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Complete beginner

A helpful place to also put any annual reports etc, of your own portfolios
DrFfybes
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Re: Complete beginner

#474113

Postby DrFfybes » January 18th, 2022, 3:06 pm

Hello, and Welcome to the Lemon Fool.

It is good to see you have thought about this and have a strategy, many novices (myself included) begin with the tips in the financial column of the News of the World and learn from their mistakes.

One initial thought regarding the broker, I assume you have checked 212 allows you to invest in all the assets you are interested in, I know some 'budget' brokers are restricted in their offerings. As you will trade infrequently then the spread (where they make their money) won't be too much of a problem for you, probably better than paying £5 or so a time to trade on other platforms.

You seem happy with the risk profile of your investments, and say you are also in an NHS pension scheme. Presumably this is still a Defined Benefit, in which case there are a few discussions on the boards about how to include that asset in your risk profile and what value to place on it. I mention this as with only 50% in Equities and a 20+ year investment span before taking benefits (and perhaps 30 years after) this is quite a conservative approach compared to many on here and could limit your returns, or could leave you laughing at those of us 'all-in' on VWRP.

Another consideration is why you have 10% in various equity classes. I must admit to doing similar with my old Zeneca Pension as a way of diversifying risk (which ended up leaving it well down compared to Global Equities). As JohnW says, 10% in Gold or property is too small to make much of a difference if VWRP drops 50%, nor will it make a big difference to your wealth if Gold doubles.

Paul

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Re: Complete beginner

#474118

Postby TUK020 » January 18th, 2022, 3:20 pm

kdtoal wrote:
I am using Trading 212 who charge no fees. I'm assuming there are fees attached within each EFT, which differs with each EFT?

I may well move away from Trading 212 at some point as they don't have as many available stocks/shares/bonds. Although if it stick with this portfolio that shouldn't really matter. Long term though I feel I may be more comfortable with my money in a larger firm like HL, although I've heard they do charge high enough fees.

Worth a browse through the Monevator page on choosing a platform
https://monevator.com/compare-uk-cheape ... e-brokers/

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Re: Complete beginner

#474120

Postby dealtn » January 18th, 2022, 3:30 pm

kdtoal wrote:
I am using Trading 212 who charge no fees. I'm assuming there are fees attached within each EFT, which differs with each EFT?



I know close to nothing about Trading 212. What I am fairly confident in is they aren't a charity, but a business. They will be taking fees somewhere. You might be fortunate in that the parts of their services you are using are being cross-subsidised by others - and free. Or not.

vand
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Re: Complete beginner

#474129

Postby vand » January 18th, 2022, 3:50 pm

kdtoal wrote:
vand wrote:50/30/10/10 stocks/bonds/reit/gold - a very nice and simple sleep-easy passive portfolio.

It has a very high weighting to smallcaps, so be prepared for the equity components to be more volatile if there is a global downturn.


Thanks for your input vand.

Could you offer any adjustments to % across the portfolio to reduce this, or any alternative options to consider?


A simple adjustment could simply be to go 20->25% total world, and 10->5% emerging small cap.

People often suggest cost-averaging in as a less risky alternative to lump summing, but if you aren't comfortable lump summing then it I would suggest that you don't have the right asset allocation... so, an acid test I like to ask new investors is: would you be happy to lump sum *any* amount into your proposed portfolio? If yes then you have the right AA, if your proposed AA probably carries too much risk.

Nick Maguilli writes a good article here about how lump summing even a more conservative asset allocation should be highly preferable to cost averaging in with a total stock portfolio:
https://ofdollarsanddata.com/the-cost-of-waiting/
https://ofdollarsanddata.com/dollar-cos ... s-lump-sum

tjh290633
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Re: Complete beginner

#474193

Postby tjh290633 » January 18th, 2022, 7:30 pm

kdtoal wrote:I plan on initially investing £10,000 into S&P 500 and the other £30,000 into the portfolio. Then each month transfer money into S&P and across the portfolio. If I were to base the monthly deposits on the initial investment it would work out as 25% into S&P and 75% split across the portfolio.

