Investment strategy for next 20+ years

Wider investment strategy discussions not dealt with elsewhere
hiriskpaul
2 Lemon pips
Posts: 113
Joined: November 4th, 2016, 1:04 pm

Re: Investment strategy for next 20+ years

Postby hiriskpaul » January 4th, 2017, 5:07 pm

Plutus wrote:Interest only mortgage approx 150k, 50% LTV, 3% fixed until 2019. Overpaying with lump sums and £300 each month.


After the 5th consecutive year of positive stock market returns, culminating in the World index delivering over 28% in £ terms last year, it is very easy to start thinking that little can go wrong by taking on increasing amounts of risk. Why not gear up? Borrow money to invest in equities at 3%? What could go wrong?

I have an offset tracker mortgage at 1% above BoE base, but at the moment most of it is paid off. Right now I would love to be able to achieve a risk free, tax free return of 3% fixed until 2019. For one thing I would max out my offset account and pay it into the 3% 2019 fix.

That said, a downside I can see to reducing your mortgage is that it may be difficult to access that cash should you want to, unless you have an offset mortgage.

If the stock market crashes within the next couple of years, you might consider yourself (and me?) a genius if you chose to reduce your mortgage instead of piling yet more money into stocks. On the other hand if markets go up another 50% from here, you will no doubt be kicking yourself and wishing you never listened to me.

Only you can decide how much risk you want to take and how to spread those risks, but the market will at some point go into reverse.

Plutus
Posts: 35
Joined: January 3rd, 2017, 11:24 am

Re: Investment strategy for next 20+ years

Postby Plutus » January 5th, 2017, 8:48 am

The additional replies have been very helpful, I won't thank each person individually but I appreciate it.

If nothing else this has confirmed some of my attitudes to risk, my aversion to losing capital, my bias towards reducing debt, a fear of frittering away my hard earned cash, my habit of interfering too much with my shares ISA account etc. etc.

What to do next?

Of my total investments including cash available to invest I have a 50% exposure to equities, this is divided between the HYP/income type portfolio and the index tracker passive portfolio that I'm running from pension Additional Voluntary Contributions provided by Prudential. My planned asset allocation is 75% equities, 25% cash/bonds but I may re-appraise this in light of my attitude to risk. A possible 60/40 split may suit my temperament.

1. I will continue to overpay the mortgage. I cannot release any overpayments but we are due to re-mortgage in 2019 and I can reassess the situation then.
2. I will aim to build up the amount invested within the shares ISA, drip-feeding into income generating investment trusts and reinvesting the dividends. I may also resume contributions into the HYP portfolio and will ask for opinions on the appropriate forum.
3. I will still be relatively cash-heavy so I won't lose my shirt if the stock markets plummet and I can ramp up equity investments when valuations are less frothy.

LooseCannon101
Posts: 9
Joined: November 5th, 2016, 2:12 pm

Re: Investment strategy for next 20+ years

Postby LooseCannon101 » January 13th, 2017, 7:01 pm

Have you considered one or more one-stop shop, global growth investment trusts e.g. Foreign and Colonial (FRCL), Alliance or Witan? I've been investing in FRCL for the past 20 years, gradually building up my holding using their saving scheme.

Pound-cost averaging isn't just a sales ploy - it actually works. Average returns of about 8% per year can be achieved so long as you keep your nerve and don't sell out during periods of market gloom. Market prices are slightly high at the moment, but no matter what the price, it is always a good time to save a set amount per month and re-invest one's dividends.

Plutus
Posts: 35
Joined: January 3rd, 2017, 11:24 am

Re: Investment strategy for next 20+ years

Postby Plutus » January 15th, 2017, 10:28 am

LooseCannon101 wrote:Have you considered one or more one-stop shop, global growth investment trusts e.g. Foreign and Colonial (FRCL), Alliance or Witan? ....

Pound-cost averaging isn't just a sales ploy - it actually works. Average returns of about 8% per year can be achieved so long as you keep your nerve and don't sell out during periods of market gloom. Market prices are slightly high at the moment, but no matter what the price, it is always a good time to save a set amount per month and re-invest one's dividends.


Good morning, thanks for replying to my question.

FRCL seems to be mentioned on many occasions especially regarding investing for children. I'll take a further look at it.

Your point about regular investment stands out though; I really need to commit to a long term plan and stick to it without meddling too often.

I have had many different ideas over the past few weeks but I'm leaning towards income investment trusts and international ETFs, luckily I'm not in a rush!


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