This blog is not trying to sell you anything which means that I can freely share with you both the positives and the negatives of my strategy. Today though is neither really a positive or negative experience with my year to date Personal Rate of Return sitting at 8.6%, compared with my Benchmark Portfolio which has returned 8.5%. Of course given that I spend significant time maintaining my strategic and tactical asset allocations many would argue that if I calculated the cost of my time then I would probably be behind compared to the benchmark portfolio which would probably cost a maximum 1 hour of time per annum with a rebalance at the start of every year. The only defence I have is that my portfolio has had to pay some fees (Equity ETF, Pension etc costs), even if I do try an minimise them, and also has paid some tax (cash is taxed at 20%).
For completeness my Benchmark Portfolio is as simple as it can get by using 29% iBoxx® Sterling Liquid Corporate Long-Dated Bond Index total return (capital & Income) index and 71% FTSE 100 total return (capital & income) index.
Looking longer term (note I didn’t say long term as only many years ahead will I know if my strategy has worked) though my strategy does appear to be working. £100,000 invested in My Low Charge Portfolio on the 4th January 2008 would today be worth £117,303, a CAGR of 5.5%, while if I had have invested in my Benchmark Portfolio £100,000 would today be worth £103,538, a CAGR of 1.2%. For full disclosure though I did get a small run of luck in 2007 when I was underweight equities as I built the strategy and portfolio you see today.
My chart today, as always, shows what I call my Desired Low Charge Portfolio and also My Current Low Charge Portfolio. My Desired Low Charge Portfolio has been constructed using both Strategic and Tactical Asset Allocation methods that I describe all over this blog. To understand how I constructed this portfolio then please start here. My investment strategy is to simply use mechanical methods to work my asset allocations towards that of the Desired.
My portfolio remains reasonably tax efficient. I currently have 35.9% in Pensions, 18.7% in NS&I Index Linked Savings Certificates (ILSC’s), 11.0% in ISA’s and 34.4% exposed to the full wrath of the tax man. I really do wish NS&I would bring ILSC’s back soon.
So now the important statistic that I look at each month. How close am I to retirement? Well my portfolio is sitting at 49.6% of the required assets which is down from 51.1% in November.
If you would like to know more about my Retirement Investing Today Current Low Charge Portfolio or my Benchmark Index then have a look here.
As always do your own research.