Am I too old to start a passive tracker?

[raybarrow]

Hi Folks,

I am 74 and as part of my 'simplifying' my portfolio I am looking at trackers. Mrs B and I have Shares ISAs (containing HPY type shares), Cash ISAs, Savings a/cs, both have a good company pension and I have a state pension (Mrs B doesn't get hers till 2023). No mortgage or other debts. A slight alteration in circumstances mean we have a couple of hundred pounds a month that needs a home. I thought it was an opportunity to try a couple of straightforward, no messing, Global Equity Acc and FTSE type of things. Set up a regular payment and forget it, more or less.

My dad lived to his 90s, my health is good and I hope to manage another ten or more years although there are no guarantees. Mrs B by the same token could manage another twenty years. I have to consider care at some point, but I don't feel we are anywhere near that yet (hope I am not tempting fate).

What do people think?
Ray.

[Dod101]

Hi Folks,

I am 74 and as part of my 'simplifying' my portfolio I am looking at trackers. Mrs B and I have Shares ISAs (containing HPY type shares), Cash ISAs, Savings a/cs, both have a good company pension and I have a state pension (Mrs B doesn't get hers till 2023). No mortgage or other debts. A slight alteration in circumstances mean we have a couple of hundred pounds a month that needs a home. I thought it was an opportunity to try a couple of straightforward, no messing, Global Equity Acc and FTSE type of things. Set up a regular payment and forget it, more or less.

My dad lived to his 90s, my health is good and I hope to manage another ten or more years although there are no guarantees. Mrs B by the same token could manage another twenty years. I have to consider care at some point, but I don't feel we are anywhere near that yet (hope I am not tempting fate).

What do people think?
Ray.

I think I would be asking why? If as it seems to be that you want to increase the level of your estate when you die that is fine but bear in mind that you might be increasing the estate's liability for IHT if you do that. How about giving it away, or setting up a fund for your grandchildren (if any!)? Or put it towards a holiday fund or just spend it, or use in helping to meet the increased costs coming down the line?

The original why? was meant to be asking your aim in putting £200 per month into a tracker but it actually has raised in my mind wider issues which you may not want to answer here but which you might like to think about.

Dod

[DrFfybes]

A slight alteration in circumstances mean we have a couple of hundred pounds a month that needs a home. I thought it was an opportunity to try a couple of straightforward, no messing, Global Equity Acc and FTSE type of things. Set up a regular payment and forget it, more or less.

Certainly not too late, and probably as good a choice as any other equity investment

However as this is 'spare cash', do you have any (grand)children that you could pass it too falling outside of the IHT net?

[NotSure]

Bit of a cliche, but the old Chinese proverb comes to mind:

The best time to plant a tree is twenty years ago.
The second best time is today

[tjh290633]

A slight alteration in circumstances mean we have a couple of hundred pounds a month that needs a home. I thought it was an opportunity to try a couple of straightforward, no messing, Global Equity Acc and FTSE type of things. Set up a regular payment and forget it, more or less.

If you have money which needs to be put somewhere, cash savings accounts seem to be designed to put you off these days.

If you have a share ISA, pay it into that and buy a suitable share regularly. My choice in your cirumstances might be FCIT, F&C IT, but the choice is yours. FCIT is a Global IT, with most exposure to the USA, plus some private equity. There are many to choose from, and you might prefer exposure to commodities, perhaps.

TJH

[Maylix]

Hi Folks,

I am 74 and as part of my 'simplifying' my portfolio I am looking at trackers. Mrs B and I have Shares ISAs (containing HPY type shares), Cash ISAs, Savings a/cs, both have a good company pension and I have a state pension (Mrs B doesn't get hers till 2023). No mortgage or other debts. A slight alteration in circumstances mean we have a couple of hundred pounds a month that needs a home. I thought it was an opportunity to try a couple of straightforward, no messing, Global Equity Acc and FTSE type of things. Set up a regular payment and forget it, more or less.

My dad lived to his 90s, my health is good and I hope to manage another ten or more years although there are no guarantees. Mrs B by the same token could manage another twenty years. I have to consider care at some point, but I don't feel we are anywhere near that yet (hope I am not tempting fate).

What do people think?
Ray.

Hi Ray
Nothing wrong with your tracker idea, but it strikes me in your situation Premium Bonds would be my choice. Low risk and low return, but chance of a big win......
HTH
May Lix

[JohnB]

As you get older you don't want to bother with things. If Warren Buffet thought a global tracker was the best thing for his wife, it should be for you.

[Dod101]

I am an asset manager for private clients, their families and trusts. I usually stay quiet because of the rules against promoting oneself, but I wanted to point out that many high net worth and UHNW asset managers don't use funds at all, and especially not trackers.

