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New portfolio sense check(UK)
Posted: Mon Aug 03, 2015 3:30 pm
by mase
Hi,
I started my portfolio 5 months ago after reading plenty of books, forum posts and blogs. Now I am up an running I would like a sense check on my options to see if I have grasped the correct principals and choices available to me.
My investment: �700 per month, from a zero balance
Based: UK
Stocks - Vanguard FTSE UK All Share Index Unit Trust
Bonds - Vanguard UK Long Duration Gilt Index Fund
Gold - I buy physical gold, my view on this is overtime the charges on an ETF could erode value were physical gold is bought once at a premium and held. I buy mainly Sovereigns or Brittania's once I have enough money is the gold pot.
Cash - Highest interest ISA account available on the market
Any comments would be much appreciated
Re: New portfolio sense check(UK)
Posted: Mon Aug 03, 2015 7:28 pm
by Ad Orientem
A quick look at the two funds you are using suggests no problems. Both seem to be doing what needs to be done and both are inexpensive. Your gold is physical and although I am not up to speed on British ISAs, from what little I know that seems like an acceptable near cash alternative.
Re: New portfolio sense check(UK)
Posted: Tue Aug 04, 2015 3:50 am
by gizmo_rat
It's all good, a couple of minor points to think about;
Check your broker's fee structure is a good fit for your portfolio size and holdings
http://monevator.com/compare-uk-cheapes ... e-brokers/
Unless you have an overriding reason for using the Vanguard find you might consider holding the Bonds directly e.g. GB00B54QLM75 , it's theoretically safer and doesn't have any management fees (unless your broker piles some on).
Later down the line you might consider holding a small proportion of the Gold in an EFT just for ease of rebalancing.
Re: New portfolio sense check(UK)
Posted: Tue Aug 04, 2015 9:38 am
by mase
gizmo_rat wrote:
It's all good, a couple of minor points to think about;
Check your broker's fee structure is a good fit for your portfolio size and holdings
http://monevator.com/compare-uk-cheapes ... e-brokers/
Unless you have an overriding reason for using the Vanguard find you might consider holding the Bonds directly e.g. GB00B54QLM75 , it's theoretically safer and doesn't have any management fees (unless your broker piles some on).
Later down the line you might consider holding a small proportion of the Gold in an EFT just for ease of rebalancing.
I chose the bond fund as it is placed inside a stocks and shares ISA which means any income is free from income tax. The broker costs were cheaper compared to buying direct.
The stocks element is also inside an ISA which means all income in my portfolio is exempt from income tax, and the gold is exempt from capital gains as sovereign and Britannia coins are exempt from CGT.
I don't like the taxman :-)
Re: New portfolio sense check(UK)
Posted: Tue Aug 04, 2015 11:43 am
by Ad Orientem
mase wrote:
gizmo_rat wrote:
It's all good, a couple of minor points to think about;
Check your broker's fee structure is a good fit for your portfolio size and holdings
http://monevator.com/compare-uk-cheapes ... e-brokers/
Unless you have an overriding reason for using the Vanguard find you might consider holding the Bonds directly e.g. GB00B54QLM75 , it's theoretically safer and doesn't have any management fees (unless your broker piles some on).
Later down the line you might consider holding a small proportion of the Gold in an EFT just for ease of rebalancing.
I chose the bond fund as it is placed inside a stocks and shares ISA which means any income is free from income tax. The broker costs were cheaper compared to buying direct.
The stocks element is also inside an ISA which means all income in my portfolio is exempt from income tax, and the gold is exempt from capital gains as sovereign and Britannia coins are exempt from CGT.
I don't like the taxman :-)
You may color me impressed.
Re: New portfolio sense check(UK)
Posted: Thu Aug 13, 2015 11:39 am
by banker22
mase wrote:
Hi,
I started my portfolio 5 months ago after reading plenty of books, forum posts and blogs. Now I am up an running I would like a sense check on my options to see if I have grasped the correct principals and choices available to me.
My investment: �700 per month, from a zero balance
Based: UK
Stocks - Vanguard FTSE UK All Share Index Unit Trust
Bonds - Vanguard UK Long Duration Gilt Index Fund
Gold - I buy physical gold, my view on this is overtime the charges on an ETF could erode value were physical gold is bought once at a premium and held. I buy mainly Sovereigns or Brittania's once I have enough money is the gold pot.
Cash - Highest interest ISA account available on the market
Any comments would be much appreciated
Why didn't you decide to invest in a short term gilt fund rather than keeping cash? Does anyone know of any good short term gilt funds that I can trade within an ISA?
Thanks
Re: New portfolio sense check(UK)
Posted: Thu Aug 13, 2015 12:13 pm
by goodasgold
banker22 wrote:
Why didn't you decide to invest in a short term gilt fund rather than keeping cash? Does anyone know of any good short term gilt funds that I can trade within an ISA?
Thanks
[/quote]
Banker22, you may want to ask this question on the Bogleheads list. They have some sharp people over there regarding UK and other non-U.S. investments.
Re: New portfolio sense check(UK)
Posted: Mon Aug 17, 2015 2:40 pm
by mase
I would imagine the cost of buying a fund would outweigh any gains this approach may yield. I don't think I am investing enough to make that strategy work, but I'm open to suggestions - I must admit the cash part was a bit confusing.
banker22 wrote:
mase wrote:
Hi,
I started my portfolio 5 months ago after reading plenty of books, forum posts and blogs. Now I am up an running I would like a sense check on my options to see if I have grasped the correct principals and choices available to me.
