Simple Portfolio Management in retirement

[Darka]

With FIRE being imminent(ish) (end of year hopefully) I've started looking at the complexity of my spreadsheets, etc. and I don't like what I see.

Like most of you I have a complex spreadsheet for tracking our retirement portfolio, incoming dividends, transactions, etc. this portfolio is spread across several ISA and SIPP accounts.

The problem is that my wife struggles with understanding it and this causes her great anxiety and worry should anything happen to me.

I've tried to explain things on several occasions but as we get older it's not as easy to pick up things and I can't expect her to gain the knowledge that I have gained over the last 15+ years, it's not realistic or fair.

So, I need to simply everything as much as possible....
I have some ideas, but was wondering if anyone else has this issue and what have you considered to solve this?

regards,
Darka

[dealtn]

With FIRE being imminent(ish) (end of year hopefully) I've started looking at the complexity of my spreadsheets, etc. and I don't like what I see.

Like most of you I have a complex spreadsheet for tracking our retirement portfolio, incoming dividends, transactions, etc. this portfolio is spread across several ISA and SIPP accounts.

The problem is that my wife struggles with understanding it and this causes her great anxiety and worry should anything happen to me.

I've tried to explain things on several occasions but as we get older it's not as easy to pick up things and I can't expect her to gain the knowledge that I have gained over the last 15+ years, it's not realistic or fair.

So, I need to simply everything as much as possible....
I have some ideas, but was wondering if anyone else has this issue and what have you considered to solve this?

regards,
Darka

Why would she need any of that "monitoring"?

With respect to food, some are happy to get an allotment, sow seeds, nurture seedlings, transplant, water, harvest etc. there are ancillary benefits in addition to the food and nutrition.

Others are happy to do a weekly shop, or online delivery, or even a weekly box scheme where they don't even need to choose what comes.

There are plusses and minuses with either approach, and people decide what is right for them (which might be different to others).

If the "pot" is sufficient a set of trackers such that a regular monthly(?) income arrives in the bank account, with no additional work, she will be happy, and needn't involve herself with much (once you are gone - which I assume is the case you are concerned about).

I doubt she ever worried about your monthly salary, dealt with your HR department, did your taxes etc., but was happy with a monthly salary arriving into an account available to spend. (Certain assumptions made here of course).

[swill453]

Maybe it's not the management but the portfolio that's the real problem?

Certainly for our joint portfolio, if my wife was at all concerned about taking it over on my demise I'd say she should just, on day one, liquidate everything and put it all in a single world tracker.

Scott.

[ReformedCharacter]

With FIRE being imminent(ish) (end of year hopefully) I've started looking at the complexity of my spreadsheets, etc. and I don't like what I see.

Like most of you I have a complex spreadsheet for tracking our retirement portfolio, incoming dividends, transactions, etc. this portfolio is spread across several ISA and SIPP accounts.

The problem is that my wife struggles with understanding it and this causes her great anxiety and worry should anything happen to me.

I've tried to explain things on several occasions but as we get older it's not as easy to pick up things and I can't expect her to gain the knowledge that I have gained over the last 15+ years, it's not realistic or fair.

So, I need to simply everything as much as possible....
I have some ideas, but was wondering if anyone else has this issue and what have you considered to solve this?

regards,
Darka

Yes, I can relate to that. My wife is a highly intelligent and successful woman but has little knowledge or particular interest in money management or investment. She is more than a decade younger than me and therefore likely to have to do without my input at some point. I'm also mindful of the fact that my father never discussed his finances with my mother who was twenty years younger than him and who remained in total ignorance of her financial situation until after he died. This is what I have done:

- Created spreadsheets in a shared folder (Google Sheets) which I update weekly and to which my wife has access. This details what is where.
- Moved over time from individual company shareholdings to ITs.
- Created a 'strategy' document, again in a Google shared folder, listing suggested ITs for both income and growth which I review every year or so. We already own some of the ITs
- Involved one of my sons who is interested in investment (and looking after his mother), he has access to the same documents and spreadsheets.
- Made suitable warnings about the use of IFAs.
- Discuss, from time to time, what she will have to do after I have died.

Possibly the most helpful thing I have done is to write it all down. This has clarified my thoughts and of course provided some easy to access guidance.

RC

[scrumpyjack]

I have been steadily moving to investment trusts and trackers for the same reason. ITs have the advantage that the dividend income is likely to be steady, as long as financial shocks do not last more than a year or two, and both ITs and ETF trackers mean it is reasonable to have a do nothing policy. I have done the same for children and grandchildren's portfolios as none of them have a clue about investment!

The ITs and ETFs are global rather than UK oriented, though all UK listed. The UK is such a small part of the global economy that IMO it is far too risky to be seriously overweight UK.