I appreciate that the route is convenient and is of a low cost to the mass market compared to buying directly, but clearly if you are HNW you can avoid all fund fees and the pricing problems with funds by not using them. You pay less in fees from about 350k.

Second, may I point out that for the purposes of planning computations, one is not investing to make money, but to maximise the chances of making money. To do that one does need to know objectives - which you have not defined. Perhaps it would be best to ask the next generations what they would want to use some of the money for, and what they are prepared to do to look after this family wealth for their children. Actually you might start with the realisation that whereas you have been successful it is now hard for a young couple to achieve the same result. In fact we worked out that a 36 year old breadwinner on 60k p.a. about to buy a house would be forced to live in income poverty as defined by the Joseph Rowntree Foundation for the whole of his/her life if he/she were to save enough now to have the same standard of living in retirement as he/she does now.

Third, there is a performance index of discretionary managers run by Asset Risk Consultants which provides close to a historic measure of the 'best-possible-from-world-markets' i.e. the performance you should have got. You can use this to determine if your asset allocation decision (i.e. which tracker) was correct. If it was not, by even 2% p.a., typically that will make £1mn difference over a lifetime. 'Passive' investing does not mean 'passive; asset allocation if there is such a thing. Most DIY investors have now junked the 60:40 split from the boom days, and now spend 20 hours a month looking at just the asset allocation decision. The world may still be growing but slowly, and it is not homogenous, and if Trump gets another shot, you're going to be wondering why you bought that All Share tracker.

So, not too old, of course not. Time to involve the whole family and ask 'what should this resource be used for?' and ' how are you lot going to manage it well when I'm not here?'

I am not keen on having self confessed financial managers or even asset managers on these Boards but you are in my opinion not far wrong in your comments. I made the same point in my response early in the thread. The OP needs to know what his aims are before doing anything.

Dod

[DrFfybes]

In fact we worked out that a 36 year old breadwinner on 60k p.a. about to buy a house would be forced to live in income poverty as defined by the Joseph Rowntree Foundation for the whole of his/her life if he/she were to save enough now to have the same standard of living in retirement as he/she does now.

So what you are saying is that a 36 year old on £60k pa is doomed forever to live in poverty?

I know that is NOT what you are saying, but it is what you said. Statements like that are really meaningless, unless accompanied by the underlying predictions and assumptions about interest rates, the price of the property, the deposit, the size of the family, and what income level the JRF consider to be poverty line.

If they live up to their £60kpa, and save nothing, then they will never reach that standard of living in retirement, so it is an impossible arguement.

If they have to save (say) £20kpa to get the same living standard in retirement as someone spending £60k, then they are actually living on £40k pa, and therefore so should their retirement.

If they save £40kpa and live on £20k, then they will be in poverty, but have a lot more money in retirement than they do now.

As for....

You can use this to determine if your asset allocation decision (i.e. which tracker) was correct. If it was not, by even 2% p.a., typically that will make £1mn difference over a lifetime

Not based on my liftime. £1m is £25kpa over 40 years. if that is 2% then even if I'd lived in a tent, photosynthesised, and saved every penny I earnt, 2%pa wouldn't have made me another million over 40 years.

The rest of what you say I agree with, but that just seemed to be straight out of the marketing brochure.

[xxd09]

Do you have children who are not wealthy?
xxd09

[JohnW]

I usually stay quiet because of the rules against promoting oneself,

Unlike Dod I am keen on having financial planners and asset managers offering their insights. We can evaluate the views they put on their merits, not on the authority of their position. And clearly they can tell us a lot about the industry. But, if you’re worried about promoting oneself one wouldn’t choose a user name that spells out the URL of one’s business, surely.

many high net worth and UHNW asset managers don't use funds at all, and especially not trackers

Mike Piper suggests three reasons for this, one being: ‘if an advisor told you they were going to put your money into a target-date fund, many people’s natural response would be “well then why am I even hiring you?”’

Most DIY investors have now junked the 60:40 split from the boom days, and now spend 20 hours a month looking at just the asset allocation decision.’

I’d be interested to know the data source for those assertions because I thought it’s now closer to 19 hours.

[monabri]

I usually stay quiet because of the rules against promoting oneself,

Unlike Dod I am keen on having financial planners and asset managers offering their insights. We can evaluate the views they put on their merits, not on the authority of their position. And clearly they can tell us a lot about the industry. But, if you’re worried about promoting oneself one wouldn’t choose a user name that spells out the URL of one’s business, surely.

many high net worth and UHNW asset managers don't use funds at all, and especially not trackers

Mike Piper suggests three reasons for this, one being: ‘if an advisor told you they were going to put your money into a target-date fund, many people’s natural response would be “well then why am I even hiring you?”’

