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Post by rgs2001uk on Aug 16, 2017 21:43:58 GMT 7
^^^ and in a nutshell we have it, are you happy with your portfolio, yes, thats all that matters.
I remember years ago reading some article that mentioned take your age and subtract it from 100, thats how much of your portfolio should be in shares, the rest in bonds. why as a 20 something would I need to invest in bonds
Those days are gone, as are the days of buy the likes of BP, RBS, Shell and Astra Zeneca.
Thankfully when I reach retiree status I will have two gold plated final pensions kicking in, thats if they are actually worth anything or I havent been bought out.
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Post by rgs2001uk on Aug 16, 2017 22:07:42 GMT 7
Not mentioned in all the above, your Thai mrs, does she actually understand what you are doing and how it works and why you are doing it?
I will admit again, my mrs aint the sharpest tool in the box when it comes to these things, but she is slowly getting her head round it.
True story, a 2 week millionaire cashed in, this is happening right now as I type, he took a pay off of 300k sterling at age 57, thats it, thats his lot, he has to use this to keep him going for lets say the next 20+ years.
If invested he could look at a yearly dividend of lets say, 12k (sterling) per year, or 1,000 per month if he gets a 4% divi, forget inflation and exchange rates, those are the least of his worries.
His problem is his "mia farang" mrs refuses to downgrade her status and is still expecting her monthly stipend, she refuses to cook, clean the house or wash and iron the clothes, she wants to spend her days at massage parlours etc etc and act the mia farang.
2 months in now, matey boy is questioning if he did the right thing, despite everyone telling him he was, A, a fool, and B, his mrs will kill him finacially.
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chiangmai
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Post by chiangmai on Aug 17, 2017 2:46:26 GMT 7
Not mentioned in all the above, your Thai mrs, does she actually understand what you are doing and how it works and why you are doing it? I will admit again, my mrs aint the sharpest tool in the box when it comes to these things, but she is slowly getting her head round it. True story, a 2 week millionaire cashed in, this is happening right now as I type, he took a pay off of 300k sterling at age 57, thats it, thats his lot, he has to use this to keep him going for lets say the next 20+ years. If invested he could look at a yearly dividend of lets say, 12k (sterling) per year, or 1,000 per month if he gets a 4% divi, forget inflation and exchange rates, those are the least of his worries. His problem is his "mia farang" mrs refuses to downgrade her status and is still expecting her monthly stipend, she refuses to cook, clean the house or wash and iron the clothes, she wants to spend her days at massage parlours etc etc and act the mia farang. 2 months in now, matey boy is questioning if he did the right thing, despite everyone telling him he was, A, a fool, and B, his mrs will kill him finacially. You're confused rg., the trick about subtracting your age from 100 has nothing to do with shares and bonds, it simply gives the age of the wife you're allowed to have. No, my wife doesn't understand any part of this debate, she probably could if she tried but she's quite happy to leave it all to me, plus, the future to her is something to be dealt with in, well, in the future! FWIW most of the expats I have met who are about my age are worried about their finances in retirement, not for themselves but for the people they will leave behind. You talk of a two week millionaire: he has my sympathies in spades, been there and done that, my experience is that he will need all the good luck and strong will he can muster without having his wife be uncooperative - age 57 years is a dangerous time to be in that boat simply because it's so hard to recover if the wheel falls off and they don't make wheels like they used to, he may have to make some tough choices if he wants to get through old age in some comfort, being old bald crying and helpless is fine at birth but no good in later life. Again my experience (which is the only thing I can use to get some important messages across): I never gave a thought to pensions until about age 57, prior to that I was firmly of the view that I was going to make it OK without such things. Ha! Then at about 57 years the coin dropped that retirement was looming plus the effects of the GFC meant that my investments had not done as well and as quickly as I had hoped - it was quite a long haul reigning in or adjusting my lifestyle from being a high earning high spender to becoming a normal everyday expat. Fortunately, when I did an inventory I found that I had in fact acquired several pensions along the way which I simply needed to organise and claim, without them I would have been toast - lesson number one is to get these things organised early. When I did get organised I had an opportunity to take some of the pensions in cash and/or transfer them into QROPS etc which would allow me to take them in cash at a later date. I made the very firm decision that they were always going to remain as income rather than lump sums and if that meant dying rich and leaving the money to someone else, so be it. That was one of my better decisions in life and is lesson number two since it provides me with some future security which at age 68 years I can highly recommend. Your friend's wife will likely not understand any of that if she's quite young so he has got a hard task ahead and he will have to be cruel to be kind, the alternative is impoverished old age. Lastly. I was always taught to have a viable plan B in life and the older I get the more important that becomes. It needs to be a viable plan B, one that is realistic, can be executed easily and is based on fact rather than wishes hopes and dreams - periodically you need to test your plan B to make sure it still works and that it's all still highly viable. For most UK expats in Thailand plan B means going back to Blighty which is why there's so much angst amongst them when we hear that the rules and regulations back home have changed, NHS eligibility, pension uplift, cost of living, benefits etc. If your friend has his plan B in place he needn't worry too much about the current behaviour of his wife, you might want to try asking him what his plan B is and see if it can be tested. Good luck.
