due to my risk tolerance lowering, and not losing a large amount in a large done turn. And not having the time to recover.
would keeping the RL fund  £299k in the 60/40 , and maybe moving the £85k vanguard fund from 60/40 to say something like 80/20 for long term growth?

plumb1_2

kempiejon said:

plumb1_2 said:
That’s is an issue for me with carrying on working, yes I should be putting my feet up, but I do enjoy. It gives me time away from Mrs Plum 😊

And I also work with a colleague, who I have done so for over 20 yrs. And have a laugh and natter..( good for my mental health). I call him my 67 yr old apprentice.
And most probably leave 70% of the pots ti inheritance, unless care home fees kick in, hopefully not.

Planing ? That’s where I fall short. I can’t seem to envisage the future in regards numbers/ income etc

If work brings pleasure and human interaction and financially it's not essential, may as well crack.
If you don't need the surplus 70% and want to maximise an inheritance 60:40 probably won't increase in value as much as higher proportion global equities - with the oft mentioned volatility. Your total wealth, income assets SP and so on give a good grounding but only you can judge what feels too risky with your investments and asset allocation.
Those with the accumulator mindset struggle with pursuing an active deaccumulation plan, those that get affirmation from a role like to keep that.

Yes I’ve been to work today 9am to 12-15 with my mate. And even had a chance to go for a coffee.

Yes I can only envisage taking about £10k per year out of the pension for the next 10 yrs.  what I have been thinking is after April next yr take the 25% tfls from Vanguard about £21k and putting it in the ss isa. Leaving RL pot to grow and only taking the 25% before aged 75.

At the moment I bam waiting for a tenant to leave hopefully within 18 months, said he’s getting married late next year.
Then I would sell it and have £100k less cgt and any other fees. So maybe £74k ballpark, and that would last 7 yrs , I would loose the rent.
But less stress etc.
Regarding the 60/40 , what I have need reading it averages about 7/8% increases, hopefully above inflation.
I  feel I am getting tiered chasing the rainbow, I was chatting to my mate this morning about my car insurance going up, we both agreed that we can’t be bothered spending time chasing cheaper quotes, if it’s under £50 increase.

Alexland

plumb1_2 said:

sorry I don’t understand when you say bonds are higher so less long term opportunities to being diversified? 

The yields on bonds are much higher than they were during the near zero interest rate period because their price has crashed so they are mathematically offering better return prospects going forward.

So unlike a few years ago when holding bonds was a dead-weight liability in the portfolio (a 'return free risk,', and people were asking if 60/40 was broken) they should now provide a positive and hopefully above inflation return depending on which ones you hold.

So my point is that in current market conditions it pays to be diversified as there is less of an opportunity-cost ie you are no longer missing out on much returns by holding bonds in the portfolio because at current prices and yields they are offering good returns.

Over the very long term equities should still do better but given current high equity market valuations then over the next decade it's not clear to me which would be expected to do better so something like 60/40 looks like good positioning.

plumb1_2

Alexland said:

plumb1_2 said:

sorry I don’t understand when you say bonds are higher so less long term opportunities to being diversified? 

The yields on bonds are much higher than they were during the near zero interest rate period because their price has crashed so they are mathematically offering better return prospects going forward.

So unlike a few years ago when holding bonds was a dead-weight liability in the portfolio (a 'return free risk,', and people were asking if 60/40 was broken) they should now provide a positive and hopefully above inflation return depending on which ones you hold.

So my point is that in current market conditions it pays to be diversified as there is less of an opportunity-cost ie you are no longer missing out on much returns by holding bonds in the portfolio because at current prices and yields they are offering good returns.

Over the very long term equities should still do better but given current high equity market valuations then over the next decade it's not clear to me which would be expected to do better so something like 60/40 looks like good positioning.

Thanks for explaining about bonds,  think I’ll stick with the 60/40. . The ones I hold are just in the vanguard and RL funds.
Dont think I am educated enough market wise to select individual bonds and equity funds.

Bostonerimus1

60/40 is said to be "out of date" because the financial industry needs to sell something new. It's still a classic along with 70/30, 50/50, 40/60 and my personal favourite 80/20. Seriously your asset allocation depends on your circumstances not the latest trends in personal finance.

dunstonh

60/40 is said to be "out of date" because the financial industry needs to sell something new.

I disagree.   The "out of date" references have mostly come from social media influencers and theoretical studies trying to be cool but ultimatly relying on a short term period when bonds were going through an extremely poor period.   The financial industry no longer creates packaged investment products.  At least, not in the UK, it doesn't.

Bostonerimus1

dunstonh said:

60/40 is said to be "out of date" because the financial industry needs to sell something new.

I disagree.   The "out of date" references have mostly come from social media influencers and theoretical studies trying to be cool but ultimatly relying on a short term period when bonds were going through an extremely poor period.   The financial industry no longer creates packaged investment products.  At least, not in the UK, it doesn't.

OK perhaps I should have said "financial zeitgeist". 

dunstonh

Bostonerimus1 said:

dunstonh said:

60/40 is said to be "out of date" because the financial industry needs to sell something new.

I disagree.   The "out of date" references have mostly come from social media influencers and theoretical studies trying to be cool but ultimatly relying on a short term period when bonds were going through an extremely poor period.   The financial industry no longer creates packaged investment products.  At least, not in the UK, it doesn't.

OK perhaps I should have said "financial zeitgeist". 

I would go along with that.