My investment: �700 per month, from a zero balance
Based: UK
Stocks - Vanguard FTSE UK All Share Index Unit Trust
Bonds - Vanguard UK Long Duration Gilt Index Fund
Gold - I buy physical gold, my view on this is overtime the charges on an ETF could erode value were physical gold is bought once at a premium and held. I buy mainly Sovereigns or Brittania's once I have enough money is the gold pot.
Cash - Highest interest ISA account available on the market
Any comments would be much appreciated
Why didn't you decide to invest in a short term gilt fund rather than keeping cash? Does anyone know of any good short term gilt funds that I can trade within an ISA?
Thanks
Re: New portfolio sense check(UK)
Posted: Mon Aug 17, 2015 2:51 pm
by atrus138
gizmo_rat wrote:
Later down the line you might consider holding a small proportion of the Gold in an EFT just for ease of rebalancing.
How much gold are you buying each month? Google says that 700 pounds is about $1,100, which is about the price of an ounce of gold right now. It might be a good idea to put some into an ETF and save a bit until you can get an entire ounce, since you get more gold for your dollar buying an ounce instead of fraction-ounces.
Re: New portfolio sense check(UK)
Posted: Tue Aug 18, 2015 9:53 am
by mase
Considered that option on the gold gizmo, I kind of went for a half way house approach.
I basically put my gold money into cash for about 3 -4 months to let it build up and then buy a decent sized coin of gold to keep the charges to a minimum.
Because gold earns no interest I did not want ETF eroding my other with charges.
Re: New portfolio sense check(UK)
Posted: Tue Aug 18, 2015 10:32 pm
by Jake
mase wrote:
Gold - I buy physical gold, my view on this is overtime the charges on an ETF could erode value were physical gold is bought once at a premium and held. I buy mainly Sovereigns or Brittania's once I have enough money is the gold pot.
One of the clever ideas Harry Browne had when developing the PP strategy is to hold the gold portion abroad. There are lots of ways of achieving this— they are outlined in Craig's book. It's a hassle to organise at first, but much easier for people in the UK to do than it is for US residents. Something to consider going forward...
Re: New portfolio sense check(UK)
Posted: Sun Aug 30, 2015 1:42 pm
by ashantiwarrior
Hi there,
I'm UK based and new to the PP system but it makes a lot of sense to me what you have done. Rather than go for a UK only stock fund, I chose
Stock: IWRD as an ETF (45%)
Bonds Direct purchase of 30 year UK Gilts (25%), I'd be interested if people think whether even longer dates bonds would work, the UK govt offers even longer dated bonds.
Gold: SGLD (5%)
Cash: Offset mortgage (25%). This seems a good way to use the cash component.
I used
www.peaktotrough.com to model this portfolio and it seemed to do slightly better than the 25% across the board approach.
I know I could go a bit higher in Gold but I am working up to it
Any comments are appreciated.
Re: New portfolio sense check(UK)
Posted: Mon Aug 31, 2015 10:18 am
by mase
How much did it cost you to buy through bonds direct?
Re: New portfolio sense check(UK)
Posted: Mon Aug 31, 2015 2:02 pm
by ashantiwarrior
I bought them at �3.95 per transaction, TD direct were offering a special rate, but they offer the same rate as stocks purchases normally, around �10 a transaction. Much cheaper than a Bond ETF, since there are no ongoing charges.
Re: New portfolio sense check(UK)
Posted: Tue Sep 01, 2015 8:46 am
by gizmo_rat
ashantiwarrior wrote:
Stock: IWRD as an ETF (45%)
Bonds Direct purchase of 30 year UK Gilts (25%), I'd be interested if people think whether even longer dates bonds would work, the UK govt offers even longer dated bonds.
Gold: SGLD (5%)
Cash: Offset mortgage (25%). This seems a good way to use the cash component.
Any comments are appreciated.
It rather depends on what you found attractive about the PP system in the first place. I think I'd characterise your allocation / method as a "Post 2008 60/40" portfolio. It's a perfectly sensible allocation that I'd be happy to hold, but it isn't the PP and you shouldn't expect it to behave like it was (for better or for worse). It'll likely outperform the PP in more prosperous times, but underperform in other economic conditions.
wrt. to long dated gilts and the PP, longest dated works best (more volatility) you just need to remember to sell off your gilts when they have about 20 years until maturity and replace with longer dated gilts.
Re: New portfolio sense check(UK)
Posted: Thu Sep 03, 2015 1:34 pm
by mase
ashantiwarrior wrote:
I bought them at �3.95 per transaction, TD direct were offering a special rate, but they offer the same rate as stocks purchases normally, around �10 a transaction. Much cheaper than a Bond ETF, since there are no ongoing charges.
I can see that working if your investing larger amounts, but that charge equates to 2.5% of what I invest in bonds each month. Thanks for the info though, when I become rich i will go this route ;-)
Re: New portfolio sense check(UK)
Posted: Fri Sep 11, 2015 4:10 am
by Observer
For my FtSE All share tracker - i use Scottish Widows - they are much cheaper than vanguard with an all in cost of 0.07% pa
Short Term Gilts , you can use National Savings & Investments - as it is fully backed by Her Majesty's Treasury - Short Term Gilts are not worth investing in unless you have over �2 Million (limit for NS & I) in that portion, which i suspect would be a few of us - why pay charges for a short term gilt fund, when you can avoid management fees, and get better access to funds through NS&I?