[EU|UK] Please review my portfolio

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Topic Author
marinero
Posts: 15
Joined: Tue Aug 06, 2019 5:16 am

[EU|UK] Please review my portfolio

Post by marinero » Mon Sep 02, 2019 3:59 pm

Country of Residence: UK
International Lifestyle: Greek national. Plan to move back to EU at some point.
Currency: EUR
Emergency funds: 6 months
Debt: None
Age: 40
Desired Asset allocation: 80% stocks / 20% bonds
Desired allocation to stocks outside your of country of residence: not sure what this means. Savings are in EUR in German account.

State pension at 67, but not counting on it. Plan to retire earlier.
______________________________________________________________

Current retirement assets
General investment account, taxable
500k cash in EUR (for investing)
Sheltered investment account, tax free
100k Sterling in ISA with Vanguard (Lifestrategy 80)
______________________________________________________________
New investments
xx General investment account: Want to invest lump sum investment of 500k EURO (possibly over 1-2 years)

New annual Contributions
xx General investment account: 30k EUR (independent of lump sum above)
xx Sheltered investment account: 20k Sterling (independent of lump sum above)
_______________________________________________________________
Contigency plans
xx Earning 55k Sterling in salary annually + 60k EUR after tax from properties back home. This income, especially the salary from a safe job, should help me weather any storm that might come.
______________________________________________________________
Goals
xx Saving away 500k lump sum over 2 years + 50k a year for the next 10 years, hoping to retire in about 10 years.
_______________________________________________________________
Questions:
1. Despite being 40, I decided on an 80-20 stocks-bonds split, because I have a safe job and regular passive income from properties in Greece coming in. I am thinking of buying slowly into these products to build a balance of:
* 10% EMIM: iShares Core MSCI Emerging Markets IMI UCITS ETF (Acc)
* 70% IWDA: iShares Core MSCI World UCITS ETF USD (Acc)
* 20% AGGH: iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc)

Total TER 0.18%
What is the opinion of the Boglesphere of my choices?

2. Given I have a safe income from job and properties in Greece and given the state of bonds would it make sense to stick to 100% equity? I feel I could weather the storm if I have to as I'll have income coming in.

3. I am a relative newbie, having only about 18 months experience from investing (read a good book and lots of online resources). I a bit nervous about investing all 500k EUR in one go, especially given how expensive the market currently is and a crisis predicted by the infamous bond yield inversion. I read somewhere that a crisis followed 14 out of 15 yield curve inversions. This happens usually within 18 months. I was thinking of spreading the 500k over 24 months and obviously monitoring the situation continuously.

Opinions on that?

4. I live in the UK where I would have to declare the dividends even though they are accumulating and pay tax on them. Brokers give you such annual reports of dividends collected even if they were re-invested, right? I signed up with Degiro + Interactive Brokers and want to test drive both.

5. I recently discovered https://www.justetf.com which has been quite helpful in searching for ETFs and comparing. I am on the free tier. I wonder if someone has paid the membership that allows you all the simulations etc. Opinions on the platform?

Thanks Bogleheads :) !
Last edited by marinero on Wed Oct 09, 2019 9:13 am, edited 1 time in total.

glorat
Posts: 344
Joined: Thu Apr 18, 2019 2:17 am

Re: [EU|UK] Please review my portfolio

Post by glorat » Mon Sep 02, 2019 10:07 pm

marinero wrote:
Mon Sep 02, 2019 3:59 pm

1. Despite being 40, I decided on an 80-20 stocks-bonds split, because I have a safe job and regular passive income from properties in Greece coming in. I am thinking of buying slowly into these products to build a balance of:
* 10% EMIM: iShares Core MSCI Emerging Markets IMI UCITS ETF (Acc)
* 70% IWDA: iShares Core MSCI World UCITS ETF USD (Acc)
* 20% AGGH: iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc)

