Bond allocation

dont_use_vistaprint

hi, I retired at 52 and living off savings and investments recently got access To a small LGPS which covers all my bills from age 55 but doesn't provide any extra for living or travel supporting children, large purchases, etc. have a full from state pension at 67 and large mortgage free property that could be downsized later to release equity. I'm in very good health and travel extensively and so hopefully this will continue for at least another 20 years.

Looking at my portfolio I have the following allocation. So there is a larger than normal cash amount in different types of accounts, to allow flexibility and unpredictability in my life, which is important and a substantial growth engine for longer term at the expense of minimal defensive assets

your impression of the split below?

also last couple of years I've shifted cash to SIPP my maximum non-taxpayer allowance, and tax relief, increasing equity slightly due to the good growth, but with higher interest rates currently , tech sector uncertainty, I was thinking of stopping this taking some tax-free SIPP into cash accounts at around 5%, and if rates drop later to move it into a stocks and shares ISA, splitting between bonds and equities. This will have maximum of adjusting the numbers below by one or 2% over the next few years. So a small adjustment to the changing market conditions rather than a change in strategy

Cash	41%
Bonds	12%
Equities	47%
Total	100%

El_Torro

Some people will think your allocation is fine, some will think it's too conservative. If it meets your needs then it doesn't really matter what we think.

I am not near retirement yet but my plan when the day comes is to have a few years worth of cash, a few years worth of 60 / 40 investments and the rest in 100% equities. That way when stock markets drop I can take money from my cash and not sell in a dip. I won't be looking at it in percentage terms, more in the number of years of low volatility investments I have.

SVaz

I have 4-5 years in cash ( short term money market funds) which currently is 35% of my pot, to take me to 67 in 2032.

Another 15% in Gilts, maturing between 2032-2035, the income may or may not be needed.
Around 10% in a balanced mixed asset fund, which I’m still adding to for the next 18 months.

The other 40% is in a Global all world tracker, I’m also feeding the dividends ( minus my platform fees) into the balanced fund.

dont_use_vistaprint

https://forums.moneysavingexpert.com/discussion/comment/82169336#Comment_82169336

Yes, I am using a higher cash liquidity to manage market risks rather than a higher bond approach. The seems sensible to me interest rates are good and as a non-taxpayer I can leverage it. But sometimes you get so familiar with your own approach and views It feels normal and obvious useful to get external perspective.

I spoke to an IFA recently but they asked all the wrong questions. They never talked about lifestyle flexibility & spontaneity or how to make sure your money runs out by the time you die, and they asked me what my risk attitude was which I thought it was a silly question like going to a dietician and them asking you how much you like food. So I would rather ask for the views of other people doing this in similar situations making those decisions for perspective.

dont_use_vistaprint

https://forums.moneysavingexpert.com/discussion/comment/82169374#Comment_82169374

I got rid of my money market funds because they perform worse than consumer savings products and I am a non-taxpayer. Also, I don’t need the liquidity inside a SIPP, because my strategy doesn’t require it, I stopped actively trading on a regular basis

Dazed_and_C0nfused

also last couple of years I've shifted cash to SIPP my maximum non-taxpayer allowance, and tax relief, increasing equity slightly due to the good growth, but with higher interest rates currently , tech sector uncertainty, I was thinking of stopping this taking some tax-free SIPP into cash accounts at around 5%, and if rates drop later to move it into a stocks and shares ISA, splitting between bonds and equities.

Why would you want to miss out on a free £720 each year, which far outweighs any taxable (or ISA) interest you can get 🤔

dunstonh

I spoke to an IFA recently but they asked all the wrong questions. They never talked about lifestyle flexibility & spontaneity or how to make sure your money runs out by the time you die,

Those are not the wrong questions.

The biggest risk with investments is the investor. Behavioural risk, and you only ascertain that through risk questions and probing.

Questions for budgeting and cash flow planning come later. Most IFAs won't start on that until you employ them, as it's time-consuming. They tend to be in meeting 2 or meeting 3. So, assessing risk profile and behavioural risk early on is usually the right way.

nd they asked me what my risk attitude was which I thought it was a silly question like going to a dietician and them asking you how much you like food.

It's a good question, as it indicates what the person thinks they are and the context. One person's low risk is another person's high risk. So, we need questions on this to build that context.

Also, I think a dietitian asking how much you like a food is a good question. It again gives a lot of context to how you eat and why you choose certain foods.

dont_use_vistaprint

https://forums.moneysavingexpert.com/discussion/comment/82169505#Comment_82169505

Why do they need to know my risk appetite? If I take big risks I’d rather they tell me not to do that, than feed me risky options build a sound portfolio for me not one than leans in to my emotions to take risks.

SVaz

vistaprint - STMMFs have a better rate than cash held in a SIPP, it’s over £1500 more on the £60k I have, why on earth would you think cash is better? AFAIK you can’t use savings products in a SIPP anyway, so it’s irrelevant.

My Wife is withdrawing all her SIPP tax free over the next few years, she CAN get a better rate in a savings account or cash ISA for the portion she’s not reinvesting.

She will also continue the £2880 dance until she gets her State pension, why turn down £720 a year of free cash?

dunstonh

Why do they need to know my risk appetite?

Let's look at a scenario. You have 30 years to retirement and are investing monthly. On that basis, you should be as high in equities as you possibly can. I.e., 100%

However, let's also add in that you're a nervous investor who cannot handle stock market volatility and tends to look at your investment values on a daily basis, even though you've been told many times not to.

How do you think that's going to end up?

If I take big risks I’d rather they tell me not to do that, than feed me risky options build a sound portfolio for me not one than leans in to my emotions to take risks.

The advisor is there to ascertain the whole scenario and put in place a solution that fits you as an individual.

The advisor won't automatically build a portfolio because you've told them that you a certain risk level. Behaviour, capacity for loss, timescale, knowledge, and understanding are all taken into account. If an advisor thinks you're being too cautious or too adventurous, they will tell you that and explain why. But before they do all that, they have to understand what your default position is. Most of the other stuff occurs in conversation rather than in a questionnaire.

vistaprint - STMMFs have a better rate than cash held in a SIPP, it’s over £1500 more on the £60k I have, why on earth would you think cash is better? AFAIK you can’t use savings products in a SIPP anyway, so it’s irrelevant.

You can hold a range of deposits in a SIPP. However, plenty of personal pensions masquerade as SIPPs but don't actually offer much SIPP functionality.

dont_use_vistaprint

https://forums.moneysavingexpert.com/discussion/comment/82169626#Comment_82169626

My cash is typically 1.35 - 1.65 percentage points higher than money markets and not subject to any tax