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chiangmai
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Post by chiangmai on Aug 17, 2017 6:48:27 GMT 7
^^^ and in a nutshell we have it, are you happy with your portfolio, yes, thats all that matters. I remember years ago reading some article that mentioned take your age and subtract it from 100, thats how much of your portfolio should be in shares, the rest in bonds. why as a 20 something would I need to invest in bonds Those days are gone, as are the days of buy the likes of BP, RBS, Shell and Astra Zeneca. Thankfully when I reach retiree status I will have two gold plated final pensions kicking in, thats if they are actually worth anything or I havent been bought out. It's really all about risk and return isn't it, that and return on capital employed. If you're happy with say a 5% per year return and the knowledge that your losses are limited, a bond/equities mix is for you. If however you want a greater return, say 9% and along with that, you're prepared to accept the risk of extended losses and an extended recovery time, forgo the bond aspect. Perhaps there is an argument in favour of holding zero bonds at a younger age, I can't see that there is one though for people past age 65, unless they are purely speculators and quite wealthy. The guideline of 100 minus age probably does work for many except in the current low-interest rate environment everyone is chasing yield, I suppose the trick is that in the course of that chase the older investor still needs to maintain a sensible ratio and not ignore bonds completely
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Post by rgs2001uk on Aug 17, 2017 21:52:02 GMT 7
Not mentioned in all the above, your Thai mrs, does she actually understand what you are doing and how it works and why you are doing it? I will admit again, my mrs aint the sharpest tool in the box when it comes to these things, but she is slowly getting her head round it. True story, a 2 week millionaire cashed in, this is happening right now as I type, he took a pay off of 300k sterling at age 57, thats it, thats his lot, he has to use this to keep him going for lets say the next 20+ years. If invested he could look at a yearly dividend of lets say, 12k (sterling) per year, or 1,000 per month if he gets a 4% divi, forget inflation and exchange rates, those are the least of his worries. His problem is his "mia farang" mrs refuses to downgrade her status and is still expecting her monthly stipend, she refuses to cook, clean the house or wash and iron the clothes, she wants to spend her days at massage parlours etc etc and act the mia farang. 2 months in now, matey boy is questioning if he did the right thing, despite everyone telling him he was, A, a fool, and B, his mrs will kill him finacially. You're confused rg., the trick about subtracting your age from 100 has nothing to do with shares and bonds, it simply gives the age of the wife you're allowed to have. No, my wife doesn't understand any part of this debate, she probably could if she tried but she's quite happy to leave it all to me, plus, the future to her is something to be dealt with in, well, in the future! FWIW most of the expats I have met who are about my age are worried about their finances in retirement, not for themselves but for the people they will leave behind. You talk of a two week millionaire: he has my sympathies in spades, been there and done that, my experience is that he will need all the good luck and strong will he can muster without having his wife be uncooperative - age 57 years is a dangerous time to be in that boat simply because it's so hard to recover if the wheel falls off and they don't make wheels like they used to, he may have to make some tough choices if he wants to get through old age in some comfort, being old bald crying and helpless is fine at birth but no good in later life. Again my experience (which is the only thing I can use to get some important messages across): I never gave a thought to pensions until about age 57, prior to that I was firmly of the view that I was going to make it OK without such things. Ha! Then at about 57 years the coin dropped that retirement was looming plus the effects of the GFC meant that my investments had not done as well and as quickly as I had hoped - it was quite a long haul reigning in or adjusting my lifestyle from being a high earning high spender to becoming a normal everyday expat. Fortunately, when I did an inventory I found that I had in fact acquired several pensions along the way which I simply needed to organise and claim, without them I would have been toast - lesson number one is to get these things organised early. When I did get organised I had an opportunity to take some of the pensions in cash and/or transfer them into QROPS etc which would allow me to take them in cash at a later date. I made the very firm decision that they were always going to remain as income rather than lump sums and if that meant dying rich and leaving the money to someone else, so be it. That was one of my better decisions in life and is lesson number two since it provides me with some future security which at age 68 years I can highly recommend. Your friend's wife will likely not understand any of that if she's quite young so he has got a hard task ahead and he will have to be cruel to be kind, the alternative is impoverished old age. Lastly. I was always taught to have a viable plan B in life and the older I get the more important that becomes. It needs to be a viable plan B, one that is realistic, can be executed easily and is based on fact rather than wishes hopes and dreams - periodically you need to test your plan B to make sure it still works and that it's all still highly viable. For most UK expats in Thailand plan B means going back to Blighty which is why there's so much angst amongst them when we hear that the rules and regulations back home have changed, NHS eligibility, pension uplift, cost of living, benefits etc. If your friend has his plan B in place he needn't worry too much about the current behaviour of his wife, you might want to try asking him what his plan B is and see if it can be tested. Good luck. , no thanks, up my way is littered with these worthless bone idle Hello Kitty types, some people refer to them as "hotties" Preaching to the converted here Pastor CM, , from what I read elsewhere plan B seems to be Cambodia or Flippersville, personally I would prefer the condo option. I took a belt and braces approach and have options A, B, C, D and E in place.