When you say drip feed over 3-4 years do you recommend drip feeding the £30,000 into the portfolio over these 3-4 years? Or what so you mean?

I would like to use up my ISA allowance each year to invest into the portfolio and S&P 500, although this may not be totally achievable. Approximately £1000-1500 per month and reassess at year end and consider an extra instalment.

Thanks again

At your age I do not see the point of either bonds or gold. You will get times when bonds outperform shares, but the situation has always reversed itself after a short time.

You mentioned later that you are contributing to an NHS pension, but presumably that is linked to your NHS earnings. Certainly worth holding on to if it is defined benefit.

One point which you might like to look at is the Growth v. Value controversy. For a long time, funds and share which paid higher dividends outperformed those that went for sheer growth. In the last few years the situation has reversed, but looks like it is moving back in favour of "Value".

One thing that is a feature of some of the Global ITs (FCIT or WTAN for example) is exposure to Private Equity and a highish proportion invested in the USA. Costs are not very high, from the FCIT Annual Report for 2021, page 102:

Total Costs – these total 1.19% and comprise all operating costs actually incurred by the Company in the period and costs suffered within underlying funds (0.59% as shown in the Ongoing Charges calculation), together with interest on borrowings (0.23%) and estimated implicit and explicit costs of dealing (0.37%). These are all expressed as a proportion of the average daily NAVs of the Company over the period. Taxation expense and the costs of buying back or issuing ordinary shares are excluded from the calculation.


The ongoing charges figure is what is usually quoted, but the others need to be added in to get a true comparison.

If you invest directly in individual shares, your costs can be much lower. Mine have been as low as 0.039%, made up of 0.033% trading fees and 0.006% annual fees. They will vary with the value of the portfolio and the frequency of trading. Back in the low point of 2008-9, with a lot of trading to adjust the portfolio because of shares not paying dividends and a low capital value, I got up to 0.569%, 0.489% trading and 0.080% annual fees. Today those annual fees would be about 1/3rd of that figure, because they have fallen.

By all means go for collective investments at the start, but time will come when you may feel ready to go for individual shares.

TJH

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Re: Complete beginner

#474201

Postby kdtoal » January 18th, 2022, 7:54 pm

AsleepInYorkshire wrote:
kdtoal wrote:Thanks for your comments.

I plan on initially investing £10,000 into S&P 500 and the other £30,000 into the portfolio. Then each month transfer money into S&P and across the portfolio. If I were to base the monthly deposits on the initial investment it would work out as 25% into S&P and 75% split across the portfolio.

When you say drip feed over 3-4 years do you recommend drip feeding the £30,000 into the portfolio over these 3-4 years? Or what so you mean?

I would like to use up my ISA allowance each year to invest into the portfolio and S&P 500, although this may not be totally achievable. Approximately £1000-1500 per month and reassess at year end and consider an extra instalment.

Thanks again

Bear with me as I know what to say but I have a terrible knack of babbling - I've even been known to spout bullsh1t :roll:. Let's say you buy £30K of S&P 500 tomorrow. Totally for example let's say the price is £1.00 per share. Tomorrow the S&P 500 falls by 10% and you're out of pocket by £3K. Let's assume the S&P 500 enters a bear market. I recall (and obviously check yourself) that if you're buying into an equity/fund you should consider defensively buying in over time. The strategy is known as pound cost averaging.

Let's assume you buy £625 of S&P 500 each month. In month one the value of the fund falls by 10%. You loose £62.5. But you are then buying another £625 of S&P 500 at that reduced price. So you buy the ups and downs and achieve a reasonable price without huge risk.

Obviously the above is a very simple analogy to explain the strategies essence. How you employ this is really down to your own personal choice. There are currently two main arguments in the marketplace. One suggests the S&P 500 is over-valued. The other that it is not. I couldn't say either way what direction it will go in the short term. I don't have to as pound cost averaging is benefiting me as I add cash to my pension pot.

