How much is too much

[KDave]

13 minutes ago, DarkChameleon said:

I think 30% is way too much, id say 15% comfortably and 20% high..30% is way to deep into metals.

Nah its conservative, I use gold instead of bonds. If I said 30% bonds to 70% stocks you would not bat an eyelid. Do you call someone with 30% bonds deep into government debt? If you do its a fair enough point 

[DarkChameleon]

3 minutes ago, KDave said:

Nah its conservative, I use gold instead of bonds. If I said 30% bonds to 70% stocks you would not bat an eyelid. Do you call someone with 30% bonds deep into government debt? If you do its a fair enough point 

Bonds dont tend to plummet 20% in abadday.

[KDave]

2 minutes ago, DarkChameleon said:

Bonds dont tend to plummet 20% in abadday.

Volatility is not a problem with stocks and gold in a portfolio, it is even less than stocks and bonds have a look at past returns. But volatility is not really a problem at all anyway, only to weak hands - the risk associated with bonds is a bigger problem imo. Risk of inflation mostly (default). I think my combination will fare much better in an inflationary environment than stocks and bonds will. Certain stocks will anyway, not trackers that include the last cycles winners, people with market trackers and government bonds are going to be the big losers in real terms this decade, nominal terms they probably won't even notice it happening.   

Volatility and risk are not the same thing. 

[Lewbear]

Funny really as after reading all this and thinking $24000 a year sounds like a lot, I've just realised that I haven't got a clue what the average pension paid out here is (living in UK), I'm still working towards a £24k a year income now and feel like that's probably a lot more than im likely to get out of a pension judging on what my elderly relatives get in support and pension (very little) seems like you need to save up to a point, get a house and hope that your health lasts long enough to not have to sell the house just to pay your way when retired. Obviously there's a huge spectrum here and everyone is in a different situation but that's certainly the way it's looking for me!

Hence the hopeful pension top up and personal gold pension, in terms of an investment portfolio... I'm 100% in PMs as seeing it much more like saving rather than investment as planning to hold the bulk of or for 30+ years, hopefully!

The way I see it here is the one bonus we have here over US is the NHS so bit less to worry about in that respect but doubt that will even be a thing by the time I reach retirement! 

[Lewbear]

2 hours ago, DarkChameleon said:

You can enjoy collecting as well as stacking, i do, sometimes deals to buy stackables come along and so do collectable coinsand pieces...only the other week there was a silver statue of 1006 ozs, a remington 'mountain man' and sold for $23,500 and $300 shipping....figure that out for melt alone, today it would be worth $27,000 but its also a work of art.

Another good point, for the moment I'm trying to avoid the collecting side of things as I know I'll fall deep into that rabbit hole! Bullion grade all the way for the moment. That's said I've found it very hard not to pull the trigger on some the nicer collectable pieces. Think Sovs are my current redemption there as I can slightly sate that collector itch and still pay bullion prices! 

[Seasider]

1 hour ago, Lewbear said:

hope that your health lasts

Too right.  If you go into a nursing home you will burn through money faster than you could believe.

[Prophecy]

55 minutes ago, Lewbear said:

Funny really as after reading all this and thinking $24000 a year sounds like a lot, I've just realised that I haven't got a clue what the average pension paid out here is (living in UK), I'm still working towards a £24k a year income now and feel like that's probably a lot more than im likely to get out of a pension judging on what my elderly relatives get in support and pension (very little) seems like you need to save up to a point, get a house and hope that your health lasts long enough to not have to sell the house just to pay your way when retired. Obviously there's a huge spectrum here and everyone is in a different situation but that's certainly the way it's looking for me!

Hence the hopeful pension top up and personal gold pension, in terms of an investment portfolio... I'm 100% in PMs as seeing it much more like saving rather than investment as planning to hold the bulk of or for 30+ years, hopefully!

The way I see it here is the one bonus we have here over US is the NHS so bit less to worry about in that respect but doubt that will even be a thing by the time I reach retirement! 