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Post by rgs2001uk on Aug 17, 2017 21:58:57 GMT 7
^^^ and in a nutshell we have it, are you happy with your portfolio, yes, thats all that matters. I remember years ago reading some article that mentioned take your age and subtract it from 100, thats how much of your portfolio should be in shares, the rest in bonds. why as a 20 something would I need to invest in bonds Those days are gone, as are the days of buy the likes of BP, RBS, Shell and Astra Zeneca. Thankfully when I reach retiree status I will have two gold plated final pensions kicking in, thats if they are actually worth anything or I havent been bought out. It's really all about risk and return isn't it, that and return on capital employed. If you're happy with say a 5% per year return and the knowledge that your losses are limited, a bond/equities mix is for you. If however you want a greater return, say 9% and along with that, you're prepared to accept the risk of extended losses and an extended recovery time, forgo the bond aspect. Perhaps there is an argument in favour of holding zero bonds at a younger age, I can't see that there is one though for people past age 65, unless they are purely speculators and quite wealthy. The guideline of 100 minus age probably does work for many except in the current low-interest rate environment everyone is chasing yield, I suppose the trick is that in the course of that chase the older investor still needs to maintain a sensible ratio and not ignore bonds completely All about a balanced portfolio, and what you can live with, I would snap your hand off for a return of 5% guaranteed for the rest of my life. Life and stock markets arent a straight line, peaks and troughs, making sure that in each trough you have enough to tide you over to the next peak. I suppose am lucky that I sussed out years ago not to rely on the Gov't or pension provider to provide for me in my old age and became proactive. As mentioned above, I have no problem with being the richest guy in the graveyard, it sure the heck beats the alternative.
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chiangmai
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Post by chiangmai on Aug 18, 2017 6:57:28 GMT 7
why would every IFA and every self teach course in investments advise to hold a balanced portfolio of bonds and equities. For the very simple reason they don't keep up with modern research. In particular, IFAs stick with very traditional, inefficient, model portfolios because it's "safe" (for them - they're not the ones suffering poor performance.) If they suggested something different which then under performed for a year or two, they'd lose clients because clients typically have very short time horizons when performance is poor. If the IFA simply does what his/her peer group is doing, then the client will be satisfied. If you look at what more sophisticated managers are doing: - The Yale Endowment has less than 5% in bonds static1.squarespace.com/static/55db7b87e4b0dca22fba2438/t/58ece6bd579fb356c857e2a4/1491920595529/Yale_Endowment_16.pdf- Ruffer Investment Trust has 0% in conventional bonds ruffer.co.uk/cmsfiles/reports/RIC_Monthly_report.pdf- Personal Assets Investment Trust also has 0% in conventional bonds www.patplc.co.uk/portfolioThe last two are notable for being run particularly cautiously. Traditional thinking equates being cautious with holding lots of bonds. Some now know better. Unless I'm reading your links wrong, there's not too much here that different thinking: "Personal Assets Investment Trust also has 0% in conventional bonds" - PAI holds 47% in bonds and cash AND 10% in gold "Ruffer Investment Trust has 0% in conventional bonds" - Ruffer holds over 50% in bonds/gilts and gold, there's nothing more conventional and traditional than Gilts.