Your ISA can be accessed to suit you. So if you over indulge with additions during the year and suddenly find you need a little more cash you can remove that from the ISA. The downside is you may be selling cheaper than you purchased. The upside is the opposite.

I can't point you in one direction or another but I can, at the risk of annoying you, suggest you review pensions. Time is on your side.

If you invest £18,000 per annum in a pension you will get £3,600 added to the pension. You've just made 20% for nothing. If you earn over £50,000 you will also attract additional tax rebates. I've no idea what you earn and it's none of my business. But let's assume it's slightly less than Google's average UK Dentist salary of £72K. If you put £18,000 into a pension each year you will get £7,200 tax rebate.

This is a much quicker way to put together a pot of money for retirement. Try not to look at the downside, because there isn't a great deal of that in my opinion. If you are ill and can no longer work modern pensions can be drawn down before retirement age (iirc). The LTA isn't a huge burden at all - it can be managed. And your pension is outside of IHT and will pass to your nominated beneficiary. They can immediately draw down from this at their tax rate as the pension withdrawal age has already been achieved by you.

I did a quick "what if" scenario on my spreadsheet. Assuming you add £18K per year to a pension and attract 40% tax relief and the fund grows by 8% per annum you will have a pension pot of £3.41M.

Assuming growth is 6% it will only be £1.87M at your age 60.

I am not suggesting you go all in to a pension. But if you invested £18K (plus rebate at 40%) for the first 10 years and stopped adding to your pension at that point but continued to let it grow then at 6% it would be worth £1.3M by your age 60. An ISA (i.e. without tax rebates) would be worth £979K. An approximate difference of £320K or just short of 33%.

May I suggest that it's good to have an entrance strategy. But you also need an exit plan too. If by 40 your pension is banked (subject to 6% growth over the next 20 years) and your £18K can go into ISA's, sports cars or charities then you're in a great place.

There will be others who know more about this than I do and will be able to explain in more detail. Some good eggs hereabouts :)

Take care and don't hesitate to check my maths :)

AiY


Thanks for all your input AiY. Really appreciate you taking the time to offer your advice.

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Re: Complete beginner

#474203

Postby Newroad » January 18th, 2022, 7:56 pm

Hmm TJH.

"... but time will come when you may feel ready to go for individual shares ..."

I think that time came for Anakin Skywalker - and look what happened to him ;)

Beware the (seductive) power of the dark side :lol:

Regards, Newroad

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Re: Complete beginner

#474209

Postby kdtoal » January 18th, 2022, 8:24 pm

DrFfybes wrote:Hello, and Welcome to the Lemon Fool.

It is good to see you have thought about this and have a strategy, many novices (myself included) begin with the tips in the financial column of the News of the World and learn from their mistakes.

One initial thought regarding the broker, I assume you have checked 212 allows you to invest in all the assets you are interested in, I know some 'budget' brokers are restricted in their offerings. As you will trade infrequently then the spread (where they make their money) won't be too much of a problem for you, probably better than paying £5 or so a time to trade on other platforms.

You seem happy with the risk profile of your investments, and say you are also in an NHS pension scheme. Presumably this is still a Defined Benefit, in which case there are a few discussions on the boards about how to include that asset in your risk profile and what value to place on it. I mention this as with only 50% in Equities and a 20+ year investment span before taking benefits (and perhaps 30 years after) this is quite a conservative approach compared to many on here and could limit your returns, or could leave you laughing at those of us 'all-in' on VWRP.

Another consideration is why you have 10% in various equity classes. I must admit to doing similar with my old Zeneca Pension as a way of diversifying risk (which ended up leaving it well down compared to Global Equities). As JohnW says, 10% in Gold or property is too small to make much of a difference if VWRP drops 50%, nor will it make a big difference to your wealth if Gold doubles.

