Results 1 to 5 of 5

Thread: Fund diversification and portfolio makeup

  1. #1

    Fund diversification and portfolio makeup

    I'm 32 and new to investing. My wife and I are hoping to retire in 20 years (earlier would be nice, but we have to be realistic) and we don't plan on having children. I've saved up a decent amount (20000) to get started but I'm having difficulty determining exactly how I should divide my money up.

    My initial approach was to try a robo-advisor: I went with MoneyFarm and its approach was to divide my funds up as such:

    Cash and short-term Gov. Bonds: 18%
    Developed Markets Gov. Bonds: 11%
    Inflation Linked Bonds: 9%
    High-Yield and Emerging Markets Bonds: 26%
    Developed Markets Equity: 31%
    Cash: 5%

    Correct me if I'm wrong, but that's rather high percentage of bonds (64%), especially for a relatively young investor.

    My second approach was to open an investment platform and buy a range of index funds to cover a number of markets (UK, US, Europe, Pacific, Japan, Emerging, World, Technology). The problem is these all seem to rise and fall together rather than independently, which seems to defeat the purpose of diversification.

    What other bond/fund combinations do people have? What approach would you recommend I take with my investments?

  2. #2
    1. What is your attitude to risk: with equities be prepared to accept a paper loss of 30% short term.

    2. What is your investment period: 20 years, so long term; not to be drawn in the meantime.

    This suggests put it all in equities.

    What equity? Consider a a Global Index Tracker ETF. Over 20 years you will save a lot in costs.

    Type of fund: a SIPP assuming you pay income tax.

  3. #3
    Guest
    One of many not one off, stop press! there is another bastard on the way. I can count on one hand those I know who make a positive financial contribution, the vast majority are a drain. No business could survive this way. As for unions, we would be poorer without them. I lived in poverty from 1968 until the unions dragged us out with the pay boom and of course inflation. I buried a wife and child in paupers graves, both died from chest infection brought on by cold and damp. Yes I am bitter, it is not something I like to recall. However there have been many times when my union has 'downed tools' for a week or two for no gain but simply for fun. No fun if you can't afford a bag of coal.
    I know we must balance our books after gordons vote-catching lunacy but can it be done? "the moneys there" the unions believe and disruption is already under way. Seeing the greed and excess at board level who can blame them?
    The crap is about to hit the fan.

  4. #4
    1. What is your attitude to risk: with equities be prepared to accept a paper loss of 30% short term.

    2. What is your investment period: 20 years, so long term; not to be drawn in the meantime.

    This suggests put it all in equities.

    What equity? Consider a a Global Index Tracker ETF. Over 20 years you will save a lot in costs.

    Type of fund: a SIPP assuming you pay income tax.

  5. #5
    Robo-advisors are rather overpriced for what is essentially a basket of ETFs you could put together yourself for much less. They do like to talk up their investment processes but ultimately they are all very similar in strategy. I did give a few of them (including Moneyfarm) a crack when the cashback deals were on, but withdrew my money as soon as the cashback was paid.

    Each of Moneyfarm's portfolios looks to have underperformed its Vanguard Lifestrategy equivalent since inception; it seems to be a similar story for other robo-advisors like Nutmeg and Wealthify. It does irk me somewhat when wealth managers don't compare their performance to a benchmark.

    If you are looking to adopt a passive approach to investing, I would suggest that you swerve the robos and start off with one of the cheap multi-asset funds like Vanguard Lifestrategy, L&G Multi Index or HSBC Global Strategy. As you learn more about investing you may want to make some more active changes to your portfolio, using one of these multi-asset funds as the core holding.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •