BoomBustInvest wrote:Just curious as to what changes people have made to their portfolio once in retirement as compared to what was invested in before retirement in the accumulation phase?
The big pension providers (and investment managers) seem to still go for "60% global equities / 40% global bonds" (or whatever variation they currently favour - 70/30 etc) and then switch over to mostly bonds at retirement to reduce risk.
What I'm interested in is what people are actually invested in retirement. I believe many in the UK opt for a home bias UK Equity Income portfolio (maybe combined with bonds to reduce risk). Has anyone here remained in, for example, a standard globally diversified accumulation fund and shunned bonds and HYP stocks/funds? (... And then just sold down accumulation units based on growth in the fund?)
BackgroundI retired about 18 months ago. I have since started work as a part time lecturer at a local college, but this is not for financial reasons.
A significant % of my total wealth is in property ( large family house in Surrey), and the majority of my pension income is from defined benefit schemes. As a result, I am very comfortable with being 'equity heavy' on the discretionary portion of my wealth.
Investment wrappersabout half of my total investments are in my ISA, and about half in my SIP. These have slightly different focuses.
SIPP is about generating income, to ensure sufficient cash generation to cover my monthly withdrawals (with more than half a year buffer). The monthly withdrawals are pitched at a level determined by my higher rate tax thresholds, rather than any safe withdrawal calculation. This will continue until my state pension age, at which point my SIP will go dormant - as a emergency reserve or alternatively an IHT efficient means of passing wealth onto my kids.
ISA is about growth - total return. I do not need to touch this at the moment, so most investments are growth rather than income. The intent is that the income will be available for luxury projects/travel/holidays, and the capital is my cushion for nursing home fees etc.
InvestmentsWithin my SIP, the majority of my investments are income focused. Traditionally this was an HYP individual shares focus, but I am gradually transitioning this to income ITs. Part of the shift to ITs is for reasons of diversification - ITs enable easier geographical and sectoral diversification. But the main reason is to simplify the management of the investment portfolio. I am planning for the day I get less interested/capable of managing the portfolio - ITs become a more hands off way of dealing with this.
Within my ISA, I am making the same slow journey from investing in individual growth shares to investing in growth ETFs & ITs on a global stage.
Specific Investment choicesIn the SIPP, I am heavily into tobacco (IMB & BAT) and Oil (RDS & BP) and also a wide variety of the usual HYP suspects. New funds are directed towards ITs such as CTY, MCH, MCT and so on.
In the ISA reinvestment is focused into L&G Global100, FCIT, and so on.
Things like RCP & LWDB surface in both portfolios.
HedgingAbout 5% of the total portfolio is related to precious metal, roughly split between a physical metal gold ETF and a gold miners ETF. This is as portfolio insurance - I hope i never need to use this, but it is there in case Putin nukes Kyiv, or some other catastrophe, causing all equity and bond markets to tank.
Hope this helps. The big shift to retirement investing is the shift in focus from individual stocks to ITs & ETFs to simplify the management of the portfolio aka "long term gaga plan"