Paul


Hi Paul,

Thanks for the message. Yes, Trading 212 offer all the assets that are in the portfolio. I may well move away from T212 at some point, more for security, as a larger company is less likely to go bust. Although T212 and HL offer the same level of protection , £85,000 through the FSCS.

The reason I have gold in the portfolio is that many of the other popular lazy portfolios included gold. The gone fishin, golden butterfly, permanent and all weather portfolio all had gold ranging from 5-25% across their portfolios. As a rookie I though it best to take their advice. :D

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Re: Complete beginner

#474210

Postby kdtoal » January 18th, 2022, 8:27 pm

tjh290633 wrote:
kdtoal wrote:I plan on initially investing £10,000 into S&P 500 and the other £30,000 into the portfolio. Then each month transfer money into S&P and across the portfolio. If I were to base the monthly deposits on the initial investment it would work out as 25% into S&P and 75% split across the portfolio.

When you say drip feed over 3-4 years do you recommend drip feeding the £30,000 into the portfolio over these 3-4 years? Or what so you mean?

I would like to use up my ISA allowance each year to invest into the portfolio and S&P 500, although this may not be totally achievable. Approximately £1000-1500 per month and reassess at year end and consider an extra instalment.

Thanks again

At your age I do not see the point of either bonds or gold. You will get times when bonds outperform shares, but the situation has always reversed itself after a short time.

You mentioned later that you are contributing to an NHS pension, but presumably that is linked to your NHS earnings. Certainly worth holding on to if it is defined benefit.

One point which you might like to look at is the Growth v. Value controversy. For a long time, funds and share which paid higher dividends outperformed those that went for sheer growth. In the last few years the situation has reversed, but looks like it is moving back in favour of "Value".

One thing that is a feature of some of the Global ITs (FCIT or WTAN for example) is exposure to Private Equity and a highish proportion invested in the USA. Costs are not very high, from the FCIT Annual Report for 2021, page 102:

Total Costs – these total 1.19% and comprise all operating costs actually incurred by the Company in the period and costs suffered within underlying funds (0.59% as shown in the Ongoing Charges calculation), together with interest on borrowings (0.23%) and estimated implicit and explicit costs of dealing (0.37%). These are all expressed as a proportion of the average daily NAVs of the Company over the period. Taxation expense and the costs of buying back or issuing ordinary shares are excluded from the calculation.


The ongoing charges figure is what is usually quoted, but the others need to be added in to get a true comparison.

If you invest directly in individual shares, your costs can be much lower. Mine have been as low as 0.039%, made up of 0.033% trading fees and 0.006% annual fees. They will vary with the value of the portfolio and the frequency of trading. Back in the low point of 2008-9, with a lot of trading to adjust the portfolio because of shares not paying dividends and a low capital value, I got up to 0.569%, 0.489% trading and 0.080% annual fees. Today those annual fees would be about 1/3rd of that figure, because they have fallen.

By all means go for collective investments at the start, but time will come when you may feel ready to go for individual shares.

TJH


Hi TJH,

Thanks so much for the input

I can't really see a time where I will want to go for individual shares. I would probably end up spending hours on end researching shares and go crazy. The lazy/passive portfolio suits me better.

Thanks again

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Re: Complete beginner

#474212

Postby kdtoal » January 18th, 2022, 8:34 pm

vand wrote:
kdtoal wrote:
vand wrote:50/30/10/10 stocks/bonds/reit/gold - a very nice and simple sleep-easy passive portfolio.

It has a very high weighting to smallcaps, so be prepared for the equity components to be more volatile if there is a global downturn.


Thanks for your input vand.

Could you offer any adjustments to % across the portfolio to reduce this, or any alternative options to consider?


A simple adjustment could simply be to go 20->25% total world, and 10->5% emerging small cap.

