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Inherited Portfolio

Investment discussion for beginners. Why you should invest your money, get help getting started
maillion
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Inherited Portfolio

#176226

Postby maillion » October 25th, 2018, 3:26 pm

My dad was a keen investor and died suddenly a year ago, whilst ill he saw financial advisors looking to take over his investments for my mum and baulked at the cost saying "maillion can do it its easy". However he never got the chance to teach me. I have never had money to invest of my own until he left me circa £40k from some kind of insurance product and his car. Has been sitting in my current account. :oops:

He has left mum with circa £250k total in a variety of investment trusts, £7k in funds like Lindsell Train, and some cash. All contained in ISAs.

On his death I arranged via APS with the platforms for the investments to be exactly replicated in my mothers name. I know this could have been a chance to rebalance, change platform, reinvest elsewhere but there was simply not time to learn about this world and I figured he picked good investments so why not carry on for the time being and not miss out on continued growth over the time it takes me to learn what to do.

Mum (late 60s, retired) owns family home and is fortunate to have a great final salary pension and so says she does not need to take any income from investments. She is very risk averse but by the same token thinks she does not need this money for her income so growth would really be for her beneficiaries. Obviously needs change and she may need money for care, or even to secure that dream bungalow at short notice without needing to wait on selling her house. She doesn't like the idea of us paying inheritance tax but unless the limits don't keep pace with inflation I don't think she will be affected.

I think its pertinent to:
1) Work out what to do with my £40k (i would use mine and my wife's ISA allowances) and a monthly investment of circa £400 each.
2) Work out the risk level in mum's portfolio - and remove any high risk investments that I am not capable of managing yet / don't match her risk profile - but do this at the right time!

Questions:
A) For me I was looking at Lifestrategy 80, but found dad had setup similar for my sister with WITAN via cavendish fidelity- this seems to have outperformed lifestrategy 100, but has a £1.50 each month dealing fee. I'm late 30's, I have inertia in pressing the button to move such a large amount of money, I want it to be the right move! WItan or lifestrategy 80 or something else for my investment? I fully intend to get "active" in my money and understand this world, but for now I want to put it somewhere thats going to beat inflation and not get lost in a random crash - its the only money I have aside from rainy day cash ISA. Maybe I can build up a "learning pot" or some mock portfolios to learn. Or do I (almost blindly) follow advice like Money Wise's first 50 funds portfolio suggestions and then learn to monitor those?
B) Which platform for me? Halifax seems to come out cheapest (?) on comparisons, or iWeb. HL and cavendish seem very popular but more expensive?
C) How do I assess the risk in each fund / trust my mum holds?
D) How do I choose the right time to sell the riskiest investments - if its better to hold for another couple of years to ride out potential market wobbles in March then we will. Is it just a case of look at the chart compared to an index and sell when relatively high.....?

TUK020
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Re: Inherited Portfolio

#176231

Postby TUK020 » October 25th, 2018, 3:52 pm

maillon,
to help answer a couple of your questions, start by reading the Monevator website
http://monevator.com/category/investing ... investing/
and in particular, under the heading 'cutting costs', look at the seciton on comparing online brokers and platform fees.

My suggestion would be to select your platforms, move funds into tax protected wrappers (i.e transfer your 40k into an ISA) without delay, and then take your time about getting it invested.

Before making any changes to your Mum's portfolio, let it run for a while and observe what is going on.

One thought that you might want to explore with her: regular gift payments that are from surplus income are exempted from later inheritance tax. Your Mum understandably wants to hang on the the capital value of the portfolio in case of later need. She doesn't need the income from it - perhaps she should pay 80% of the income into your + siblings ISAs, and retain 20% to build cash buffer. Sensitive topic!

tjh290633
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Re: Inherited Portfolio

#176263

Postby tjh290633 » October 25th, 2018, 6:17 pm

Sounds like your mother's portfolio has been chosen well. I would leave it well alone, although you should reinvest the dividends with care. ITs don't need much looking after, except to decide where to reinvest the cash. Maybe top up the holdings in turn at suitable intervals. It sounds likely that she doesn't have any risky investments if it is all in ITs. You could post the weightings of the various constituents if you want comments on that.

You could probably do a lot worse than following your sister's example, using Witan, with Halifax who will give you a good deal on regular investments. Definitely have his and her's ISAs. You could try different strategies to decide which is best, but you have already done some research on that. You could run different ITs, like WTAN in one and FRCL (F&C) in the other. You get instant diversification with an IT, including geographical spreads. Compare their holdings, which will have quite a lot in common.

Good luck.

TJH

monabri
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Re: Inherited Portfolio

#176280

Postby monabri » October 25th, 2018, 7:06 pm

I would suggest listing the investments out but only list they percentages totalling to 100% on the Investment Trust board and ask for comments. Having been a " keen investor"( for many years) probably translates to " an experienced, canny investor who had an interest in investing and knew what he was doing".