[scrumpyjack]

I would add that I did prepare a pack sometime ago explaining everything to my daughter, as my executor, on my demise and I told her where the pack is. I must update it! She is highly intelligent but completely uninterested in money or finance (as long as it is there!).
One should try to leave one's executor's job as simple as possible.

[Darka]

Why would she need any of that "monitoring"?

Good point and is kind of where I think I'm heading with this.

If the "pot" is sufficient a set of trackers such that a regular monthly(?) income arrives in the bank account, with no additional work, she will be happy, and needn't involve herself with much (once you are gone - which I assume is the case you are concerned about).

Yes, the income is all that really matters at the end of the day, and so long as she understands that side of things, then the rest of it isn't important.

Our ISA dividends are already automatically paid out into a collection account, her DB pension will join that from September.
All that will remain after that is to extract SIPP dividends once a year into the collection account.

Then it's a simple case of taking the value of that account at the end of the year and divide by 12 to produce the monthly income for the following year and tweaking the two standing orders from that account.

regards,

[Darka]

Maybe it's not the management but the portfolio that's the real problem?

Certainly for our joint portfolio, if my wife was at all concerned about taking it over on my demise I'd say she should just, on day one, liquidate everything and put it all in a single world tracker.

Scott.

That's one of the reasons I've been moving more towards IT's as I prefer those to trackers, but still have some single company shares I might get rid of.

[Darka]

Yes, I can relate to that. My wife is a highly intelligent and successful woman but has little knowledge or particular interest in money management or investment. She is more than a decade younger than me and therefore likely to have to do without my input at some point. I'm also mindful of the fact that my father never discussed his finances with my mother who was twenty years younger than him and who remained in total ignorance of her financial situation until after he died. This is what I have done:

- Created spreadsheets in a shared folder (Google Sheets) which I update weekly and to which my wife has access. This details what is where.
- Moved over time from individual company shareholdings to ITs.
- Created a 'strategy' document, again in a Google shared folder, listing suggested ITs for both income and growth which I review every year or so. We already own some of the ITs
- Involved one of my sons who is interested in investment (and looking after his mother), he has access to the same documents and spreadsheets.
- Made suitable warnings about the use of IFAs.
- Discuss, from time to time, what she will have to do after I have died.

Possibly the most helpful thing I have done is to write it all down. This has clarified my thoughts and of course provided some easy to access guidance.

RC

Thanks RC,

Some good suggestions, and will work on some similar documents.

[Darka]

I have been steadily moving to investment trusts and trackers for the same reason. ITs have the advantage that the dividend income is likely to be steady, as long as financial shocks do not last more than a year or two, and both ITs and ETF trackers mean it is reasonable to have a do nothing policy. I have done the same for children and grandchildren's portfolios as none of them have a clue about investment!

The ITs and ETFs are global rather than UK oriented, though all UK listed. The UK is such a small part of the global economy that IMO it is far too risky to be seriously overweight UK.

I've started this process to, still have some individual shares and would like to get rid of those too as some point.

Currently 57% IT's and 38% HYP with the remainder in cash.

[Sobraon]

my wife struggles with understanding it

I have given this some thought lately because there is a perennial problem where one partner (often male) 'looks after the investments and savings ' whilst the other partner seemingly has little interest.

With Priti Patel's Domestic Abuse Bill 2019-21 currently going through Parliament it is likely that this form of relationship may be tagged as 'abusive' in the future. This is NOT because partners are denied access to money it is because the 'financial controlling' partner is deemed to be denying them access to INFORMATION.

Some of the issues raised by large charities in addressing this 'abuse' of INFORMATION include 'denying a partner information about the family finances', 'using male privilege' and 'withholding financial information such as account passwords, account numbers, and investment information'.

Remember this is NOT about the finance itself this is about a duty on the finance controlling partner to ensure that the other partner has access to and understands that information. As an example last night I tried to explain the reddit wallstreetbets gme news and what a short squeeze was. My wife might as well have been trying to explain Greek adjectives of the 3rd declension to me such was the understanding. The thing is the law is not interested in the mutual understanding of Greek but it seems to be becoming interested in the mutual understanding of financial matters in intimate partnerships.

How this will play out I don't know (but if I were betting - in the divorce courts). I think those of us who are the 'financial controlling' partner need to take action, I think we have been warned.

[Darka]

How this will play out I don't know (but if I were betting - in the divorce courts). I think those of us who are the 'financial controlling' partner need to take action, I think we have been warned.

Thanks Sobraon,

I hadn't even considered this, however these days nothing would surprise me

regards,
Darka

[dspp]

How this will play out I don't know (but if I were betting - in the divorce courts). I think those of us who are the 'financial controlling' partner need to take action, I think we have been warned.

