Financial planning for and during retirement
Discussion
CarDoodle said:
One other question for Derek (or anyone with an opinion) is do you categorise fixed rate savings in with bond assets in a portfolio? For example 1/2/3/4/5 year fixed rate accounts. The description is often fixed rate bond so I’m curious how others categorise them.
Usually would be described as cash. Bonds in a portfolio would have a market value on your valuation (including the accrued interest), and this value would fluctuate with interest rates and changes in the credit quality of the underlying. This wouldn't be the case with a fixed depo. b
hstewie said:
hstewie said: Most suggestions seem to be to buy bonds hedged to your home currency.
That is what I have seen too. Monevator have an article on this if you want some free background on it. They focused onHigh quality (A or above)
Short dated (0-5 years)
Hedged in home currency
Inflation linked can be a good feature if you want to carry a second bond fund on top of the above but choice is limited.
I have a few fund names here if that helps to get you started (not advice just what I’ve found in the market)
I’d be interested to hear if people lean towards government only bonds or a mix of gov and corporates. I’m in the latter camp currently (with high quality rating as my protection)
The G Kid said:
Usually would be described as cash. Bonds in a portfolio would have a market value on your valuation (including the accrued interest), and this value would fluctuate with interest rates and changes in the credit quality of the underlying. This wouldn't be the case with a fixed depo.
Thank you. That is how I think of them just now. With returns creeping up over recent few years I was wondering if they moved to be more bond-like if held to maturity.CarDoodle said:
I have a few fund names here if that helps to get you started (not advice just what I’ve found in the market)
I'd be interested to hear.I thought i was 100% equity, but had a look and one of the accounts holds Ishares Iv PLC ISH GBP U B ESD D (UESD), which is an ultrashort, approx 2% of total combined sipp values. I guess i could just buy more of those
CarDoodle said:
That is what I have seen too. Monevator have an article on this if you want some free background on it. They focused on
High quality (A or above)
Short dated (0-5 years)
Hedged in home currency
Inflation linked can be a good feature if you want to carry a second bond fund on top of the above but choice is limited.
I have a few fund names here if that helps to get you started (not advice just what I’ve found in the market)
I’d be interested to hear if people lean towards government only bonds or a mix of gov and corporates. I’m in the latter camp currently (with high quality rating as my protection)
Bonds are denominated in a currency, and most people tend to buy in their own currency to avoid FX risk. Buying a bond in a different currency and then hedging your exposure back to your own currency is complex and also would have a cost to it. The GBP bond market (for direct investment) is fairly small, with often min 100K size for investment, which is why retail investors tend to hold funds rather than direct investments. High quality (A or above)
Short dated (0-5 years)
Hedged in home currency
Inflation linked can be a good feature if you want to carry a second bond fund on top of the above but choice is limited.
I have a few fund names here if that helps to get you started (not advice just what I’ve found in the market)
I’d be interested to hear if people lean towards government only bonds or a mix of gov and corporates. I’m in the latter camp currently (with high quality rating as my protection)
craig1912 said:
That’s probably about right- prior to retirement I was high risk, 100% equities- post retirement I’m medium for long term and medium low short term.
& how does that look in your investments?bhstewie said:
hstewie said: Most suggestions seem to be to buy bonds hedged to your home currency.
& the last dip saw bonds fall as hard as equity. Mind you, as that other link suggested, perhaps that was merely noise. Although, maybe not…..who knows 
mikeiow said:
craig1912 said:
That’s probably about right- prior to retirement I was high risk, 100% equities- post retirement I’m medium for long term and medium low short term.
& how does that look in your investments?bhstewie said:
hstewie said: Most suggestions seem to be to buy bonds hedged to your home currency.
& the last dip saw bonds fall as hard as equity. Mind you, as that other link suggested, perhaps that was merely noise. Although, maybe not…..who knows craig1912 said:
Well it’s about 65% equities in the medium/long term investments and short term. (Next 5-10 years) it’s all structured products that “guarantee” my income.
That sounds fair. Although if you have 5-10yrs ‘guaranteed’, I wonder why not have higher risk for the longer term.Have you gone direct for the structured products, or via an IFA (or indeed a FA)?
Also curious how guaranteed they are: SP are generally seen as “complex”, and in many cases even the capital can be at risk….we haven’t dug into them much yet, but are looking.
Edited by mikeiow on Saturday 30th November 09:03
xeny said:
alscar said:
Respectfully disagree.
I simply don’t understand why holding cash - surplus to whatever the usual wisdom says or otherwise can ever not be of much use in tough times ?
It's likely to be of use in the tough times, but holding it in the good times means you're likely to enter those tough times in a worse situation, so the overall situation is worseI simply don’t understand why holding cash - surplus to whatever the usual wisdom says or otherwise can ever not be of much use in tough times ?
I try to keep cash / deposits to a min. Yes I understand its handy if there is a big correction so you're not cashing in investments to pay your bills when they are valued low BUT having that cash fully invested before the correction means the portfolio can be substantially bigger in rhe first place so any correction (which may not come for years) is dropping your portfolio from a higher valuation point.
mikeiow said:
That sounds fair. Although if you have 5-10yrs ‘guaranteed’, I wonder why not have higher risk for the longer term.
Have you gone direct for the structured products, or via an IFA (or indeed a FA)?
Also curious how guaranteed they are: SP are generally seen as “complex”, and in many cases even the capital can be at risk….we haven’t dug into them much yet, but are looking.
I’m happy at medium risk. It’s a decent fund and very little danger of running out. It’s through a DFM and IFA. As long as FTSE doesn’t drop below around 4000 then the income is effectively guaranteed. In my view they are better than buying an annuity but give a degree of comfort that whatever the markets do the income is “guaranteed”Have you gone direct for the structured products, or via an IFA (or indeed a FA)?
Also curious how guaranteed they are: SP are generally seen as “complex”, and in many cases even the capital can be at risk….we haven’t dug into them much yet, but are looking.
Edited by mikeiow on Saturday 30th November 09:03
Derek Chevalier said:
mikeiow said:
we haven’t dug into them much yet, but are looking.
Tim Hale covers them in his book. Chapter 14 - off menu asset classes that he considers are generally worth avoiding. 
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