People often suggest cost-averaging in as a less risky alternative to lump summing, but if you aren't comfortable lump summing then it I would suggest that you don't have the right asset allocation... so, an acid test I like to ask new investors is: would you be happy to lump sum *any* amount into your proposed portfolio? If yes then you have the right AA, if your proposed AA probably carries too much risk.

Nick Maguilli writes a good article here about how lump summing even a more conservative asset allocation should be highly preferable to cost averaging in with a total stock portfolio:
https://ofdollarsanddata.com/the-cost-of-waiting/
https://ofdollarsanddata.com/dollar-cos ... s-lump-sum


Thanks vand,

I had thought that having a higher % of small caps could lead to greater returns over time. I understand they are more volatile, but if this is a long term plan with yearly rebalancing over 20+ years do you not feel it should hopefully ride out any global downturn over time? Or am I missing something?

Definitely considering the 20-25% adjustment

AsleepInYorkshire
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Re: Complete beginner

#474215

Postby AsleepInYorkshire » January 18th, 2022, 8:43 pm

kdtoal wrote:
The reason I have gold in the portfolio is that many of the other popular lazy portfolios included gold. The gone fishin, golden butterfly, permanent and all weather portfolio all had gold ranging from 5-25% across their portfolios. As a rookie I though it best to take their advice. :D

Question everything, question everyone, including me. I don't understand why gold has a value, other than it may relate to the cost of mining it or the value it has in making a new satellite. It feels more like a bet to me. Just my humble opinion.

Until you have arrived at understanding your appetite for risk keep it simple and invest in the S&P 500 until you have learned a little more. You may not have to

1. You cannot time the market - don't try. Build in your own strategy to protect your capital. Pound cost averaging (PCA) is one example.
2. Don't be tempted to buy anything you know nothing about.
3. Don't look at the value of your portfolio too often.
4. Remind yourself when the market falls that you are buying your chosen fund cheaper.
5. Ask questions. But don't try to become an expert. Understand your limitations and work within them.

Be great

Take care

AiY

vand
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Re: Complete beginner

#474224

Postby vand » January 18th, 2022, 9:32 pm

kdtoal wrote:
vand wrote:
kdtoal wrote:
vand wrote:50/30/10/10 stocks/bonds/reit/gold - a very nice and simple sleep-easy passive portfolio.

It has a very high weighting to smallcaps, so be prepared for the equity components to be more volatile if there is a global downturn.


Thanks for your input vand.

Could you offer any adjustments to % across the portfolio to reduce this, or any alternative options to consider?


A simple adjustment could simply be to go 20->25% total world, and 10->5% emerging small cap.

People often suggest cost-averaging in as a less risky alternative to lump summing, but if you aren't comfortable lump summing then it I would suggest that you don't have the right asset allocation... so, an acid test I like to ask new investors is: would you be happy to lump sum *any* amount into your proposed portfolio? If yes then you have the right AA, if your proposed AA probably carries too much risk.

Nick Maguilli writes a good article here about how lump summing even a more conservative asset allocation should be highly preferable to cost averaging in with a total stock portfolio:
https://ofdollarsanddata.com/the-cost-of-waiting/
https://ofdollarsanddata.com/dollar-cos ... s-lump-sum


Thanks vand,

I had thought that having a higher % of small caps could lead to greater returns over time. I understand they are more volatile, but if this is a long term plan with yearly rebalancing over 20+ years do you not feel it should hopefully ride out any global downturn over time? Or am I missing something?

Definitely considering the 20-25% adjustment


I would personally reduce the fixed income allocation if you want something more aggressive. Bonds might be worth holding for panic protection, but are unlikely to do any heavy lifting until yields are substaintially higher, and some of us think they could do quite poorly as they have done for several stretches in history.

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Re: Complete beginner

#474242

Postby kdtoal » January 18th, 2022, 10:45 pm

vand wrote:I would personally reduce the fixed income allocation if you want something more aggressive. Bonds might be worth holding for panic protection, but are unlikely to do any heavy lifting until yields are substaintially higher, and some of us think they could do quite poorly as they have done for several stretches in history.


