Cash heavy at market high.

[Wuffle]

Something of a counter to the adjacent thread, a family bereavement leaves me in a supervisory role across mine and my moms accounts which are almost entirely in cash.
There are counter balances of a decent family home in the Midlands worth probably twice as much as the cash and a full state pension coming to my mom, and I am just about there with my NI contributions for my state pension in 17 years and I own half of a tiny house up north.
So, at the historic highs that others here are chuffed about, what helpful titbits can you provide given that I will almost certainly need to cover care for mom in the fullness of time.

Thaks in advance, Wuffle.

[gryffron]

Problem is you have no real idea whether this will remain the market high, or whether it will just continue to ramp up. FTSE still doesn't look too expensive on metrics. Although New York does.

Cash rates are pitiful, and likely to remain so. Long term equities always win, and by a substantial margin. If mum isn't retired yet and you're not close, then you still have to be thinking long term. If it were me, I would SLOWLY trickle cash into equity ISAs. Perhaps 10%pa. Yes, there might be a downturn. But it might not happen for years yet. There could still be plenty of profits on the way up.

Gryff

[Dod101]

Something of a counter to the adjacent thread, a family bereavement leaves me in a supervisory role across mine and my moms accounts which are almost entirely in cash.
There are counter balances of a decent family home in the Midlands worth probably twice as much as the cash and a full state pension coming to my mom, and I am just about there with my NI contributions for my state pension in 17 years and I own half of a tiny house up north.
So, at the historic highs that others here are chuffed about, what helpful titbits can you provide given that I will almost certainly need to cover care for mom in the fullness of time.

Thaks in advance, Wuffle.

Of course it is pleasing for us to find ourselves fully invested at a market high but as gryffon says, it may well continue for some time yet, at least the UK market. I would be inclined to look to some higher yielding shares and buy into them. Specifically, HSBC and Shell are still giving very good yields and have not moved very much in terms of capital appreciation. If you can find a few more like them- the tobaccos come to mind- I would think these are the sort of shares you should be thinking of. Maybe also a higher yielding IT or two. They are a little more scarce but Henderson far East and Edinburgh it plus that perennial City of London might fit the bill.

Your alternative of simply sitting on cash could prove very expensive but who knows? The market may reverse as soon as you have bought, but even then you should still have the dividends.

Dod

[Itsallaguess]

So, at the historic highs that others here are chuffed about, what helpful titbits can you provide given that I will almost certainly need to cover care for mom in the fullness of time.

Slowly drip something into a couple of income-IT's - take a look at the Investment Trust board for some good ideas for wide diversification - https://www.lemonfool.co.uk/viewforum.php?f=54

You won't achieve the same yield as some of the many 'single-share' HYP candidates discussed around here, but you'll be somewhat better protected with their natural in-built diversification, income-reserves, and discount control mechanisms.

I wouldn't ever recommend someone takes a 'the time to invest is now' approach from a standing start like this, especially given your particular circumstances, but we also don't always have to take a '100% cash vs 100% equities' view either, and allowing ourselves to slowly learn that drip-feeding across many months, even at relative market highs, can still yield acceptable returns is something that I think only starts to happen by getting your feet wet in those 'market high' conditions.

Start slow and take your time. Anything is better than your current position and it's a case of slowly building confidence more than anything, I think...

Cheers,

Itsallaguess

[kempiejon]

A quick look at Vanguard's all world tracker VWRL shows it has spent quite a lot of time these past 5 years at an all time high. There have been a couple of pull backs but it has generally recovered and gone on to beat previous maximums. It'll also throws of about a percent of income. The UK indexes (100 and 250) have a less regular upwards trend. I remember reading fairly recently that a study had shown that all in is better than drip feeding. https://www.morningstar.co.uk/uk/news/1 ... sting.aspx
I transferred my 4 pensions to a SIPP and had a chunky lump sum to invest but I didn't have the courage to stick it all in so added quarterly over 3 years. I mostly bought my subsequent picks at above the first prices.

[xeny]

I remember reading fairly recently that a study had shown that all in is better than drip feeding. https://www.morningstar.co.uk/uk/news/1 ... sting.aspx
.

