Portfolio Bond Allocation

Is someone able to advise a bit on this please?

I have a SIPP to invest 60/40 equity bonds no real need for income. Won't be drawn down for quite a while. I'm 52. I can do the equity bit with a world tracker. I get stuck on bonds as everything looks pretty unattractive but I need a 'safe' corner. I had been thinking maybe 40%/40%/10%/10% - ILG, conventional gilts, corporate, EM bonds but with no great conviction that's it's right or wrong and all through index funds. EM bonds not 'safe' not safe I know.

Anyone have any strong views on this allocation?

Anyone have any strong views on this allocation v holding a goodly portion of cash and waiting for maybe real returns to comeback to ILG's and conventional gilts? Security aside, what is the point of locking into a real loss currently if there is no matching liability?

Any strong views on direct (for ILG's, gilts and CB's) v funds?

Thank you very much to anyone able to take this on!

Jimbo



Comments

  • I think holding a fair proportion of cash or at least "safe" cash investments is fine. If deflation is on the way, then the purchasing power of cash goes up. Lloyds & Santander offer a few % interest in bank accounts and you can have 3 Lloyds accounts with interest on 5K in each. (Check current details)

    You might also consider that the goalposts have moved significantly with there no longer being an obligation to purchase an annuity at retirement. Many of us had planned to retire at a certain age and part of that plan would have previously been purchasing an annuity at retirement. With this no longer being the case, instead of having a risk reducing attitude towards that retirement age, shouldn't we now be aiming for a risk reducing attitude towards our life expectancy? (Since most of us will carry on investing)
  • With the present uncertainties, holding cash maybe the best decision, as other other asset category values could start (or continue) to fall, in particular, if deflation takes hold.
    Many readers of this forum probably have invested in new ORB bonds that have been issued over the past 3 years, with interest rates likely to rise (but when?), such bonds become less attractive.
    Not an easy question to answer!
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