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AyG
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Post by AyG on Aug 18, 2017 7:14:18 GMT 7
Unless I'm reading your links wrong, there's not too much here that different thinking: "Personal Assets Investment Trust also has 0% in conventional bonds" - PAI holds 47% in bonds and cash AND 10% in gold "Ruffer Investment Trust has 0% in conventional bonds" - Ruffer holds over 50% in bonds/gilts and gold, there's nothing more conventional and traditional than Gilts. I specifically wrote "conventional bonds". Neither investment trust holds any such bonds. Index-linked bonds, which they do hold, are very different instruments and are not part of the traditional 60/40-type portfolio construction which you've been writing about. Both have a relatively high cash and cash-equivalent holdings. This is because of the fund managers' opinion about the current economy: "they are keeping their powder dry". Under more normal economic conditions they hold a lot less.
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Post by Fletchsmile on Aug 18, 2017 12:55:07 GMT 7
Unless I'm reading your links wrong, there's not too much here that different thinking: "Personal Assets Investment Trust also has 0% in conventional bonds" - PAI holds 47% in bonds and cash AND 10% in gold "Ruffer Investment Trust has 0% in conventional bonds" - Ruffer holds over 50% in bonds/gilts and gold, there's nothing more conventional and traditional than Gilts. I specifically wrote "conventional bonds". Neither investment trust holds any such bonds. Index-linked bonds, which they do hold, are very different instruments and are not part of the traditional 60/40-type portfolio construction which you've been writing about. Both have a relatively high cash and cash-equivalent holdings. This is because of the fund managers' opinion about the current economy: "they are keeping their powder dry". Under more normal economic conditions they hold a lot less. The more I see of RICA, the more I wonder if they've lost their way, rather than keeping their powder dry. Their principle objective is pretty meaningless these days. While that may have been a meaningful objective when the IT was set up 13 years ago, for more than 8 years now the base rate has been 0.25% to 0.5%. So for two thirds of their history their objective is to achieve more than 0.5% to 1% ! Surely some sort of rethink is in in order It begs the question of what do they consider acceptable returns in today's environment and what are they actually aiming for. To aim for positive returns, which is what 0.5% to 1% is, is hardly inspiring. No sane person aims for negative returns Perhaps the lack of clear aim/target is holding them back. In business people without targets/objectives regularly do less well than those who set meaningful goals. It's 5 year performance is under 25% cumulatively or under 5% p.a. The "Flexible Investment" sector it is in has averaged 43%. It's firmly 4th quartile over 1yr, 3yr and 5yr. Given it's very flexible and pretty much unrestricted mandate, and given we've had a good run in many asset classes (with the exception perhaps of commodities) in the last few years that's pretty disappointing. Looks very like they've got some major calls wrong over the last few years. For a Thai expat, over half of that gain would have gone in a weaker GBP/THB rate and after inflation it's probably just edging a mattress from Tesco Lotus For their discrete years June to June, 2 out of the last 5 years are negative, which would be disappointing for a defensive fund www.trustnet.com/Tools/PDFViewer.aspx?url=https%3a%2f%2fdocuments.financialexpress.net%2fLiterature%2f69486948.pdf%3ffundCode%3dI0F09%26univ%3dTThe heavy weighting to index linked bonds of around 40% is perhaps useful for diversification, but you have to wonder whether someone would just be better buying a pure index linked bond fund or even tracker if they want that. If someone supplemented it with a global equities fund they'd be outperforming RICA and likely at lower cost. Have they really got expertise in the inflation linked bond sector anyway or would a more proven manager or tracker make sense? I can't see where they add value in their fund. It's expense ratio at over 1% is also pretty high given the bond weightings + cash are around 48%. Again not convincing that their objective is to generate more than 0.5% to 1% (without guarantee) for us, while they are guaranteeing themselves even more than they aim for us? Volatility isn't exactly consistently low either. It also trades at a premium which I'm not keen on, and makes out-performance (that isn't happening) even more important if and when things turn worse. So while the theory may have seemed good at inception and in the early years perhaps worked, I wonder 1) whether it's lost its way and relevance with its intentions 2) whether they're making the right calls given such a flexible mandate. Their performance over the last 5 years suggests not
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Post by rgs2001uk on Aug 18, 2017 21:53:57 GMT 7
^^^ if that fund manager worked for me, his ass would be grass, mediocre,doesnt do it justice, bone idle lazy bastid is more like it, its pathetic returns in this day and age.
