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Post by capscarlet on Apr 20, 2017 10:56:32 GMT
I think you have to consider very much where you are in life and what would be the consequences of losing a big chunk of money i.e. as you approach retirement (as I am) you will probably want less exposure to volatile assets and / or a higher percentage of your wealth in cash. I think you also have to look at absolutes so while my percentage allocation to P2P is not that high, the absolute amount is in six figures.
There is a lot of talk about having 3 / 6 / 12 months "cash" but as an early retiree I want to be be in a position whereby I have a very high level of security over the money I need until I start drawing pensions (about 7 years). I also need to take into account that my wife is significantly more risk averse than I am.
Therefore I have a target allocation which looks like the following (I am not at the target but working towards it):
Cash 5,0%
Short term saving (easy access) 1,0%
Fixed bond - 12 month 2,5%
Fixed bond - 24 month 2,5%
Fixed bond - 36 month 2,0%
Fixed bond - 60 month 2,5%
Premium Bonds 5,0%
Bonds (mix of government, corporate and high yield) 21,0%
Shares - individual 10,0%
Shares - funds 21,0%
Property 7,5%
Commodities 2,5%
Peer-to-Peer 7,5%
Other investments 5,0%
Company Shares 5,0%
Notes:
1. Individual shares are a High Yield portfolio I have put together myself and I don't trade shares. There are about 30 shares in that portfolio
2. Funds are a mixture of ETFs and managed funds with a fair bit of sector and geographical diversification.
3. Property is not direct BTL but rather funds and actually a fair bit of P2P
4. Other investments are closed end funds which I am running down.
5. Company shares are share I hold in the company I work for which currently yield 6%. I'll need to find a new home for those funds once I retire.
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am
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Post by am on Apr 24, 2017 14:47:21 GMT
Premium Bonds! What exactly do you expect to earn out of them? My FSA reckons you should have enough cash to survive a year without a job. I'm not sure if this is right, but that is his view. I'd keep P2P at between 5 and 10% of by capital (ignoring houses) but closer to the 5%. At the moment premium bonds give a better return than deposit accounts, especially for taxpayers.
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jonno
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nil satis nisi optimum
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Post by jonno on Apr 24, 2017 14:54:51 GMT
Premium Bonds! What exactly do you expect to earn out of them? My FSA reckons you should have enough cash to survive a year without a job. I'm not sure if this is right, but that is his view. I'd keep P2P at between 5 and 10% of by capital (ignoring houses) but closer to the 5%. At the moment premium bonds give a better return than deposit accounts, especially for taxpayers. Last year I earned 3% tax free which equates to 5% gross for me; so not bad.
And you get that bit of excitement when the envelope(s) drops (I don't get out much  )
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Steerpike
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Post by Steerpike on Apr 24, 2017 15:12:09 GMT
Premium Bonds! What exactly do you expect to earn out of them? My FSA reckons you should have enough cash to survive a year without a job. I'm not sure if this is right, but that is his view. I'd keep P2P at between 5 and 10% of by capital (ignoring houses) but closer to the 5%. At the moment premium bonds give a better return than deposit accounts, especially for taxpayers. Most people get a return on Premium Bonds between 1% and 1.5% which is about what I got last year.
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rogerbu
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Post by rogerbu on Apr 24, 2017 15:24:21 GMT
Excluding Cash. I aim for
- 1/3rd P2P
-- 1/3rd VCT/EIS/SEIS Mainly VCT. After allowing for tax breaks they return 7-10% pa - medium risk
-- 1/3rd Stocks and Shares mainly via Tracker funds with 50% UK & 50% Global - highest risk
In all categories I try and diversify
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Post by Deleted on Apr 25, 2017 7:18:13 GMT
Prem Bonds, you can get them automatically paid into your bank account. With inflation at 2.6%, your 1.5% interest is losing you roughly 1.1% a year and you get a chance to pay tax for the pleasure.....  I remember when inflation was 15% and having cash in the bank was frightening. |
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hazellend
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Post by hazellend on Apr 28, 2017 8:29:43 GMT
Excluding Cash. I aim for - 1/3rd P2P -- 1/3rd VCT/EIS/SEIS Mainly VCT. After allowing for tax breaks they return 7-10% pa - medium risk -- 1/3rd Stocks and Shares mainly via Tracker funds with 50% UK & 50% Global - highest risk In all categories I try and diversify VCT/EIS/SEIS is by far the highest risk out of that lot - definitely not medium risk. Why do you think the gov offers 30-50 % tax relief?
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hazellend
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Post by hazellend on Apr 28, 2017 8:31:12 GMT
Excluding Cash. I aim for - 1/3rd P2P -- 1/3rd VCT/EIS/SEIS Mainly VCT. After allowing for tax breaks they return 7-10% pa - medium risk -- 1/3rd Stocks and Shares mainly via Tracker funds with 50% UK & 50% Global - highest risk In all categories I try and diversify VCT/EIS/SEIS is by far the highest risk out of that lot - definitely not medium risk. Why do you think the gov offers 30-50 % tax relief?
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rogerbu
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Post by rogerbu on Apr 28, 2017 10:57:47 GMT
Agree that EIS/SEIS are high risk, but VCTs are a very different animal.
I have been actively using VCTs for nearly 20 years. As such they have been through both the the 2000 crash and the 2008 crash.
In both cases the price hit to the VCTs was a lot less than the hit to Stocks & Shares and the dividends although reduced a bit still kept coming.
I continue to believe that after the tax advantages, then VCTs present a medium risk on a par with Equity & Income Funds/Investment Trusts and a lower risk than aggressive investing in individual shares.
My pattern is to buy VCTs then sell them after 5 years when the Tax Refund clawback period ends.
- I get 30% tax refund on the initial investment
- Dividends are tax free at 5-7%
- I don't use the VCts own reinvestment facilities, as holding for 5 years then selling become an issue, but rather collect all VCT dividends and sale proceeds and use this to fund the next purchase.
My recent sales have all returned 12-14% pa from Buy, hold 5 years, dividends then sell (Initial tax refund and all; buying and selling costs included).
The OP wanted ideas on diversification outside P2P - I believe that VCTs are worth a serious look as their behavior and risk factors are different to P2P & Stocks & Shares. That is the essence of diversification.
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