Total TER 0.18%
What is the opinion of the Boglesphere of my choices?
https://www.boglebot.com would come up with exactly the same recommendation :happy
marinero wrote:
Mon Sep 02, 2019 3:59 pm
2. Given I have a safe income from job and properties in Greece and given the state of bonds would it make sense to stick to 100% equity? I feel I could weather the storm if I have to as I'll have income coming in.
The state of bonds is that they are still holding a negative correlation to equities and that's the state you want. Bonds aren't for returns. Going to 100% equity increases your risk profile greatly - a much bigger factor than bonds that earn 0% is what if your 100% stocks drop by 50% in some year? Others can comment about risk better than me.
marinero wrote:
Mon Sep 02, 2019 3:59 pm
3. I am a relative newbie, having only about 18 months experience from investing (read a good book and lots of online resources). I a bit nervous about investing all 500k EUR in one go, especially given how expensive the market currently is and a crisis predicted by the infamous bond yield inversion. I read somewhere that a crisis followed 14 out of 15 yield curve inversions. This happens usually within 18 months. I was thinking of spreading the 500k over 24 months and obviously monitoring the situation continuously.

Opinions on that?
The cold blooded mathematicians will say that expected returns are maximised if you lump sum invest to maximise time in the markets. Psychologically, that is a difficult position to take. If investing the money slowly in over time helps you sleep better, then definitely do it. Just remember to pick your exactly plan once given some forum advice (e.g. 500k spread over 24 months, invested every 1 month) and then stick to it so you don't accidentally time the market.
marinero wrote:
Mon Sep 02, 2019 3:59 pm
4. I live in the UK where I would have to declare the dividends even though they are accumulating and pay tax on them. Brokers give you such annual reports of dividends collected even if they were re-invested, right? I signed up with Degiro + Interactive Brokers and want to test drive both.
Good question, I would want to know the same. I haven't found such a report in IB as yet
marinero wrote:
Mon Sep 02, 2019 3:59 pm
5. I recently discovered https://www.justetf.com which has been quite helpful in searching for ETFs and comparing. I am on the free tier. I wonder if someone has paid the membership that allows you all the simulations etc. Opinions on the platform?
I use morningstar for the same and am happy with that. I wouldn't get too caught up with all the funds though. If you've picked a sensible 3-fund portfolio, 3 funds are all you need to know about. Don't need to get distracted with the thousands out there.
marinero wrote:
Mon Sep 02, 2019 3:59 pm
Thanks Bogleheads :) !
Welcome to the forum!

GlobalBogle
Posts: 10
Joined: Thu Aug 22, 2019 10:15 pm

Re: [EU|UK] Please review my portfolio

Post by GlobalBogle » Mon Sep 02, 2019 10:20 pm

marinero wrote:
Mon Sep 02, 2019 3:59 pm
1. Despite being 40, I decided on an 80-20 stocks-bonds split, because I have a safe job and regular passive income from properties in Greece coming in. I am thinking of buying slowly into these products to build a balance of:
* 10% EMIM: iShares Core MSCI Emerging Markets IMI UCITS ETF (Acc)
* 70% IWDA: iShares Core MSCI World UCITS ETF USD (Acc)
* 20% AGGH: iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc)

Total TER 0.18%
What is the opinion of the Boglesphere of my choices?
Very standard and good choices I think most bogleheads in Europe would endorse.

One alternative to IWDA is "SPDR MSCI World UCITS ETF" (IE00BFY0GT14) which has a TER of 0.12% instead of the 0.20% that IWDA charges. Wondering if you (or anyone else) considered this as a reasonable alternative to IWDA?

DJN
Posts: 529
Joined: Mon Nov 20, 2017 12:30 am

Re: [EU|UK] Please review my portfolio

Post by DJN » Mon Sep 02, 2019 10:35 pm

marinero wrote:
Mon Sep 02, 2019 3:59 pm

4. I live in the UK where I would have to declare the dividends even though they are accumulating and pay tax on them. Brokers give you such annual reports of dividends collected even if they were re-invested, right? I signed up with Degiro + Interactive Brokers and want to test drive both.

Thanks Bogleheads :) !
Hi,
I think that this page may provide some answers on that one: https://www.interactivebrokers.com/en/i ... &p=explain
In your IB account you will find a section called reports and you will be able to run reports and statements that include dividend results.
DJN
Yah shure

actuallyxy
Posts: 35
Joined: Wed May 24, 2017 6:25 am

Re: [EU|UK] Please review my portfolio

Post by actuallyxy » Mon Sep 02, 2019 11:05 pm

I would advise you to use distributing funds outside ISAs and SIPPs if you are a UK taxpayer. I have used several brokers and none of them include any information on dividends paid on accumulating units. You'll have to try to find that information from the internet or ask the fund provider.