Having read a bit more through other forums on this site, I see an awful lot of people avoiding bonds altogether, especially for someone aged 36.

If I was to reduce my bond allocation would you advise reducing the long term bond IGLT or the global aggregate bond VAGP. I have seen the VAGP been mentioned in multiple forums with diversified portfolios. I still feel I would like to hold some % of bonds but am happy to move the % allocation.

Thanks again for all your advice.
Last edited by tjh290633 on January 18th, 2022, 11:00 pm, edited 1 time in total.
Reason: Corrected quote attribution-TJH

tjh290633
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Re: Complete beginner

#474247

Postby tjh290633 » January 18th, 2022, 10:58 pm

kdtoal wrote:Hi TJH,

Thanks so much for the input

I can't really see a time where I will want to go for individual shares. I would probably end up spending hours on end researching shares and go crazy. The lazy/passive portfolio suits me better.

Thanks again

I started on the then unit trusts in about 1958, then first dabbled in shares after 1970, when I inherited a few from my mother. I was 37 then. It gathered momentum when the privatisations came and the onset of PEPs in 1987 led me into them in a much bigger way. The ones that I inherited were ICI, Marks and Spencer and Brooke Bond Liebig. MKS I still have and ICI spawned Zeneca, now AstraZeneca, in 1993 which I still have. BBL were taken over by Unilever in 1973. Oddly, I now hold ULVR among my 36 holdings.

Just remember that trackers only track an index, they never beat it.

TJH

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Re: Complete beginner

#474254

Postby kdtoal » January 18th, 2022, 11:19 pm

If I am to drip feed into the portfolio every month, say £1500/month, after the initial lump sum investment (£30-40K).

Am I best to rebalance every month by transferring money into each asset to balance or transfer in to each asset based on the % allocation and rebalance once a year only?

AsleepInYorkshire
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Re: Complete beginner

#474255

Postby AsleepInYorkshire » January 18th, 2022, 11:21 pm

kdtoal wrote:
Having read a bit more through other forums on this site, I see an awful lot of people avoiding bonds altogether, especially for someone aged 36.

If I was to reduce my bond allocation would you advise reducing the long term bond IGLT or the global aggregate bond VAGP. I have seen the VAGP been mentioned in multiple forums with diversified portfolios. I still feel I would like to hold some % of bonds but am happy to move the % allocation.

Thanks again for all your advice.

Last week I looked at a friends work pension. It was invested roughly

  1. 50% equities
  2. 6% commodities
  3. 10% property
  4. 34% bonds
The first bond I looked at had lost .84% in the last five years. With inflation at say 2% per annum the bond had to pay interest of at least that to "stand still". Overall the growth of the pension fund was less than 4%. After inflation that's probably 2%.

I know very little about bonds. I'm not proposing to change that.

AiY

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Re: Complete beginner

#474258

Postby torata » January 18th, 2022, 11:43 pm

kdtoal wrote:If I am to drip feed into the portfolio every month, say £1500/month, after the initial lump sum investment (£30-40K).

Am I best to rebalance every month by transferring money into each asset to balance or transfer in to each asset based on the % allocation and rebalance once a year only?


hello kdtoal

This is what I do.
If it's cost effective, then I use each month's allocation to bring up those assets that are below weight. In this case it's only adding, and it's effectively pound cost averaging.
If, at the end of a year (although I'm flexible about the time scale), something is very out of balance, then I make sales as required to rebalance. Doing that yearly allows an element of running my winners.
I do this for my SIPP which has fixed %s for each asset class/area, and it's rare that I end up selling anything, the most recent being Scottish Mortgage, which was double it's % allocation.

torata

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Re: Complete beginner

#474297

Postby tjh290633 » January 19th, 2022, 8:34 am

kdtoal wrote:If I am to drip feed into the portfolio every month, say £1500/month, after the initial lump sum investment (£30-40K).