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Post by rgs2001uk on Aug 18, 2017 22:04:11 GMT 7
For the very simple reason they don't keep up with modern research. In particular, IFAs stick with very traditional, inefficient, model portfolios because it's "safe" (for them - they're not the ones suffering poor performance.) If they suggested something different which then under performed for a year or two, they'd lose clients because clients typically have very short time horizons when performance is poor. If the IFA simply does what his/her peer group is doing, then the client will be satisfied. If you look at what more sophisticated managers are doing: - The Yale Endowment has less than 5% in bonds static1.squarespace.com/static/55db7b87e4b0dca22fba2438/t/58ece6bd579fb356c857e2a4/1491920595529/Yale_Endowment_16.pdf- Ruffer Investment Trust has 0% in conventional bonds ruffer.co.uk/cmsfiles/reports/RIC_Monthly_report.pdf- Personal Assets Investment Trust also has 0% in conventional bonds www.patplc.co.uk/portfolioThe last two are notable for being run particularly cautiously. Traditional thinking equates being cautious with holding lots of bonds. Some now know better. Unless I'm reading your links wrong, there's not too much here that different thinking: "Personal Assets Investment Trust also has 0% in conventional bonds" - PAI holds 47% in bonds and cash AND 10% in gold "Ruffer Investment Trust has 0% in conventional bonds" - Ruffer holds over 50% in bonds/gilts and gold, there's nothing more conventional and traditional than Gilts. PAT, just had a quick look at their UK holdings, I hold Unilever, Diageo, and AG Barr, I off loaded GSK years ago. GSK, www.hl.co.uk/shares/shares-search-results/g/glaxosmithkline-plc-ordinary-25pWhy anyone would hold it is beyond me, as mentioned before the days of buying old established stocks and sitting on them are long gone. AZ, another I off loaded years ago. www.hl.co.uk/shares/shares-search-results/a/astrazeneca-plc-ordinary-us$0.25
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Post by rgs2001uk on Aug 18, 2017 22:06:18 GMT 7
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AyG
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Post by AyG on Aug 20, 2017 10:25:58 GMT 7
When I was much younger I invested in whatever asset class/sector seems most likely to produce large returns, paying little attention to risk. As I've grown older and (I like to think) wiser, I've come to appreciate investments which plod along steadily, are consistent, cautious and defensive. They now make up about a quarter of my portfolio. RICA and PNL are two of these. Fletch questioned whether RICA has lost its way. I prefer to think that they have stuck to their tried-and-tested principles, even though those principles have not produced great performance over the last few years. Have a look at this performance chart for the last 10 years. A is RICA, B is a FTSE All Share ETF. Attachment Deleted Two things immediately stand out to me: (1) in 2007/8 RICA rose in value whilst the FTSE fell dramatically, (2) over ten years RICA has beaten the FTSE quite comfortably. The trust's all time maximum drawdown has been 8.6% - far better than the FTSE's 51%. All looks good to me. Looking at the future, there are two things I can be pretty sure of: (1) there's going to be a stockmarket crash, and (2) interest rates are going to rise. RICA is well positioned (as in PNL) for both those events, whenever they happen. "The heavy weighting to index linked bonds of around 40% is perhaps useful for diversification, but you have to wonder whether someone would just be better buying a pure index linked bond fund or even tracker if they want that. If someone supplemented it with a global equities fund they'd be outperforming RICA and likely at lower cost. Have they really got expertise in the inflation linked bond sector anyway or would a more proven manager or tracker make sense? I can't see where they add value in their fund." Yes, a global equities fund + index linked bond ETF would almost certainly have outperformed RICA, but only by taking on a lot more risk. And when markets crash and inflation rises and (perhaps) Sterling rises again, I can be pretty confident that RICA will outperform. They add value to the trust by making calls based upon their view of the economic situation. That is not something I am capable of doing with any high degree of confidence, so I pay for their expertise. Admittedly, I'd prefer to pay less, but that's another story. (The asset allocation of the trust has changed significantly since 2004 when it was launched.) rgs wrote "Why anyone would hold it [GSK] is beyond me, as mentioned before the days of buying old established stocks and sitting on them are long gone." Old establishment stocks are dependable. Good businesses with good franchises. That's why they have a place in defensive portfolios. To be honest, when I see funds holding the likes of Amazon, Alphabet, Facebook, Alibaba, I question the fund managers' wisdom. It's a real turn off. Can memories be so short as not to remember the dot com bubble?
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Post by rgs2001uk on Aug 21, 2017 22:52:46 GMT 7
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Post by rgs2001uk on Aug 21, 2017 22:54:48 GMT 7
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