Also, you'll have a problem when you come to sell the funds and calculate your capital gains tax liability. You'll have to keep records of every dividend payment and take them into account when calculating how much capital gains to pay. The calculations can get complicated when you have several sales and purchases of the same fund in the past due to rebalancing. If you give up and just pay capital gains on the total, you'll end up overpaying tax.

For these reasons, it's just easier to hold distributing funds outside ISAs and SIPPs. Just reinvest the dividends yourself.

actuallyxy
Posts: 35
Joined: Wed May 24, 2017 6:25 am

Re: [EU|UK] Please review my portfolio

Post by actuallyxy » Mon Sep 02, 2019 11:05 pm

I would advise you to use distributing funds outside ISAs and SIPPs if you are a UK taxpayer. I have used several brokers and none of them include any information on dividends paid on accumulating units. You'll have to try to find that information from the internet or ask the fund provider.

Also, you'll have a problem when you come to sell the funds and calculate your capital gains tax liability. You'll have to keep records of every dividend payment and take them into account when calculating how much capital gains to pay. The calculations can get complicated when you have several sales and purchases of the same fund in the past due to rebalancing. If you give up and just pay capital gains on the total, you'll end up overpaying tax.

For these reasons, it's just easier to hold distributing funds outside ISAs and SIPPs. Just reinvest the dividends yourself.

Topic Author
marinero
Posts: 15
Joined: Tue Aug 06, 2019 5:16 am

Re: [EU|UK] Please review my portfolio

Post by marinero » Tue Sep 03, 2019 3:50 am

Thanks for your answers all.

What you say actuallyxy makes sense and I had a quick look now into the equivalent funds with iShares with Accumulation vs. Distribution and it's quite a different story.

Say for example I wanted to replace the IWDA: iShares Core MSCI World UCITS ETF USD (Acc) with a distribution equivalent. There are:
xx iShares MSCI World UCITS ETF (Dist) (ISIN IE00B0M62Q58): which does the same job but instead of a 0.2% TER like IWDA it has a 0.5% TER. Not really sure why? Is it because they have higher costs when they deal with dividend distribution?
xx Vanguard FTSE Developed World UCITS ETF (ISIN IE00BKX55T58): which again is similar and with only a 0.18% TER, but only 300m despite having started in 2014. Inexperienced manager at the helm perhaps?

I'm a bit confused. Anyone have an opinion on the above and why these issues arise?

Given the difference in costs etc, i wonder if all these brokers really haven't figured out a way to help you out with these calculations of tax when it comes down to it.

glorat
Posts: 344
Joined: Thu Apr 18, 2019 2:17 am

Re: [EU|UK] Please review my portfolio

Post by glorat » Tue Sep 03, 2019 4:08 am

The majority of investors prefer accumulation funds due to the lack of maintenance needed and avoidance of dividend taxes.

UK investors are in the minority. If I were in your situation (and I'm close to it), I'd simply go for VWRD - Vanguard FTSE All World tracker. Although it has a higher TER of 0.25%, it's an all in one combined developed world+emerging market fund so you don't have two funds to manage and balance.

The additional bonus is that you can buy VWRD in EURs to avoid some currency exchange (although dividends pay out in USD, which your broker will have to handle somehow)

You can compute the annual value difference of the TER and see how it compares to your hassle of dealing with more than one fund. At very least it is an option.

actuallyxy
Posts: 35
Joined: Wed May 24, 2017 6:25 am

Re: [EU|UK] Please review my portfolio

Post by actuallyxy » Tue Sep 03, 2019 6:35 am

Vanguard FTSE Global All Cap is a nice option. It comes in accumulating and distributing flavours. It has fees of 0.24%, which is a bit hight, but it includes emerging markets and small caps at their market weights.

Topic Author
marinero
Posts: 15
Joined: Tue Aug 06, 2019 5:16 am

Re: [EU|UK] Please review my portfolio

Post by marinero » Tue Sep 03, 2019 8:26 am

The "Vanguard FTSE Global All Cap" is a great fund but my money is in EUR and I think this is sold in GBP only.

Am I wrong?

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