72 Year Old Retiree (UK)

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Topic Author
Plantagenet
Posts: 22
Joined: Sat Apr 27, 2019 4:25 am

72 Year Old Retiree (UK)

Post by Plantagenet » Sat Sep 07, 2019 10:23 am

Hello Everyone,

I hope you are all happy and well.

I would be grateful for your thoughts and suggestions for a portfolio for an older relative of mine:

Currently, she is able to live comfortably from her Works and State Pension and has minimal outgoings.
Her current financial situation is as follows:
Emergency funds : £40,000 Cash ISA / £20,000 Current account (earning 1.49%)
Property: £80,000
Debt: None
Marital Status : Single
Tax rate: 20%
Country: UK
Age: 72
Current Portfolio: FTSE Global All Cap Index Fund Acc £30,288 / Global Bond Index Fund -Hedged Acc £19,966 (Approx 60/40)
Monthly contributions: £0
Desired Asset Allocation: Unsure
Current funds: Vanguard FTSE Global All Cap Index fund (OCF 0.24%) / Vanguard Global Bond Index Fund - Hedged GBP (OCF 0.15%)
Vehicle: UK ISA

Thank you in advance

Plantagenet

xxd091
Posts: 94
Joined: Sun Aug 21, 2011 4:41 am
Location: UK

Re: 72 Year Old Retiree (UK)

Post by xxd091 » Sat Sep 07, 2019 1:57 pm

Who advised her? He seems to have got it absolutely right
I am 73 retired with the same Portfolio except I am 30% Equities 65% Bonds 5% Cash
To increase returns
Keep 2 years expenses in cash account - rest to be invested
Make sure investment platform is suitable ie cheapest one for a small portfolio
60/40 will be volatile-30/70 might be better-less volatile and returns probably similar to 60/40
xxd091

mucgoo
Posts: 9
Joined: Sat May 05, 2018 10:12 am

Re: 72 Year Old Retiree (UK)

Post by mucgoo » Sun Sep 08, 2019 11:27 am

That seems a solid base but possibly rather cash heavy. What's her aim and time horizon here?

Supplement existing pension if its low or gets reduced?
Living the high life for a few golden years?
Bequests?
Rainy day/care home fund?

steveyg50
Posts: 33
Joined: Tue Jul 09, 2019 6:35 pm

Re: 72 Year Old Retiree (UK)

Post by steveyg50 » Sun Sep 08, 2019 4:42 pm

https://finpage.blog/2019/01/03/three-f ... 18-update/

I found the above interesting - to compare 20 year performance of 80/20, 60/40 and 40/60.
They are in fact very similar which surprised me.

This info is for the 3 fund portfolio, but that should be pretty similar to your retiree.

As pointed out to me, the last 20 years includes 2 big drawdowns, so this explains the similar performance. However 2 big drawdowns in next 20 years seems pretty plausible, especially considering one in near future seems at least a strong possibility.

I may change my mind by then, I've 17 to 20 years before I retire, but at the moment am thinking when I'm 70 I will probably adopt a 40/60 portfolio. Am considering it even for before then.

A 40/60 is also what is recommended for an investor in early retirement in The Bogleheads Guide to Investing.

https://www.bogleheads.org/wiki/UK_investing

(sample portfolios)

On the other hand you say she is comfortable living on Works & State pension, so can afford to be less conservative.

But seems rather cash heavy, perhaps could leave equity as it is but move some of the cash into bonds.?



.

Topic Author
Plantagenet
Posts: 22
Joined: Sat Apr 27, 2019 4:25 am

Re: 72 Year Old Retiree (UK)

Post by Plantagenet » Sat Sep 28, 2019 4:56 pm

xxd091 wrote:
Sat Sep 07, 2019 1:57 pm
Who advised her? He seems to have got it absolutely right
I am 73 retired with the same Portfolio except I am 30% Equities 65% Bonds 5% Cash
To increase returns
Keep 2 years expenses in cash account - rest to be invested
Make sure investment platform is suitable ie cheapest one for a small portfolio
60/40 will be volatile-30/70 might be better-less volatile and returns probably similar to 60/40
Thanks xxd 091
I moved some of her existing ISA's back in April 2018, which were held with a well known UK banking institution.
She had been 'advised' to put 80% of her capital into their UK Equity Fund & the other 20% into a UK bond Fund.
Cant believe an advisor would put everything in the UK :confused

Since moving her funds into both Vanguard Global Funds, she has enjoyed a personal rate of return of 14.72%.