I use iWeb as I like the ability to buy/sell for £5...I don't think it's worth waiting until certain special dealing days when you can deal for £2/£3. ( I want to decide when to buy/sell).

I'd do as little as possible for the moment...

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Re: Inherited Portfolio

#176322

Postby gryffron » October 25th, 2018, 11:22 pm

Have to agree with the previous posters. The WORST thing to do with investments is buy, sell, trade, shuffle,... incurring costs at every step. Leave them be. Minimise costs.

Halifax/iWeb (identical product under different brands) make no charge for holding funds. So they are certainly the place to be for your own funds/ISAs if you intent to hold ITs.

Gryff

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Re: Inherited Portfolio

#176339

Postby Aminatidi » October 26th, 2018, 7:53 am

IWEB/Halifax don't allow Lindsell Train funds (IT is fine for some reason) for info.

ADrunkenMarcus
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Re: Inherited Portfolio

#176541

Postby ADrunkenMarcus » October 27th, 2018, 10:49 am

tjh290633 wrote:Sounds like your mother's portfolio has been chosen well. I would leave it well alone, although you should reinvest the dividends with care. ITs don't need much looking after, except to decide where to reinvest the cash.


Seconded.

Best wishes

Mark.

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Re: Inherited Portfolio

#177260

Postby LooseCannon101 » October 30th, 2018, 10:21 pm

I would set up an ISA saving scheme with F and C Asset Management, costing £72 per annum (Direct Debit) each for yourself and your wife. This is much less than a platform would charge. A maximum of £20k can be invested each year. I would put the full amount at the start - making a total of £40k for yourself and your wife.

One of the most highly diversified and certainly the oldest investment trust that they manage is Foreign and Colonial Investment Trust (FRCL) which is perfect for a buy and hold passive investor. Dividends should be re-invested automatically (no extra charge). There is no need to buy multiple trusts as FRCL is effectively a investment trust portfolio in one trust - it is very large and conservatively managed.

Once set up, there is nothing to do. This is the hard part as the financial press and stockbrokers are constantly telling investors to re-balance, move out of shares and into bonds, .. etc.

Other global equity investment trusts are available, but I would suggest not with the breadth of holdings of FRCL. Holding the latter for the past 20 years has delivered about 9% per annum (total returns doubling every 8 years), but with frequent swings above and below this trend line. No one can predict short-term movements in the stock market, say over a year, but over 10+ years, the market has a strong correlation with rising company earnings.

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Re: Inherited Portfolio

#177284

Postby Urbandreamer » October 31st, 2018, 7:30 am

It would be strange indeed if I disagreed with the previous posts.

One thing that I would say is that you need to work on developing your investment comfort zone for yourself. As others have said, it sounds like your Mums portfolio will need little effort.

For yourself however, you do need to develop a somewhat more blasé attitude to investment. In truth you could toss a coin to decide between WITAN, Lifestrategy 80 or Lindell Train (well it would have to be a three sided coin) and not be too disapointed if one or both of the others did slightly better. It's all to easy to buy into the concept that you don't want to make a mistake/do the wrong thing, however with investment coming second best is often FAR better than not joining in.

You also need to get use to "loosing" money. In the last four weeks the market (hence most people) lost about 7%. That would be £300 of your £40k. Of course between April and May you would have seen the same gain, but for people who are not use to investing, it's only the loss that matters! Personally I think that we are in for a bumpy ride in the next few years, but that makes it a great time to learn.

Assessing the risk of investments is a very difficult subject. So difficult that even many in the business take short cuts. They find the volitility and use that as a measure of risk when they discuss the subject.
It would be a fairly bad idea to adopt that methadology and as you sugest assess the risk of each fund in your Mums portfolio. To use the common story, both ice cream and umbrella sellers suffer from the risks of the weather. The one will do badly if it rains, the other if it shines. A more nuanced approach is needed. Indeed I would argue, given the statement that you made about your Mum, there is room in her portfolio for a very small amount of high risk/high reward investments. Given what you said about your late Father I expect that you will find some in the portfolio that she inherited.

When and why to sell. I've already remarked upon risk. However it may be sensible to review the balance of a portfolio regualrly. If for example a couple of investments have done stunningly well, they may have increased the overall risk to the portfolio. Many decide upon limits of how large a share of a portfolio any single investment can become. Likewise keep an eye on small holdings. It's likely they once were bigger and could lose even more. Think about their prospects and be ruthless. As for when, there simply isn't a right or wrong time. Just don't do it too often.