Am I best to rebalance every month by transferring money into each asset to balance or transfer in to each asset based on the % allocation and rebalance once a year only?

If you are topping up each month, then you can correct any imbalances then. It is best to allow some leeway in your nominal percentages, as they will always vary to some extent. You may find that a band of +/-25% of the nominal figure is a good practical tolerance at the outset. Presumably you would top up sectors sequentially, one or two each month. Then topping up by say 20% would keep you within range. You need to avoid too much rebalancing unless it gets radically out of kilter.

TJH

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Re: Complete beginner

#474331

Postby vand » January 19th, 2022, 9:50 am

kdtoal wrote:
vand wrote:I would personally reduce the fixed income allocation if you want something more aggressive. Bonds might be worth holding for panic protection, but are unlikely to do any heavy lifting until yields are substaintially higher, and some of us think they could do quite poorly as they have done for several stretches in history.


Having read a bit more through other forums on this site, I see an awful lot of people avoiding bonds altogether, especially for someone aged 36.

If I was to reduce my bond allocation would you advise reducing the long term bond IGLT or the global aggregate bond VAGP. I have seen the VAGP been mentioned in multiple forums with diversified portfolios. I still feel I would like to hold some % of bonds but am happy to move the % allocation.

Thanks again for all your advice.


I would reduce the shorter duration bonds (VAGP) and keep the long term bonds. A part of the reason that multi-asset strategies work is that they benefit from volatility harvesting when you rebalance, so therefore you want the assets that move around the most, and long term bonds are more sensitive to interest rate changes, while shorter term bonds behave more like cash.

That is also why a small but significant amount of gold works well in a diversified portfolio.. because it tends to do its own thing and/or mildly countercyclical to paper assets, so is a very good complimentary asset when put together with the traditional financial assets. Your 10% gold is a perfect amount imo.

kdtoal
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Re: Complete beginner

#474405

Postby kdtoal » January 19th, 2022, 12:06 pm

vand wrote:
kdtoal wrote:
vand wrote:I would personally reduce the fixed income allocation if you want something more aggressive. Bonds might be worth holding for panic protection, but are unlikely to do any heavy lifting until yields are substaintially higher, and some of us think they could do quite poorly as they have done for several stretches in history.


Having read a bit more through other forums on this site, I see an awful lot of people avoiding bonds altogether, especially for someone aged 36.

If I was to reduce my bond allocation would you advise reducing the long term bond IGLT or the global aggregate bond VAGP. I have seen the VAGP been mentioned in multiple forums with diversified portfolios. I still feel I would like to hold some % of bonds but am happy to move the % allocation.

Thanks again for all your advice.


I would reduce the shorter duration bonds (VAGP) and keep the long term bonds. A part of the reason that multi-asset strategies work is that they benefit from volatility harvesting when you rebalance, so therefore you want the assets that move around the most, and long term bonds are more sensitive to interest rate changes, while shorter term bonds behave more like cash.

That is also why a small but significant amount of gold works well in a diversified portfolio.. because it tends to do its own thing and/or mildly countercyclical to paper assets, so is a very good complimentary asset when put together with the traditional financial assets. Your 10% gold is a perfect amount imo.


Hi vand,

Thanks again for the input.

I've readjusted my % allocation to:

25% All world VWRP
20% US small cap value IDP6
10% emerging markets small cap IEMS
15% long term UK bonds IGLT
10% global aggregate bond VAGP
10% developed markets property yield IWDP
10% gold SGLN

I wanted a portfolio that I could setup and only need to make minor adjustments to each year. I am aware that other portfolios may produce more (or possibly less) money over time, but with a higher level of risk involved. I feel, after listening to everyone's comments on this thread, that the above portfolio should hopefully set me up with a reasonable long term passive/lazy portfolio and provide a better nights sleep.

Again, if there is something that I have misread in the comments and the allocation is slightly off, I am still open to critique.

Thanks again for all the advice. It has been invaluable.


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