Smarter Investing: Simpler Decisions for Better Results (Financial Times Series)

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I’ve actually use this instead of a bond allocation now (from beginning of 2022, so worked out well so far).

Tim Hale’s Smarter Investing – What’s new in the 3rd edition Tim Hale’s Smarter Investing – What’s new in the 3rd edition

Gold is meant to withstand high and unexpected inflation (although its record in this respect is patchy). Cash is there as an all-round workhorse providing for immediate liquidity and moderate recession protection. It’s also less vulnerable to inflation than medium bonds. Your portfolio could sensibly look something like this if you’re at or near-retirement. Essentially, you’ve hit your number, won the game, and don’t need to take big risks with your wealth anymore. NB: A negative weighted average yield to maturity figure, therefore, results in a nil bond allocation. Shiller on the other hand criticises the efficient market hypothesis and believes that markets can get irrational exuberant and prices soar to levels that can't be supported. This is the world of investment bubbles that burst, losing late investors, huge amounts of money.It sounds wonderful but the downside is you need a very large portfolio to generate enough income, even if you choose high-yielding dividend funds – as we’ve done for this load-out. I’m in the same position, and I have extracted 4 years’ worth of spending in cash and gilts. So far so good. But what is the plan (your plan) to keep the 5 years of cash buffer rolling? Selling a year’s worth of spend of equities each year? Finally if you’re a Monevator veteran for whom these investment portfolio examples have been more a familiar ramble than wide-eyed adventure, then why not forward this article to a friend or family member who needs to get started? Personally, I reject the idea that anyone with a 10-year+ time horizon should be 100% in equities if they are “properly educated”. In my investing journey from 2000, 100% S&P index would have been worth 93% a decade later (72% in real terms). Compare to 156% in cash, 210% in 10y+ USTs, 198% in commodities. It was 2021 when US equities finally outperformed a 60:40 portfolio.

Tim Hale - Smarter Investing — MoneySavingExpert Forum Tim Hale - Smarter Investing — MoneySavingExpert Forum

Beyond that, we’ve tried to keep our investment portfolio example’s manageable. No more than six funds max. But note that the miracle of capitalism means you can actually diversify perfectly well with a single product, if you choose a multi-asset fund. Unfortunately I can't see what people are getting so excited about and thought it made a dull read. If you’re struggling to push the button and finally invest for real, fear not. It happened to me and many better investors besides. You are not alone. As part of this, starting to think around some of the rules of thumb for sizing bond allocation, and how they could be adapted and improved to safeguard against having too much in bonds, i.e. trying to avoid future overexposure to too richly valued bonds that won’t cushion equity volatility. This is what have come up with so far for a 2 asset global equities/higher quality (intermediate or long AAA-AA) global government bond allocation: Fama supports the efficient markets hypothesis which says that the current price reflects all known information and is the most appropriate value under current assumptions.Seems that JPLG has more of a smaller bias. It’s largest holdings are 0.3%, whereas FSWD has FB, Apple, Exxon, MSFT, Cisco, Walmart all above 2% each… On the deaccumulation example I wondered if there was a reason why the cheaper BCOG wasn’t suggested for the commodity allocation.

Smarter Investing - Pearson Smarter Investing - Pearson

I remain puzzled that retirees are advised to increase their bond allocation because they cushion the portfolio and are less volatile than equities. Just looking Morningstar data for shares Core UK Gilt ETF (IGLT): 3yr SD 10.2%; 3yr mean return -11%. Vanguard UK Long Duration Gilt fund: 3yr SD 17.1%; 3 yr mean return -18.8%. Compare these to Vanguard FTSE Developed World etc (VHVE): 3yr SD 12.5%; 3yr mean return +13.2%. For a variety of reasons I then decided to take my DB early once it provided enough to cover, at least, the ‘essentials’ . Which means I have ended up with even more floor assets in the Pot outside the DB scheme. Yes, we’ve had a least a triple treat on the global equities side in the last year or so with the best ETF for All World equities from @TA only very recently, @Finimus covering the cheapest All Countries equity ETF combo, and this June 2022 piece by @TA on the Vanguard Life Strategy options, including VLS100: All-World’s lowest point in 2022 is -13.6% vs -8% for RFA portfolio (this is 60/10/10/10/10 version).That’s the longest timeframe I can get for a representative combo of ETFs. It’s not clear to me how justETF’s portfolio tool handles rebalancing. Last few posts resonate with me. I’m 7-8 years away from FI but 95% equities so still carrying substantial risk, although my FI date isn’t a hard stop for RE. I am planning on rebalancing though contributions into a more balanced portfolio such as RFA. Potential tweaks? If you’re a fan of gold then you could swap it in for half or all of the portfolio’s broad commodities exposure. https://am.jpmorgan.com/gb/en/asset-management/adv/products/jpm-global-equity-multi-factor-ucits-etf-usd-acc-ie00bjrcll96 PDF / EPUB File Name: Smarter_Investing_Simpler_Decision_for_Better_Results_-_Tim_Hale.pdf, Smarter_Investing_Simpler_Decision_for_Better_Results_-_Tim_Hale.epub