Of course having sold, you then need to decide what to do with the new funds. If you simply reduced the size of a holding then simply topping up a couple of smaller ones may make sense. If however you've got rid of a holding that you see little future in, then you are going to have to find another.

Sounds like a lot of work doesn't it? However in practice it's actually a huge amount of fun.

I would make a start by finding as much as possible about the holdings in your late Fathers portfolio and tying to guess his reasons for buying them in particular.

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Re: Inherited Portfolio

#177309

Postby monabri » October 31st, 2018, 9:31 am

Urbandreamer wrote:
I would make a start by finding as much as possible about the holdings in your late Fathers portfolio and tying to guess his reasons for buying them in particular.


Or even listing them out here all along the lines of

Equity #1 = 10%
Equity #2 = 5%
etc.

The Lemons here will help!

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Re: Inherited Portfolio

#177389

Postby BobGe » October 31st, 2018, 3:30 pm

Urbandreamer wrote:You also need to get use to "loosing" money. In the last four weeks the market (hence most people) lost about 7%. That would be £300 of your £40k.

If only...

tjh290633
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Re: Inherited Portfolio

#177395

Postby tjh290633 » October 31st, 2018, 4:02 pm

LooseCannon101 wrote:I would set up an ISA saving scheme with F and C Asset Management, costing £72 per annum (Direct Debit) each for yourself and your wife. This is much less than a platform would charge. A maximum of £20k can be invested each year. I would put the full amount at the start - making a total of £40k for yourself and your wife.

One of the most highly diversified and certainly the oldest investment trust that they manage is Foreign and Colonial Investment Trust (FRCL) which is perfect for a buy and hold passive investor. Dividends should be re-invested automatically (no extra charge). There is no need to buy multiple trusts as FRCL is effectively a investment trust portfolio in one trust - it is very large and conservatively managed.

The snag about that is that you are limited to what F&CAM offer. You can use Halifax for a lower annual fee and get a much wider choice of investments. If you wished, you could have FRCL and WTAN in the same ISA. You cannot do that with F&CAM.

TJH

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Re: Inherited Portfolio

#177414

Postby Itsallaguess » October 31st, 2018, 5:19 pm

Urbandreamer wrote:
You also need to get use to "losing" money.

In the last four weeks the market (hence most people) lost about 7%. That would be £300 of your £40k.


£40,000 x 0.07 = £2,800.

Cheers,

Itsallaguess

Urbandreamer
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Re: Inherited Portfolio

#177440

Postby Urbandreamer » October 31st, 2018, 7:23 pm

Itsallaguess wrote:£40,000 x 0.07 = £2,800.

Cheers,

Itsallaguess


Thanks. I didn't think that it looked right but had to rush off to work.

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Re: Inherited Portfolio

#177738

Postby StepOne » November 2nd, 2018, 9:19 am

LooseCannon101 wrote:I would set up an ISA saving scheme with F and C Asset Management, costing £72 per annum (Direct Debit) each for yourself and your wife. This is much less than a platform would charge


What's the advantage over using iWeb/Halifax which have zero annual charge, just a one-off £25 setup charge?

StepOne

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Re: Inherited Portfolio

#177747

Postby Aminatidi » November 2nd, 2018, 9:42 am

StepOne wrote:
LooseCannon101 wrote:I would set up an ISA saving scheme with F and C Asset Management, costing £72 per annum (Direct Debit) each for yourself and your wife. This is much less than a platform would charge


What's the advantage over using iWeb/Halifax which have zero annual charge, just a one-off £25 setup charge?

StepOne


I can't see as there is one so long as IWEB offer all the funds and IT's you want - and that's the thing to check with IWEB as they are a bit fussy/particular about what they offer.

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Re: Inherited Portfolio

#177806

Postby XFool » November 2nd, 2018, 2:11 pm

StepOne wrote:
LooseCannon101 wrote:I would set up an ISA saving scheme with F and C Asset Management, costing £72 per annum (Direct Debit) each for yourself and your wife. This is much less than a platform would charge

What's the advantage over using iWeb/Halifax which have zero annual charge, just a one-off £25 setup charge?

StepOne

HSDL has no setup fee and charges £12.50 pa for an ISA. Not that that should put anybody off! Don't know about iWeb (apart from the initial £25).

maillion
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Re: Inherited Portfolio

#180384

Postby maillion » November 14th, 2018, 10:13 pm

Thank you all so much for the very kind replies.

I have looked at Mum's portfolio across 3 platforms, and summed each investment as a percentage stake of the whole portfolio. There is an awful lot of different investments here to get my head around :(

I have no idea how to decide which are good, which are bad, the risk level or diversity. Can anyone advise? Or a good way to work it out?

Lindsell train has done well, perhaps I should rebalance in some way?

Any tips on simplifying this - are there some very similar things going on?