The figures I've seen are that lump sum investing beats drip feeding about 2/3 of the time.

To an extent the benefit of drip feeding is that for many people it makes it psychologically easier to actually start getting a lump sum invested.

[tjh290633]

Not only is the market high, though not at its recent peak, but yields are very high by historical standards.

So you have a dichotomy. Do you take advantage of the current high yields, or do you go defensive because the market might be due a correction? My feeling has always been to take the yield that is on offer.

Considering provision for care in the future, that is likely to cost over £1,000 a week, so the more income that the portfolio provides, the less will be the need to eat into capital. Dividend income can be expected to rise, at least as fast as inflation, but capital can fluctuate dramatically, falling by up to 50% or even more if there is a sharp reaction to some event. The use of Investment trusts can reduce the risk of dividend reductions, because of their income reserves which can be used to maintain dividends.

Hope that helps your deliberations.

TJH

[scrumpyjack]

If your mum hasn't quite reached the state pension age she could have decades ahead of her and cash is not without risk. It will steadily lose its purchasing power with inflation. It is prudent to have a good cash buffer but I share the view of other posters that a good IT is the route to go for the long term. Equities may appear high but that needs to be seen in the context of the alternative - fixed interest - which is at stratospheric levels. The return from FI is virtually guaranteed to be negative in real terms.

[Hariseldon58]

An alternate view is to look at what you need from a portfolio in terms of cash flow for each of, say. the next 10 years.

You may have to make some guesses but it provides a sensible starting point.( Dividends tend to have far less volatility than prices. )

If you were to hold sufficient cash/secure bonds of an appropriate duration, combined with say 75% of the present dividend yield for each of the next 10 years, it provides a reasonable starting point for a discussion of asset allocation.

Investing cash over a period of time is probably sub optimal but it can sure feel better if prices fall.

Eg I probably spend around 3% of my portfolio to fund a generous retirement lifestyle and that’s roughly the portfolio yield. Assuming that ongoing income fell 50% I could easily live on the reduced income. Hence I don’t need to hold much cash/bonds but the portfolio is such that I presently hold enough secure assets to last 10 plus years as if portfolio income was zero. Ie I can keep pretty safely carry on with present standard of living without too much worry as I have looked at the cash flows needed for the next 10 years. Ie basic living costs are covered by the bonds and a 50% reduced income flow would top it up to the luxury level.

Review each year and adjust as required.

[Wuffle]

Thanks to all,
I have dipped a toe in this morning on a market fall and bought 5k of VUKE on my own account and cleaned up some cash in my SIPP.
My considerations were, in no particular order, UK doesn't look scary expensive, diversified and cheap.
It has a whiff of cop out about it, being money tucked away out of reach, but you have to start somewhere.

Wuffle.

[Wuffle]

Off to a blinding start with my initial VUKE purchase!
That has enough time to right itself, so I am more sanguine than I might have been.
More fortuitously I went for ballast first in my personal ISA and got some CGT and it seems to be working.
Mom remains entirely in cash.
Feels like the right place to be until some clarity can be established.

W.

[JohnB]

I bet mum is pleased with you, but while you don't want to be in a crashing market, equally you don't want to be out of it in the first few weeks of its recovery. You will have an interesting discussion with your Mum at Easter when you say now is the time to enter the market big-time when her head is full of Market Crash headlines. It took many private investors a year to return to the market after 2008, by which time you'd lost most of the advantage. I held back my house money too long, but at least it was getting good interest rates from worried banks.

[Wuffle]

Hi,
It has been a tricky couple of years for the world and us.
Mom is approaching the first anniversary in care (Dementia and Parkinsons), she is 78.
The house has just been sold. a balance between its value appreciating and its condition deteriorating. It is at range and logistically tricky.
So, 800k in cash, 9k state pension coming in, 55k going out.
I bled my small pile into a growth and income IT selection in the intervening couple of years and with recent falls I am about even.
Mom is an order of magnitude bigger problem.

I shall be doing exactly what a specialist IFA tells me to do. I have had the free meeting, they were ok. Solid actually but the chat is now a year out of date. Globally, things have moved on. I have some say over the timing of the second meeting. 'Not yet' was enough for the sibling and I look a genius this week.