Trust me you don't want to know what the average person has saved up in a pension. It's pretty pathetic. Personally, no more than 30% of your retirement savings value in PMs and rebalance yearly. If I hadn't done that the pandemic would have kicked my savings in the proverbials.

[Lewbear]

13 minutes ago, Seasider said:

Too right.  If you go into a nursing home you will burn through money faster than you could believe.

Exactly the problem spend most if your life paying the house off so that it can then pay someone else to look after you! 

[Lewbear]

14 minutes ago, Prophecy said:

Trust me you don't want to know what the average person has saved up in a pension. It's pretty pathetic. Personally, no more than 30% of your retirement savings value in PMs and rebalance yearly. If I hadn't done that the pandemic would have kicked my savings in the proverbials.

Your probably right, I'm hoping to basically sort my own pension and treat the official one as a top up, out of curiosity what else you you invest/save in over the longer term like that and on a smaller budget? Like the Idea of stock and trading till the realisation you need to start with a good chunk anyway, PMs seem especially appealing purely for the less  historical move upwards over time

[KDave]

1 hour ago, Lewbear said:

Funny really as after reading all this and thinking $24000 a year sounds like a lot, I've just realised that I haven't got a clue what the average pension paid out here is (living in UK), I'm still working towards a £24k a year income now and feel like that's probably a lot more than im likely to get out of a pension judging on what my elderly relatives get in support and pension (very little) seems like you need to save up to a point, get a house and hope that your health lasts long enough to not have to sell the house just to pay your way when retired. Obviously there's a huge spectrum here and everyone is in a different situation but that's certainly the way it's looking for me!

Hence the hopeful pension top up and personal gold pension, in terms of an investment portfolio... I'm 100% in PMs as seeing it much more like saving rather than investment as planning to hold the bulk of or for 30+ years, hopefully!

The way I see it here is the one bonus we have here over US is the NHS so bit less to worry about in that respect but doubt that will even be a thing by the time I reach retirement! 

The key is to reduce costs, have a paid off house is the biggest one, and either save enough to support your desired standard of living or plan to have a standing of living low enough to outlast your savings, thats all there is to it.

Lots of different investments is how I am doing it. Everyone has state pension scheme by default (unless things change, which they might), so I count that as worst case, then supplement it, primarily with the work based pension as its the best option I have, then pay into a SIPP to get some tax back and diversify and invest in what I want/take a different position to the work pension. Then the rest is savings, mostly ISA stocks, physical metals, a regular cash saver and premium bonds for cash equivalents. What more can we do. 

If on a small budget you can invest in a SIPP from £25 a month that is how I started mine a couple of years ago, buying £25 quids worth of FTSE all share funds for a few months before I was happy to start putting more in. The benefit of a SIPP is mainly that they can't take it off you if you end up jobless. They don't count it towards assets or savings and you can't touch it before retirement, unlike a LISA which they will make you raid if you ever need state help. The SIPP linked to state pension age though, when you can draw out the cash is 58 at the moment for me, but if state pension age goes to 70 as they are talking about, that will mean 60 before you get access. 25% can be taken as tax free lump then 75% is counted to towards income, but if you are taking below the threshold out theres no tax. Or when you retire you can do a Tom Hanks, go to Greece or Portugal for a year and claim residence, take the lot out there tax free, put it in an ISA and come back and pay nowt  

[Lewbear]

22 minutes ago, KDave said:

The key is to reduce costs, have a paid off house is the biggest one, and either save enough to support your desired standard of living or plan to have a standing of living low enough to outlast your savings, thats all there is to it.

Lots of different investments is how I am doing it. Everyone has state pension scheme by default (unless things change, which they might), so I count that as worst case, then supplement it, primarily with the work based pension as its the best option I have, then pay into a SIPP to get some tax back and diversify and invest in what I want/take a different position to the work pension. Then the rest is savings, mostly ISA stocks, physical metals, a regular cash saver and premium bonds for cash equivalents. What more can we do. 