Thanks Sobraon,

I hadn't even considered this, however these days nothing would surprise me

regards,
Darka

It is not quite the same thing, but my GF's portfolio (in ii as a broker) is basically in 4 Vanguard equity trackers, to which in time I expect to add a Vanguard bond tracker. A number of years ago I set things up for her and she watched over my shoulder, then progressively she took the wheel. Nowadays she even downloads the annual tax statement, and maybe asks with me if I have an opinion on what she should top up next, or maybe not. The point is she is able to drive, because she is driving.

You could try splitting your (joint) portfolio in two chunks, not necessarily equal sized. (You could even open an account with a different broker, but it could be the same broker - I don't know anything about spousal tax/etc stuff by the way). In her 'starter' chunk simplify the holdings, then give her the keys. That way if you did go under the #10 bus tomorrow as a minimum she would have a reference simplified portfolio to convert over to. And as the months and years run by she will get more comfortable and you can maybe even equalise up the size of the chunks, or whatever. You might even get attracted by the low-stress approach of the simplified portfolio and no records keeping and convert yourself. The point is she would be actually doing it and getting more confident in doing so.

This is not advice, just an offering for consideration. Mysteries of other people's marriages & all that.

regards, dspp

[scrumpyjack]

my wife struggles with understanding it

I have given this some thought lately because there is a perennial problem where one partner (often male) 'looks after the investments and savings ' whilst the other partner seemingly has little interest.

With Priti Patel's Domestic Abuse Bill 2019-21 currently going through Parliament it is likely that this form of relationship may be tagged as 'abusive' in the future. This is NOT because partners are denied access to money it is because the 'financial controlling' partner is deemed to be denying them access to INFORMATION.

Some of the issues raised by large charities in addressing this 'abuse' of INFORMATION include 'denying a partner information about the family finances', 'using male privilege' and 'withholding financial information such as account passwords, account numbers, and investment information'.

Remember this is NOT about the finance itself this is about a duty on the finance controlling partner to ensure that the other partner has access to and understands that information. As an example last night I tried to explain the reddit wallstreetbets gme news and what a short squeeze was. My wife might as well have been trying to explain Greek adjectives of the 3rd declension to me such was the understanding. The thing is the law is not interested in the mutual understanding of Greek but it seems to be becoming interested in the mutual understanding of financial matters in intimate partnerships.

How this will play out I don't know (but if I were betting - in the divorce courts). I think those of us who are the 'financial controlling' partner need to take action, I think we have been warned.

Ah, sounds like we could have a Catch 22 situation here. On the one hand you must not keep her in the dark about financial matters, but on the other hand, unless you are a qualified IFA (if there is such a thing!), you must not give her financial advice and discussing finances with her might be considered financial advice

They'll get you one way or the other!

[swill453]

Some of the issues raised by large charities in addressing this 'abuse' of INFORMATION include 'denying a partner information about the family finances', 'using male privilege' and 'withholding financial information such as account passwords, account numbers, and investment information'.

I've never seen a bank account that didn't specifically prohibit sharing of login details, even between joint account holders. Each party has a separate login.

Scott.

[JohnB]

Presumably the same applies if only one of you can cook! It would seem sensible for the more financially savvy one to write up the whole procedure for a year's fiances, from making the trades, downloading the statements and filling in the tax returns. Its rather optimistic to legislate for this kind of thing, as not everyone in a relationship has the capacity, rather than the inclination, to do it. It does sound like clever people thinking what clever people need to be able to do.

[airbus330]

Thanks for posting this thread, I seem to have a similar problem.
One thing I have not worked out yet, most of my income will be coming from UFPLS drawdowns from my SIPP. If I die that SIpp will pass to my wife. What I'm not clear about is whether the pot passes in speci or is cashed in and passed across. If the latter, some plan on how to re-invest the cash will have to be made. Had the OP considered this?

[Adamski]

@airbus330, the provider transfers the sipp to a new pot called death benefit, this gets paid out typically as a lump sum, or purchase a beneficiary drawdown plan, or an annuity. ie typically cash in and paid across. Under current rules under 75 this is tax free, over 75 taxed at their marginal rate of income tax.

[Adamski]

@Darka, I'd simplify the number of ISAs and combine SIPPs, and dispose of individual shares, and small holdings. Or if in good health, do it gradually over the years.

[scrumpyjack]

@airbus330, the provider transfers the sipp to a new pot called death benefit, this gets paid out typically as a lump sum, or purchase a beneficiary drawdown plan, or an annuity. ie typically cash in and paid across. Under current rules under 75 this is tax free, over 75 taxed at their marginal rate of income tax.

I think this will be down to the options that the provider offers. It should be possible for it to be transferred in specie because it does not form part of your estate and whoever has inherited it can keep it undrawn and then (assuming you died aged 75+) only pay tax when anything is taken out, or not take anything out and pass it on to their children and they to theirs ad infinitum.

For those inheriting it, it does not form part of their lifetime allowance.

I have already told my daughter that she does not need to worry about a pension as I plan to leave her my pot untouched as my wife does not need it.