So, inflation and rising interest rates, war and falling stock values, huge ongoing cost.
When do I have the second meeting?

W.

[GrahamPlatt]

Nothing’s certain, but this may help with your planning.
https://www.dementiacarecentral.com/alz ... start-page.

[1nvest]

The Larry (Swedroe) portfolio opts to shift bond risk over to the stock side. Instead of more volatile bonds he opts for more stable short term treasuries (gilts) and increases the stock exposure. 33/67 stock/short term Gilts instead of 50/50 stock/bond type thinking.

Pushed even further and as a indication since 1972 a 65 year old retiree who spread their money equally between Pounds, US Dollars, Japanese Yen and gold, who invested the Pound into the FT All Share stock index and with a 30 year investment horizon opted to draw a 3.3% SWR (3.3% of the initial amount, where that amount is uplifted by RPI inflation each year as the amount drawn in subsequent years) ... would in the worst cases have seen that money last 28 years. In the average case for all runs to date that have failed the money lasted 35 years. A good prospect of the money having outlived them, whilst just 25% of the money was invested, the rest was stuffed under a mattress as hard currencies. And that's from a start point that subsequently endured very high inflation rates during the 1970's.

If some/all of that 'cash' was deposited into safe choices, then that would have enhanced the overall outcomes. And/or that had opportunistic benefits - the availability of cash ready in-hand to deploy as/when good/great opportunities might present. If in perhaps 5 years time you can buy into index linked savings accounts paying inflation + 3% then you have the option to load heavily into those.

[1nvest]

Nothing’s certain, but this may help with your planning.
https://www.dementiacarecentral.com/alz ... start-page.

Thanks Graham. In my case mom is 90 with so far with mild dementia and I'm caring for her in her own home (live nearby). Indications from that calculator (I just entered a midway score value of 15) suggests that might continue for another 1 to 2 years before needing more intensive care home based care, along with a 4.5 to 6.5 year further life expectancy.

So a very back of napkin estimate is for the next year me continuing to do the care, followed by a 5.5 years in a care home. Around my (Surrey) way a reasonable care home is around £80K/year, so with her state pension and allowances of around £12.5K/year total (of the order of around £9K pension, £1K personal pension, £2.5K attendance allowance) = £68K x 5.5 years (rounding) < £400K indicative possible/upper-average expense.

Nice to have some indicative figure. Again thanks.

I know there has been a care costs change, but I see that as just smoke and mirrors. The money isn't going to Social Care but is being directed at the NHS to likely bolster the likes of GP wages, a.k.a. another con. When they doubled GP wages some years back most opted to reduce to half time weeks and I see the Social Care reform as more likely being just another such calamity.

[tjh290633]

I know there has been a care costs change, but I see that as just smoke and mirrors. The money isn't going to Social Care but is being directed at the NHS to likely bolster the likes of GP wages, a.k.a. another con. When they doubled GP wages some years back most opted to reduce to half time weeks and I see the Social Care reform as more likely being just another such calamity.

It just happened that I walked a distance with our Practice Manager this morning on her way to work, as I was going for my paper. She commented that the money that they receive from the Government is static, and so they have problems raising their levels of pay to attract people, to fill their vacancies. It is not only GP wages, it is nurses, phlebotomists, receptionists, telephonists, admin staff. There is a need to boost both NHS and the Care sector. Both have the same problem.

TJH

[moorfield]

It just happened that I walked a distance with our Practice Manager this morning on her way to work, as I was going for my paper. She commented that the money that they receive from the Government is static, and so they have problems raising their levels of pay to attract people, to fill their vacancies. It is not only GP wages, it is nurses, phlebotomists, receptionists, telephonists, admin staff. There is a need to boost both NHS and the Care sector. Both have the same problem.

As I understand I will be paying more NI, the Health and Social Care Levy, from next month specifically to address this.

https://www.bbc.co.uk/news/uk-politics-58436009

Now call me a cynic, but do we think much of this levy will actually end up in Practice Managers' hands next year ? (I don't, btw.)