I have advised her to keep £20,000 in cash as an emergency fund and to move the remaining cash ISA £40,000 into
Global Bonds in order to reduce the volatility of the portfolio.
Im using Vanguard's own platform, I know its not the cheapest but I like the transparency.

Topic Author
Plantagenet
Posts: 22
Joined: Sat Apr 27, 2019 4:25 am

Re: 72 Year Old Retiree (UK)

Post by Plantagenet » Sat Sep 28, 2019 5:01 pm

mucgoo wrote:
Sun Sep 08, 2019 11:27 am
That seems a solid base but possibly rather cash heavy. What's her aim and time horizon here?

Supplement existing pension if its low or gets reduced?
Living the high life for a few golden years?
Bequests?
Rainy day/care home fund?
Thanks mucgoo.
She enjoys living modestly, but is looking to build a fund which can sustain her in later years where she may require help/care.
Time horizon is difficult, I imagine it's hard to know what the future holds for any of us in our latter years.

Topic Author
Plantagenet
Posts: 22
Joined: Sat Apr 27, 2019 4:25 am

Re: 72 Year Old Retiree (UK)

Post by Plantagenet » Sat Sep 28, 2019 5:07 pm

steveyg50 wrote:
Sun Sep 08, 2019 4:42 pm
https://finpage.blog/2019/01/03/three-f ... 18-update/

I found the above interesting - to compare 20 year performance of 80/20, 60/40 and 40/60.
They are in fact very similar which surprised me.

This info is for the 3 fund portfolio, but that should be pretty similar to your retiree.

As pointed out to me, the last 20 years includes 2 big drawdowns, so this explains the similar performance. However 2 big drawdowns in next 20 years seems pretty plausible, especially considering one in near future seems at least a strong possibility.

I may change my mind by then, I've 17 to 20 years before I retire, but at the moment am thinking when I'm 70 I will probably adopt a 40/60 portfolio. Am considering it even for before then.

A 40/60 is also what is recommended for an investor in early retirement in The Bogleheads Guide to Investing.

https://www.bogleheads.org/wiki/UK_investing

(sample portfolios)

On the other hand you say she is comfortable living on Works & State pension, so can afford to be less conservative.

But seems rather cash heavy, perhaps could leave equity as it is but move some of the cash into bonds.?
Thanks steveyg50.
I totally agree a 40/60 portfolio seems very prudent at this age.
I have also advised her to move her remaining cash ISA's (currently paying 0.2%) into Global Bonds.

User avatar
Forester
Posts: 530
Joined: Sat Jan 19, 2019 2:50 pm
Location: UK

Re: 72 Year Old Retiree (UK)

Post by Forester » Mon Sep 30, 2019 3:25 am

Try to get her to use the SIPP allowance as a retiree - churning this every year is something like a free £800.

Topic Author
Plantagenet
Posts: 22
Joined: Sat Apr 27, 2019 4:25 am

Re: 72 Year Old Retiree (UK)

Post by Plantagenet » Thu Oct 03, 2019 3:48 am

Forester wrote:
Mon Sep 30, 2019 3:25 am
Try to get her to use the SIPP allowance as a retiree - churning this every year is something like a free £800.
So how would this work ?

ukbogler
Posts: 68
Joined: Mon Sep 30, 2019 4:38 am

Re: 72 Year Old Retiree (UK)

Post by ukbogler » Thu Oct 03, 2019 5:33 am

As I understand it, unless the SIPP is already in drawdown, she can keep contributing to it, and the govt will add 25% on top. Even if she isn't working, she can do that up to (AFAIR) £3600 a tax year. When you start drawing from the SIPP, they claw the tax back. I'm not a pensions advisor, btw, that's just my laymans understanding, and I have personally seen my platform add in the 'free' money as expected. Which I then invested, obviously.

Topic Author
Plantagenet
Posts: 22
Joined: Sat Apr 27, 2019 4:25 am

Re: 72 Year Old Retiree (UK)

Post by Plantagenet » Sat Oct 05, 2019 11:06 am

ukbogler wrote:
Thu Oct 03, 2019 5:33 am
As I understand it, unless the SIPP is already in drawdown, she can keep contributing to it, and the govt will add 25% on top. Even if she isn't working, she can do that up to (AFAIR) £3600 a tax year. When you start drawing from the SIPP, they claw the tax back. I'm not a pensions advisor, btw, that's just my laymans understanding, and I have personally seen my platform add in the 'free' money as expected. Which I then invested, obviously.
Thanks Forester, I will definitely have a look at this....

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