Asset Allocations

I thought I would have a look at my asset allocations as I do need to review how to make my money work for me – I don’t think it is even breaking a sweat! I don’t think I am investing wisely and need to shuffle the money around to give me the best income and growth long term, while enabling me to draw down and live – balancing risk.

I have read on a number of blogs how people have a lot of money/net worth tied up in property so I thought it would be good to see how my allocations compare.


On the left is my ratio for:  cash, equities, bonds and property.

So 34% of my net worth is tied up in property. This is across 2 properties, my own home and my BTL. I don’t have one huge house; just two small properties, with a mortgage on the BTL. What is interesting is how I have only 40% in equities, I thought I would have more but it just shows how I am holding quite a bit of cash. This cash is in a mix of general savings and NISA accounts and includes my emergency funds; my own and the BTL –  to cover any expenses that may crop up including covering the void periods.

On the right is my ratio excluding property: Cash, equities, bonds and pension.

Now in all my figures I have excluded my DB pension which is now sitting dormant with an old employer. I will not be able to access this until I am 65. I am not sure what its value is, all I do know is that it should pay out a fixed income (£12,000 p.a.) when I reach 65. It should have a small annual increase included when it is drawn. The current state pension age for me is 67, at the moment I don’t think I have paid in enough through NI to obtain a full state pension. You need 30 qualifying years and I don’t have this yet.

Some of my equity allocation will be split into bonds but I haven’t tried to go to that much detail here. I have just highlighted the explicit bonds. Seeing my DC pension in double figures is impressive as the value seems so pitiful. Its the value from 2 employers pension schemes and a personal stakeholder which I setup after leaving my DB so I could have something ‘on-the-side’ to drop money into when I was feeling flush with bonuses – not that I have received any in the past 2 years. I saw the stakeholder as a personal scheme independent from any employer into which I can place spare cash which I know I couldn’t access until I was 55.  Maybe I should have opened a SIPP but now I am not working there are limits on what you can invest in pensions annually(?).

The cash will start to deplete as I enjoy a period of freedom and also reallocate this towards equities to gain more income and growth.

I need to read the Tim Hale book and look at allocation ratios to really sort this as I think I have too much cash doing nothing and need to rebalance my equities to get a good return! If anyone has any book recommendations feel free to let me know. At the moment my equities are returning 9% annually.

I will also look to use some of the cash to start a new hustle. Not sure what this will be yet, I may just go contracting to earn some income in the future, using the honey pot as my backup during the lean times. Income streams are important and I need to make sure my assets are working for me not against me!

Time for some serious reading.


2 thoughts on “Asset Allocations

  1. I wouldn’t worry too much, your current allocation is very close to a conservative “Talmud portfolio” that’s been pretty successful the last 2000 years or so.
    Since you’re a sniff away from FI there’s an element of not needing to run once you’ve won the race. As well as living costs during lean times, a large chunk of cash is going to dampen volatility and give you something to rebalance from when stocks go phut, it’s not really the dead weight that some investment advice implies.

    • Thanks Nathan. I have just been reading Monevator and his recent asset allocation post. Given the normal rule of using an equity % based on (100 – age) then my equity allocation isn’t far off where it should be for my life stage. My main concern is getting the level of returns I need to provide a passive income without eroding the capital. I also need to research how best to take the income – as some of the return is through equity growth.

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