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  • FIRST POST
    • captainreckless
    • By captainreckless 9th Feb 18, 6:52 PM
    • 26Posts
    • 16Thanks
    captainreckless
    Is this a reasonable plan?
    • #1
    • 9th Feb 18, 6:52 PM
    Is this a reasonable plan? 9th Feb 18 at 6:52 PM
    I am moving out of the UK to work this year and as such I will no longer have access to my DB pension. Therefore, I'm going to invest an amount equivalent to my current pension contributions plus my current employers contribution plus a bit more to take account of the fact that I won't be in a 'gold plated' public sector scheme any more. I'm aiming for 1200 a month to start with.

    I'll be holding any investments for more than 20 years and I wish to gain broad exposure to global equities with a gradually increasing bond allocation as my (hopefully) early retirement draws near. I'll also be making voluntary NI contributions.

    My plan is to invest in a cheap FTSE All World Index tracker as a core holding along side some actively managed funds to boost exposure to emerging markets. Later on I'll add in some bonds. I expect to experience at least two stock market crashes in this time. I also expect that everything should average out to inflation plus 5% over several decades.

    I would like to know if this is a stupid plan that contains a flaw that I am unaware of that will leave me destitute in retirement.
Page 1
    • Thrugelmir
    • By Thrugelmir 9th Feb 18, 7:13 PM
    • 58,203 Posts
    • 51,575 Thanks
    Thrugelmir
    • #2
    • 9th Feb 18, 7:13 PM
    • #2
    • 9th Feb 18, 7:13 PM
    I also expect that everything should average out to inflation plus 5% over several decades.
    Originally posted by captainreckless
    On what basis would you expect that level of return?
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • captainreckless
    • By captainreckless 9th Feb 18, 7:59 PM
    • 26 Posts
    • 16 Thanks
    captainreckless
    • #3
    • 9th Feb 18, 7:59 PM
    • #3
    • 9th Feb 18, 7:59 PM
    I Googled for 'long term inflation adjusted stock market returns' and then took a guess.
    • Alexland
    • By Alexland 9th Feb 18, 8:43 PM
    • 2,237 Posts
    • 1,631 Thanks
    Alexland
    • #4
    • 9th Feb 18, 8:43 PM
    • #4
    • 9th Feb 18, 8:43 PM
    I think a return of around 2% above inflation and fees is more realistic given the medium term economic outlook.

    Vanguard, one of the world's largest asset managers, is forecasting that a 100% global shares portfolio will only return around 4% per annum over the next 10 years!

    https://www.vanguardinvestor.co.uk/articles/latest-thoughts/markets-economy/why-investors-prepare-for-lower-returns

    Alex
    • captainreckless
    • By captainreckless 9th Feb 18, 9:24 PM
    • 26 Posts
    • 16 Thanks
    captainreckless
    • #5
    • 9th Feb 18, 9:24 PM
    • #5
    • 9th Feb 18, 9:24 PM
    So the suggestion is that I should chase higher returns somehow? I'm already 100% equities as it is!
    • Alexland
    • By Alexland 9th Feb 18, 9:37 PM
    • 2,237 Posts
    • 1,631 Thanks
    Alexland
    • #6
    • 9th Feb 18, 9:37 PM
    • #6
    • 9th Feb 18, 9:37 PM
    So the suggestion is that I should chase higher returns somehow? I'm already 100% equities as it is!
    Originally posted by captainreckless
    No we are just suggesting you base your plan on more realistic expectations for the medium term. Perhaps in the later phase there might be better market growth but as you say you will be reducing market exposure to get some better certainty of outcome which is perfectly understandable.
    • captainreckless
    • By captainreckless 9th Feb 18, 10:02 PM
    • 26 Posts
    • 16 Thanks
    captainreckless
    • #7
    • 9th Feb 18, 10:02 PM
    • #7
    • 9th Feb 18, 10:02 PM
    Fair enough. To be honest, all I'm really interested in is not making real terms losses over the long term. I don't have any plans that depend on achieving a certain return. I'm investing more out of a sense of prudence than any desire to make money.
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