To Total Return
5 Apr 2017 19.9%
5 Apr 2018 11.3%
5 Apr 2019 -0.9%
3 Apr 2020 7.3%
1 Apr 2021 28.1%
Third each :
50/50 2MCL (2x FT250 fund)/gold
BRK (Berkshire Hathaway)
Gold
i.e. ... 16.67% 2MCL, 33.3% BRK, 50% gold. Yearly rebalanced (end of fiscal year is a good time for rebalancing as you have the option to rebalance in the old, new or a combination of both according to whatever might be the more tax efficient).
2MCL is a 2x daily FT250 index total return, pays no dividends, nor does BRK (nor does Gold).
£12,300/year capital gains tax allowance ... for a couple doubles to £24,600, so for instance if the value of holdings had doubled you could liquidate £49,200 of holdings and be within your yearly CGT allowance.
Concept of the 50/50 2x stock/gold choice is that half in 2x, half in bonds rebalanced yearly will tend to align to 100% in 1x stock, but where we substitute gold for bonds.
Example using US Data
Outside of ISA/SIPP and dividends/interest might just expand your income tax liabilities. Also taxation risk tends to increase with economic stress. For instance when inflation is 15% and cash deposits are paying 15% in reflection of that, basic rate taxation might rise to 40%, so in net terms that's a -6% yearly real (after inflation) loss. A sequence/handful of such years and ... ouch!
Small (in US scale) more equal weighted like (FT250), combined with large cap weighted (US stock for which BRK is assumed a proxy), and gold is a form of three currencies, £ domestic, US$ primary reserve currency, gold - is a form of global currency (as well as being a proxy for commodities).
Each year one of those holdings will be the worst performer and the diversification dilutes that down, lowers overall portfolio volatility, whilst the overall yearly averages for the combined set tend to still be reasonable/good. And average yearly gains combined with the degree of deviation in those yearly gains is a primary driver of overall annualised (actual) gains. There's a nice calculator towards the bottom of this web page
In a low interest rate era leveraged stock funds are nice due to the low cost of borrowing. When you invest £1 the fund in effect borrows another £1 to buy £2 of stock exposure. If you invest only 50p the fund borrows another 50p to buy £1 of stock exposure, whilst you still have 50p that you might invest in bonds - that could offset the cost the fund pays to have borrowed 50p. You can use that as a means to backtest historic likely results for a 2x fund. I used T-Bill + 2% for the cost of borrowing and historically even under periods of high interest rates/inflation the concept still worked well, where half in 2x, half in gold worked out OK as a proxy for 100% in 1x stock exposure. Had bonds been held instead of gold then in net terms (after taxation) there was a greater tendency for 50/50 2x/bonds to lag 100% in 1x stock.
I like to use Terry's TJH Accumulation HYP as a benchmark and for reference the corresponding respective fiscal yearly total returns from that were
17.3%
-3.2%
9.7%
-23.9%
41.2%
which compounded to a 6% annualised, versus 12.7% annualised for the NYP.
The history of 2MCL is limited as it only became available for retail investors in late 2015.
With NYP you'd typically use a SWR withdrawal/income production approach, i.e. a initial fixed percentage amount of the portfolio drawn at the start of the first year, and that £ amount uplifted by inflation as the amount drawn at the start of subsequent years - so a nice regular inflation adjusted income being produced. A common choice of SWR is 4%. When the surplus portfolio performs OK/well then typically that SWR value tends to become a smaller percentage of the ongoing portfolio value i.e. a initial 4% SWR after a number of years might be just 3% of the portfolio value being drawn.