INDEPENDENT financial advice

Discussion in 'Pensions' started by Hubert, Jan 22, 2017.

  1. Hubert

    Hubert Registered User

    Have spent the last week getting the right ticker symbols for the ETFs set up on my online account and finalising selection - starting to purchase tomorrow and do it monthly from here on out.

    Kept it pretty simple and went with 4 Blackrock ishares ETFs from their core range to average in over the next 3 years at varying rates/allocations. Once I get these to a size will look at widening it out.

    Have bought two stocks also for the long term, boring industrials and looking at UK investment trusts but no rush.

    Apart from that will go slow and steady.
  2. Sarenco

    Sarenco Frequent Poster

    Would you like us to give our 2 cents on your proposed allocation or are you happy with your choices?

    The reason I ask is that you kicked off this thread by asking if anybody could recommend a good independent financial advisor so I assume you thought you would benefit from some advice on some aspect of your retirement investment strategy.
  3. Hubert

    Hubert Registered User

    Absolutely, if you can. Would appreciate it. I'm taking 3 years to drip in my existing funds excluding new contributions. Reason I'm taking 3 years is I'm nervy about markets and particularly US being overvalued just based on what I read.

    In terms of allocation, I'm aiming initially at European, US (will be back ended to see what happens next 6-12 months), Emerging (small proportion), and an all market fund for any excess cash earmarked for ETFS. UK Investment trusts will be separate and will be one or two or the large longstanding ones.

    Appreciate any views.
  4. Sarenco

    Sarenco Frequent Poster

    Hi Hubert

    I believe that markets are good, if imperfect, at efficiently reflecting all available information in the price of publicly traded securities. As such, I don't believe there is any point in trying to time markets or trying to pick winning stocks, sectors or regions.

    We can't really have a sensible discussion on portfolio construction if you don't agree with those fundamentals.

    Regardless, I obviously wish you well with your investing strategy.
    Merowig likes this.
  5. Hubert

    Hubert Registered User

    Thanks Sarenco. I probably agree with you in the context of me (or anyone) investing for a long time period, in my case 20 years plus.

    But does the market get in wrong on specifics, does it overshoot/undershoot well I think that's another debate entirely!!

    OK to add more detail, here is my logic. I have 90% of my fund now in cash. It's did very well from 2010-2015 as a result of general market movement and me working hard on the contributions. Now I have to go back into equities and I am nervy that the US to my mind looks set for a correction. It's my simple guess and I'll probably be proven wrong.

    So I don't want to go in too quick and I want to keep cash in reserve so I can buy the turndown. I'm not trying to time the market in my mind, I'm just looking at a 9 year bull market that has to run out of steam at some point. In the meantime, I'm setting my allocation target to be hit at the end of month 36.

    I plan to allocate 80% of my funds cash to let's call it my core long term fund. The balance is for quality stock picking or my sex and violence.

    The 80% will be invested in equal portions over the 3 years so I will be in substantial cash still for a while.

    So my target allocation at month 36 for my core long term fund is:

    US S&P 35% - but monthly contributions will start very low and we'll see what happens;
    Euro 35% - will allocate more on a monthly basis initially and see what happens;
    Emerging markets 10% - will allocate evenly;
    UK Investment Trusts 10% - will allocate evenly to 2/3 trusts (1 FTSE focused) with decent dividend/track record/costs;
    All market 10% - will allocate excess cash evenly.

    Worst that can happen, I average in too slow and miss US growth, best I get some benefit from the correction (but that's just my own opinion).

    What I'll do at end year 3 (aged 44) is then allocate monthly contributions evenly across these. I'll then fill it out with other asset classes over time - will see how bonds are etc.

    I'm trying to get to a stage by 44 that I have a solid well diversified cost effective equity fund that will be good to remain in place for 20 years.

    My 20% will be actively managed by myself and we'll see how this goes. As I said I have a few rules (its simple warren buffet stuff) and if I mess it up only myself to blame.

    That's my thinking, comments welcome on any of it.
  6. Fella

    Fella Frequent Poster

    Just be careful of the tax treatment of that ETF's is all I'd say. This site was a great help to me understanding the tax treatment of ETF's , I had originally invested in these but moved all money into investment trusts with thanks mostly to Sarenco for guiding me into these.
    It can be hard to lump all your money in in one go and although the right thing is time in market not timing market for peace of mind I don't think the euro cost averaging is that bad. A lot of the trusts i bought myself where at terrible Sterling prices had I averaged in i may have done better Im not sure , I still buy regularly which I believe to be the most important thing, I've seen people invest in things and It goes pear shaped soon after and they pull out or never put more in , so on that note I'd never be too hard on someone who wanted to Euro cost average .
  7. Sarenco

    Sarenco Frequent Poster

    Just to be clear, Hubert is talking about a self-directed pension fund so the tax considerations are totally different to those that would apply to a taxable investment portfolio.
    Fella likes this.
  8. Fella

    Fella Frequent Poster

    Ok ignore what i wrote! Cheers Sarenco for clearing that up
  9. Hubert

    Hubert Registered User

    Just thought I'd give an update on this.

    Have everything set up with an online broker account and have started to purchase in line with my plan.

    Am focused on building the foundations over the next 2-3 years so with that in mind and with my objectives above am:

    1. Buying ishares Euro ETF monthly - this will be the main investment in cash terms over 2017;

    2. Buying smaller amounts of a Japanese ETF and an Emerging Markets ETF to set allocations regardless of price;

    3. Am not buying UK or US for the time being and will see how the next 12 months go. Am researching UK investment trusts and will invest later in 2017 through 2018. On the US have an S&P ETF chosen along with a Russell 2000 ETF but waiting out the next 6-12 months - fools errand but I'm going to try and time it;

    4. Have bought 5 high dividend boring European stocks -key sectors - pharmaceutical, healthcare, industrial, automotive, business services - all medium to large cap - I have followed them for a while;

    5. Am being disciplined with number trades to manage costs and keeping everything recorded to track it;

    6. I've noticed my trustee has given up trying to push me onto related service providers who wanted to charge fees etc BUT i did undertake a financial review with someone recommended from this site and the advisor said what i was doing was 85% OK - questioned my long allocation period and aversion to managed funds but that was it.

    In terms of end year 3 allocation, plan is to allocate what I have as at 1/1/2017 (it's a cash lump sum) as follows:

    Europe - 30% (front ended - next 17 months)
    US - 30% (more back ended)
    My chosen high div shares - 20% (as opportunities arise)
    Japan and EM - 7.5% (even allocation)
    UK investment trusts - 12.5% (even allocation)

    What I put in over the next 3 years, I'm going to look at:

    A Private equity fund or fund of funds - just need to do more work on it but reading lots of interesting research on it from a long term 10 year+ investment horizon.

    Now my question to readers is how do I manage the FX exposure - as much of what I'm doing will be USD, some STG and the balance Euro.

    Appreciate any views on this.