This is all excluding cash ISAs, the cash shown is cash balance on one of the platforms.

% holding
11.02 Invesco Distribution Class Y - Accumulation (GBP)
9.35 LF Lindsell Train UK Equity Class D - Accumulation (GBP)
8.07 Fundsmith Equity Class I - Accumulation (GBP)
7.61 LF Woodford Equity Income Class Z - Accumulation (GBP)
7.31 Invesco Income Class Y - Accumulation (GBP)
7.17 Troy Trojan Income Class O - Accumulation (GBP)
6.31 Merian UK Smaller Companies Class R - Accumulation (GBP)
5.55 Marlborough UK Micro-Cap Growth Class P - Accumulation (GBP)
5.45 Lindsell Train Global Equity Class D - Income (GBP)
4.56 Invesco High Income Class Y - Accumulation (GBP)
3.74 Jupiter European Class I - Income (GBP)
2.54 Baillie Gifford Global Discovery Class B - Accumulation (GBP)
2.25 Stewart Investors Asia Pacific Leaders Class B - Accumulation (GBP)
1.98 WITAN INV TRUST ORD GBP0.25
1.88 LINDSELL TRAIN INV ORD GBP0.75
1.83 Invesco Global Smaller Companies Class Y - Accumulation (GBP)
1.36 ISHARES FTSE 250 UCITS ETF GBP DIST
1.35 First State Greater China Growth Class B - Accumulation (GBP)
1.23 FINSBURY G&I TST ORD GBP0.25
1.15 FP CRUX European Special Situations Class I - Accumulation (GBP)
1.08 ISHARES VI PLC EDGE S&P 500 MIN VOL UCITS
1.03 Kames Ethical Cautious Managed Class B - Accumulation (GBP)
0.96 ISHARES III PLC S&P SML CAP 600 UCT ETF GBP
0.92 FUNDSMITH EMERGING ORD GBP0.01
0.80 Aberdeen Japan Investment Trust plc Ordinary 10p
0.79 Woodford Patient Capital Trust PLC Ordinary Shares GBP 0.01
0.54 VINACAPITAL VIETNA ORD USD0.01
0.49 INDIA CAPITAL GROW ORD GBP0.01
0.46 BLACKROCK WORLD MI ORD GBP0.05
0.42 BLACKROCK FRONTIER USD0.01
0.38 DOWNING STRAT MICR RED ORD GBP0.001
0.30 Cash GBP
0.11 Stewart Investors Indian Subcontinent Class B - Accumulation (GBP)

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Re: Inherited Portfolio

#180455

Postby Urbandreamer » November 15th, 2018, 9:44 am

maillion wrote:Any tips on simplifying this - are there some very similar things going on?

This is all excluding cash ISAs, the cash shown is cash balance on one of the platforms.


Ok, disclaimer. I don't own or like funds. So take my recomendations with a pinch of salt.

First, as you say, the portfolio is far too "big" to think about. Secondly, what on earth is anyone doing with holdings as small as some of these. Then again, why invest in two funds that claim to try and do the same thing (as you say).

What to do?
Well think long and hard before you make changed to the first 10 ellements in the table. Doing so will have significant effects either for better or worse and you don't really want that with someone elses portfolio that you are starting managing for them.

Sell the 10 smallest holdings without any consideration of what they are or what they do.

Now look at the next 10 smallest holdings. Think carefully and top up 3 of them with the funds from selling the bottom 10.

Now sit back and start to study and read about investment. Record and track the portfolio, but resolve to make no furthor changes for a year. By pruning the portfolio it becomes possible to consider the merits of what is left. I would suggest that during that time you consider if the portfolio performance or income is too dependent upon just a couple of holdings and what the aim of the portfolio is. Personally I think that the largest holding should be reduced, but don't do it without a years thought. You should also consider fund classes and charges during that time. While I suspect that your Dad already did that, you need to check that you are in "clean" fund classes (ie post RDR).

I confess that I hold about the same number of investments. Some of mine should be desposed of too so I'm no saint. I suspect that your Dad was interested rather than "invested" in the smaller holdings. That is to say that he held them for his entertainment, rather than carefully considered reasons. All well and good, but while in your own porfolio you can indulge your interests it's unlikely that your Mum will be interested or entertained by the performance of the smaller holdings in this portfolio. They certainly will have little to no effect upon the portfolio performance, simply because they are so small.

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Re: Inherited Portfolio

#180462

Postby Alaric » November 15th, 2018, 10:04 am

Urbandreamer wrote:Ok, disclaimer. I don't own or like funds.


It's a mixture of OEICs and Investment Trusts. Observations about clean classes of units only apply to OEICs.

Pruning the smaller holdings could make sense. They also appear to be at the riskier end of the spectrum.


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