I started investing about 20 years ago and decided to use a number of different providers and a few different index-based approaches. As I see early retirement coming into view a few years from now, I realise it all looks a bit of a mess and I'd like to start to glide something a bit simpler and more sensible for withdrawal purposes.
Country of Residence: United Kingdom, and staying here
Emergency funds: Yes about 3 months worth
Desired Asset allocation: 65% stocks / 30% bonds / 5% gold, with appropriate amounts overseas. But see questions below
Workplace pension: Could be around 35k p.a. at age 65 but it's at risk I don't want to rely on it, so am looking for advice on a worst-case scenario as if it's not there
Total portfolio size: A few six figures into seven figures
So I have my investments split into five accounts.
Fund 1: A UK SIPP, following a Swensen portfolio. 8% of the whole portfolio.
2% Lyxor FTSE 100 UCITS ETF - Acc (L100.L)
2% iShares Core MSCI World UCITS ETF | SWDA
1% iShares £ Index-Linked Gilts UCITS ETF | INXG
1% iShares Core UK Gilts UCITS ETF | IGLT
2% iShares UK Property UCITS ETF GBP (Dist) | IUKP
Fund 2: Another UK SIPP, following the Permanent Portfolio, 10% of the whole portfolio.
2% HSBC FTSE All Share Index Fund Institutional A Accumulation
3% 30 year UK Gilts
2% iShares UK Gilts 0-5yr UCITS ETF GBP (Dist) (GBP) | IGLS
3% WisdomTree Physical Gold (GBX) | PHGP
I stopped investing in the SIPPS because of the potential value of my workplace pension, and hitting the annual and lifetime limits. But carried on the Permanent Portfolio in a general investment account
Fund 3: General investment account following Permanent Portfolio at same broker as fund 2. 24% of the whole portfolio
7% iShares UK Equity Index
6% Vanguard long duration gilt index
6% iShares Physical Gold
6% Cash in bank account
Fund 4: General investment account at same broker as fund 1. 37% of the whole portfolio
37% Vanguard 80% Lifestrategy
And finally...An ISA built up over the years invested purely in stocks.
Fund 5: Stocks and Shares ISA. 22% of the whole portfolio
8% Fidelity MoneyBuilder UK Index
15% Aviva Investors International Index Tracking SC1 Acc
So looking at all of them horizontally, and ignoring different potential withdrawal dates:
- 19% UK equity
- 46% World equity (counting the 80% LifeStrategy stocks as all world)
- 18% bonds (counting 20% of the LifeStrategy)
- 8% gold
- 8% cash
- 2% REITs
Phew! What a mess.
I'll keep investing over the next couple of years but what I'm really after is how to shift the portfolio to something simpler and more sensible, while avoiding capital gains tax if at all possible. I'm obsessively exploring withdrawal strategies and the like, and am currently ploughing through Living off your Money (McClung). However, I'm most likely to want to follow something like the Bogleheads VPW with annual rebalancing, or possibly the Prime Harvesting technique as outlined in McClung's book. But I'm really not attracted to the hugely sliced and diced portfolios recommended in the book, not least as most of the funds are US.
So to the questions (ignoring the at-risk workplace pension)...
1. Does anyone have a recommended withdrawal strategy that's expected to work in the UK? So many of the strategies are US-based!
2. With those kinds of strategies in mind, what kind of portfolio should I aim towards?
3. Is it important to tidy things up or should I just leave things as they are and rebalance towards this AA?
4. In particular, is it worth converting the big LifeStrategy lump into separate equity and bond funds so I have a bit more control over withdrawals?
I hope that all makes sense. Thanks in advance for any advice and thoughts!