SalvorHardin wrote:Retiring at such a young age meant that I had plenty of time left so real assets made much more sense than fixed interest. I live fairly cheaply and a 50% fall in income and capital would have no effect on my living standards.
I'm not sure that my asset allocation is a good idea for the typical early retiree as they're retiring much later than me. They probably don't have my aversion to fixed interest, caused by growing up in the 1970s and seeing inflation eat away at my building society account.
I think the issue is not so much what age you retire at but rather the amount of assets you have relative to your estimate of what you will need. If that ratio is very comfortable then you won't be tempted to do what some here do, and load up on high-yielding securities (whether shares or bonds) because that's the only way they can get the retirement income they want. That actually increases risk - HY shares can be accident prone and fixed income securities do not grow in either capital or income.
What you really want is a portfolio that is large enough that it comfortably meets your goals without having to tweak it to boost the yield artificially. In fact I knew I could comfortably retire when the fluctuation in my portfolio exceeded the daily amount I could earn on almost every day.
SalvorHardin wrote:People should look at overseas assets to diversify. If anything I should have put more overseas; IMHO sterling is a weak currency long-term against the US dollar.
Yes, and that is another result of not having to reach for yield, i.e. that you can diversify away from the naturally high-yielding UK market and instead invest in other growthier markets like the US and emerging markets. The US, in particular, has most of the global market leading shares, and yet it and its currency are also safe havens when we see volatility.
djbenedict wrote:dubre wrote:Amongst my own circle of friends the prevailing problem is not that of insufficient income and capital but one of leaving their offspring with ridiculous ammounts of IHT to pay.
This is what is known as a high quality problem, but can be described mainly as one of perspective: it is generally the estate of the deceased which pays the IHT, not the legatees.
It comes to the same thing. Any tax that is taken out of the estate reduces the amount that the beneficiaries receive. So it really only makes a difference if your estate is overseas and in a country that taxes recipients rather than the estate. In that case the UK beneficiaries get their bequests free of tax. Otherwise they are just taxed in a different way. When I do inheritance tax planning it is to directly benefit my beneficiaries, not me.
hiriskpaul wrote:AleisterCrowley wrote:tjh290633 wrote: .... I am very wary of ETFs, which I consider to be a fad....
Why ? (Genuine question)
The first ETF was launched 26 years ago and all by itself is bigger than the entire IT sector. Quite some fad
Indeed. ETFs are a $5 trillion business. If they collectively fail we are all in trouble.