If on a small budget you can invest in a SIPP from £25 a month that is how I started mine a couple of years ago, buying £25 quids worth of FTSE all share funds for a few months before I was happy to start putting more in. The benefit of a SIPP is mainly that they can't take it off you if you end up jobless. They don't count it towards assets or savings and you can't touch it before retirement, unlike a LISA which they will make you raid if you ever need state help. The SIPP linked to state pension age though, when you can draw out the cash is 58 at the moment for me, but if state pension age goes to 70 as they are talking about, that will mean 60 before you get access. 25% can be taken as tax free lump then 75% is counted to towards income, but if you are taking below the threshold out theres no tax. Or when you retire you can do a Tom Hanks, go to Greece or Portugal for a year and claim residence, take the lot out there tax free, put it in an ISA and come back and pay nowt  

Very informative thank you

Sounds like I have some serious reading up to do!  cant say I've ever really had a real look into many other options yeh to be honest at all so far so good to know where to start, only really got started with gold and silver because,  its shiny..

 

 

[Bratnia]

3 hours ago, Lewbear said:

Hence the hopeful pension top up and personal gold pension, in terms of an investment portfolio... I'm 100% in PMs as seeing it much more like saving rather than investment as planning to hold the bulk of or for 30+ years, hopefully!

100% of anything is a big concentration risk. Concentration risk is one of the greatest risks. Example, 1980 to 1999 and for a US investor gold moved from $512/ounce down to $290/ounce. If you'd invested $1024 into 50/50 stock/gold, yearly rebalanced, then that would have started with 1 ounce of gold; At the end of 1999 the portfolio with dividends reinvested was worth $4238, and in half being invested in gold = $2119 of gold, which at $290/ounce = 7.3 ounces of gold. So even though the price of gold declined, you accumulated 7.3 times more ounces of gold, and the portfolio would have outpaced 4% inflation by around 3%/year. Whilst 100% gold would not only have seen its nominal value decline, but also have been significantly eroded by inflation.

In other periods things swing the other way around, and you might see ounces of gold being reduced to buy more stock shares. Simple yearly rebalancing will have you act as though you were a experienced trader who added-low/reduced-high in both stocks and gold.

Personally I'd limit gold to 33%, alongside a third in UK stocks and a third in US stocks. Equal diversification across £, $ and global currency. Those 'currencies' will wax and wane and 'trading' (rebalancing) will tend to have had you act appropriately over time. When accumulating, just add new funds to the lagging asset. In retirement spend down the highest valued holding.

[Lewbear]

Thanks again yet more invaluable info and more to look into, to be honest it wasnt planned as 100% I suppose until just now I never really thought of it s an investment portfolio, just as keeping some gold 

[DarkChameleon]

4 hours ago, Lewbear said:

Another good point, for the moment I'm trying to avoid the collecting side of things as I know I'll fall deep into that rabbit hole! Bullion grade all the way for the moment. That's said I've found it very hard not to pull the trigger on some the nicer collectable pieces. Think Sovs are my current redemption there as I can slightly sate that collector itch and still pay bullion prices! 

Preach, been collecting sovs for over 30 years....have a pouch of some i just play with when i get the gold bug, but bought some pre ium coins ans historical coins to scratch the itch..lol

[HighlandTiger]

It all depends on your age. If you are in your 20's you may have 3 or 4 more big rises and dips to buy (or sell) your pms.

However if you are like me in your mid 50's, this current rise may be the last big one you get to profit from before retirement. 

 

[Prophecy]

21 minutes ago, HighlandTiger said:

It all depends on your age. If you are in your 20's you may have 3 or 4 more big rises and dips to buy (or sell) your pms.

However if you are like me in your mid 50's, this current rise may be the last big one you get to profit from before retirement. 

 

This one is going to be the biggest in most people's lifetimes...

[vand]

This a very incomplete - almost useless - discussion without getting a much clearer picture someone's overall financial position, goals and overall financial plan.