Most DIY investors have now junked the 60:40 split from the boom days, and now spend 20 hours a month looking at just the asset allocation decision.’

I’d be interested to know the data source for those assertions because I thought it’s now closer to 19 hours.

https://iwm.eu.com/node/10

"Our standard fee is 1% of assets under management with substantial discounts for volume, and an additional 10% discount when you agree your Financial Plan as correct after one of our planning courses. Our minimum fee is £1,500 p.a. plus VAT"

How would I know it is correct? Who's the expert here? Why offer a 10% discount.....?

( by the way, this is the passive investment board).

[dealtn]

I am 74 ... A slight alteration in circumstances mean we have a couple of hundred pounds a month that needs a home.

...
What do people think?

I think you need to work out what is important to you and not which home a relatively small amount of money belongs in.

Actuary wise you have lived most of your life, what is important to you about the rest of it, or when you are gone? A tracker versus an alternative to me, in that position, would be a tail wagging dog decision, not the other way round.

[MDW1954]

Moderator Message:
Thank you, iwmdoteudotcom for your post. I confirm that it does not breach TLF rules. It was also posted on the same forum as the OP chose to ask his original question, so cannot be faulted on those grounds. People may be inclined to distrust financial advisors etc, but iwm's post bgroke no rules and touted no products. Let's get back to discussing the OP's situation, rather than challenging iwm's assertions. --MDW1954

[paulnumbers]

As you get older you don't want to bother with things. If Warren Buffet thought a global tracker was the best thing for his wife, it should be for you.

Well almost, I think he's gone for an S&P500 tracker. But not a huge difference I admit

[raybarrow]

Hi Folks,

Ooooops!
i only meant this to be a simple question. 'Am I too old to start a passive tracker?'. Yes/No delete as appropriate.

Feels like I've started something way beyond the original brief. I accept all the comments, but my finances, provisions, charities, etc, etc are ok. I just 'found this money down the back of the sofa' and thought...

I'll try to make my questions more specific next time.
Ray.

[CliffEdge]

I usually stay quiet because of the rules against promoting oneself,

Unlike Dod I am keen on having financial planners and asset managers offering their insights. We can evaluate the views they put on their merits, not on the authority of their position. And clearly they can tell us a lot about the industry. But, if you’re worried about promoting oneself one wouldn’t choose a user name that spells out the URL of one’s business, surely.

many high net worth and UHNW asset managers don't use funds at all, and especially not trackers

Mike Piper suggests three reasons for this, one being: ‘if an advisor told you they were going to put your money into a target-date fund, many people’s natural response would be “well then why am I even hiring you?”’

Most DIY investors have now junked the 60:40 split from the boom days, and now spend 20 hours a month looking at just the asset allocation decision.’

I’d be interested to know the data source for those assertions because I thought it’s now closer to 19 hours.

I heard it was 18 hours 23 or 24 minutes (there's slight uncertainty there).
Oh come on... We know what's going on here.

[torata]

Hi Folks,

Ooooops!
i only meant this to be a simple question. 'Am I too old to start a passive tracker?'. Yes/No delete as appropriate.

Feels like I've started something way beyond the original brief. I accept all the comments, but my finances, provisions, charities, etc, etc are ok. I just 'found this money down the back of the sofa' and thought...

I'll try to make my questions more specific next time.
Ray.

No

(but to me it's kind of the wrong question to ask. A bit like asking, am I too old to buy spaghetti? )

torata

[Itsallaguess]

I only meant this to be a simple question.

'Am I too old to start a passive tracker?'. Yes/No delete as appropriate.

No

(but to me it's kind of the wrong question to ask. A bit like asking, am I too old to buy spaghetti?)

Pasta certain age, you mean?

Cheers!

Itsallaguess

[tjh290633]

Most DIY investors have now junked the 60:40 split from the boom days, and now spend 20 hours a month looking at just the asset allocation decision.’

I’d be interested to know the data source for those assertions because I thought it’s now closer to 19 hours.

I heard it was 18 hours 23 or 24 minutes (there's slight uncertainty there).
Oh come on... We know what's going on here.

60/40? Asset Allocation? Most?

To the best of my knowledge 60/40 went out of the window about 20 years or so ago. I suggest that very few DIY investors agonise about their asset allocation. A bit of cash and the rest in equities, or things like premium bonds.

They may, repeat may, get a bit worked up when something goes massively overweight, but probably 20 hours per year is an overstatement.

TJH