I'm standing at the gateway to one of those transitionary phases of life and so want to set up my portfolio for the next section of the journey. I've been reading this excellent forum with great interest recently and thought I would share the topics that are top of mind for me. I would be grateful for your comments on other things I should be thinking about as well as your thoughts on the specific actions I have in mind.
My Situation
- M51, spouse F50
2 children
UK Domiciled
General plan: work until the children have finished university, which takes me to 58. I may "retire" or I may work doing something more fun/risky. The goal is getting to financial independence so I have more choices about how I spend my time whilst also launching my children into adult life. I intend to live off the income from the portfolio and so am thinking now, with 6.5 years to go, about how I might restructure things to enable that transition.
Portfolio
- Pension: Employer DC pension - £1M - Standard Life Sustainable Multi Asset Growth Pn (https://library.standardlife.com/LPNL.pdf)
ISAs: - £500K - Basket of "Funds" originally set up in 2010 as an 80:20 equity/bond allocation. The current asset allocation is shown below.
Unwrapped: £310K in a single US stock (I know, I know...)
House: Doesn't really matter what the value is as we live in it, rather than it being an investment. No mortgage.
Key actions currently in my mind, in a rough priority/sequence
- Decide my desired asset allocation in this "pre retirement" phase
Reduce platform charges, both for the ISAs and the pension
Move the pension to a SIPP with the right asset allocation
Generally tidy up and simplify
Supplemental notes:
- Asset allocation - I need to defend and grow and, in 6.5 years, be able to take income. I'm thinking of mostly a global equity tracking approach to try and smooth out regional differences and defend against inflation. I do worry a bit about how well trackers might do in a flat-to-down market. I need to decide whether I accept or reject the conventional wisdom that an equity/bond mix offers a balanced solution. I think asset allocation is my main area of decision. The rest is mechanics.
Pension - is a lifestyle plan but I pushed out my apparent retirement age to stop the provider moving into the pre-retirement mix that was bond-heavier. So that pension is all in its "growth" asset allocation still. I plan to drawdown.
Deriving income - I'm not used to taking the income. Most of the funds are in acc units at present so I need to get my head around how I actually take income efficiently.
Platform - I need to get the charges down as both the pension and the ISA are with providers who charge a percentage. I think I would be better with a flat fee or possibly consolidating to one and benefiting from reduced or no platform charges
Unwrapped I sell down the CGT allowance each year and move into the wrapped vehicles, diversifying at the same time. This is now getting more difficult as the GCT allowance is shrinking. I might have to just pay the CGT to get on with it.
Vehicles - I'm in "Funds" but I see many seem to prefer ETFs on this board... is this due to the lower holding fees? I am generally not going to want anything too exotic in the main portfolio, although I will keep a little playground area. I have about 22 different funds in the ISAs and so will want to get that down to a lower number rather than a higher number as I take control of the pension.
Current ISA allocation
UK Shares 42%
International Shares 33%
International Bonds 8%
UK Gilts 6%
Unclassified Funds 3%
UK Bonds 3%
Cash & Equivalents 2%
Investment Trusts 1%
Other 1%
Property 1%