- Do you have an sizeable emergency fund?
- What is your savings rate?
- Have you paid down all high interest debt?
- Are you making the most of your employer's pension match?
- Are you making the most of your L-ISA and pension allowance?
- Do you have a house, are you saving for one, do you have a mortgage?
- What are you realistic goals in the next 2, 5, 10 & 20 years?
- What is your expectation for your investments?
- How do you think gold helps you?
- What is your attitude for risk? How much does predictability of returns matter to you?
- How stable is your job?

etc etc.
Gold doesn't even enter the discussion until you have a stable financial base and the discussion has moved on to your strategy for preserving and building long term wealth.

[Prophecy]

13 minutes ago, vand said:

This a very incomplete - almost useless - discussion without getting a much clearer picture someone's overall financial position, goals and overall financial plan.

- Do you have an sizeable emergency fund?
- What is your savings rate?
- Have you paid down all high interest debt?
- Are you making the most of your employer's pension match?
- Are you making the most of your L-ISA and pension allowance?
- Do you have a house, are you saving for one, do you have a mortgage?
- What are you realistic goals in the next 2, 5, 10 & 20 years?
- What is your expectation for your investments?
- How do you think gold helps you?
- What is your attitude for risk? How much does predictability of returns matter to you?
- How stable is your job?

etc etc.
Gold doesn't even enter the discussion until you have a stable financial base and the discussion has moved on to your strategy for preserving and building long term wealth.

Maybe we could adjust this personal finance strategy planner flowchart to accommodate PMs. (made by some popular UK based financial planning forums.)

 

[vand]

I like that flowchart, but it's more of a guide to getting your personal finances in order rather than a guide in how to invest. Personal finance and investing have some overlap but also plenty of non-overlap too.  

Good personal finance provides the base of the pyramid and if done well then that may be enough to enable you to meet all your financial goals. Focussing on investing - the top of the pyramid - will always crumble without first getting the base of the pyramid right. I've never known anyone who's been able to succeed at the top levels of the pyramid enough to make up for having a poor base.

I advocate people paying attention to both. Put them together and you get:

Personal Finance + Investing Plan = Wealth Building Plan

[MLNCoins]

30 minutes ago, vand said:

Good personal finance provides the base of the pyramid and if done well then that may be enough to enable you to meet all your financial goals. Focussing on investing - the top of the pyramid - will always crumble without first getting the base of the pyramid right. I've never known anyone who's been able to succeed at the top levels of the pyramid enough to make up for having a poor base.

This.

You can't build a skyscraper on a stone slab, successful wealth building is no different.

[Lewbear]

Yet more amazing points and info thank you all so much, and so much I haven't thought about myself at all! I guess I'm still at the stage if getting finances in order so the flowchart is most helpful! 

I agree there's a lot more to it than just the current gold price etc, nice to hear the different views and opinions.

I appreciate all the input and time taken to answer this too given me a lot to look up and think about! 

[Heirlooms]

23 hours ago, vand said:

Good personal finance provides the base of the pyramid and if done well then that may be enough to enable you to meet all your financial goals. Focussing on investing - the top of the pyramid - will always crumble without first getting the base of the pyramid right. I've never known anyone who's been able to succeed at the top levels of the pyramid enough to make up for having a poor base.

Great info. What makes up the rest of the pyramid once you get the base right (assuming the base is emergency fund, no consumer debt, employers pension match and spending less than you earn)?

[Metallurgic]

I use pms to diversify my portfolio mainly,  gold allocation is around 5-10% of my net worth. My goal is to have passive income when I retire so I focus on cash flow generating investments such as rental properties. 

When there is no better option or I have spare cash I will spend more on gold regardless of the price and try to balance my portfolio later on

 

 

[RacerCool]

This reminds me of that country song by Daryle Singletary, "Too much fun" :

"Too much fun, what's that mean?

it's like too much money, there's no such thing!

It's like a girl too pretty with too much class,

Being too lucky, or a car too fast.

No matter what they say I've done 

I ain't never had too much fun!"

[vand]

On 22/08/2020 at 11:27, Heirlooms said:

Great info. What makes up the rest of the pyramid once you get the base right (assuming the base is emergency fund, no consumer debt, employers pension match and spending less than you earn)?

 

From https://www.collaborativefund.com/blog/the-psychology-of-money/