Illness causes a review of investment strategy

23rd Apr '21 by Lazzer

13 comments 757 reads

Unfortunately I have prostate cancer and I am currently receiving chemotherapy, so I am reviewing my investments. My wife is not interested in investing so I have to look at a company to look after our portfolios.

One option is someone like James Fisher, who seem to be slow and steady with an average return of 10% over 26 years. This will generate enough income and some left over to reinvest to keep up with inflation.

Or do you think it better to collect a broad range of 'coffee can' investments to put under the bed?

Or perhaps a collection of investment trusts?

I would appreciate everyones' thoughts as this is a big decision for me and one that lots of us will have to think of at some time, hopefully at a greater age than me!

Many thanks

Larry

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Lazzer

Premium Member

13 comments

TheGob

23rd Apr '21

Very sorry to hear your news. I have recently start to consider what I would advise family to do in my absence and have concluded that I would advise them to invest in two trackers. One would be the Vanguard mid 250 tracker and the other would be a world index tracker.

I am recommending going 50:50. There are lots of arguments for different mixes and I recognise none are right or wrong.

The advantage in my mind is the low cost and huge diversification.

Well those are my thoughts.

Hope things go well for you in the meantime.

whatmore1951

23rd Apr '21

Sorry to hear of your illness. As I am oldish I have had this conversation with family. My current advice is to subscribe to John Barron's investment trust site and split the monies equally between JB's income portfolio trusts. Not to trade along the way but to make changes once a year based on the updated portfolio. Either way our respective families need something that is automatic and preserves the wealth we have worked hard to build up.

Gromley

23rd Apr '21

Hi Larry,

Firstly let me just say how sorry I am to hear your news.

Your post suggests that you are quite gloomy about your prognosis. Obviously I do not know your situation but from what I little do know about prostate cancer there are reasons to be not too gloomy and you may well have a good time ahead of you.

However, we are all going to die sometimes and for those people with Spouses and Partners there is a near 50% chance of dieing before your partner; so it does pay to have a plan.

You mention that your partner is "not interested in investing" but I think it is worth qualifying that. Your second two options Coffee Can or pool of ITs both involve selecting a strategy and sticking to to regardless of what ever else happens. Personally that would make me feel extremely uncomfortable, so despite my doubts about IFAs and the like, I think some degree of professional management might be advisable - I'm afraid that is not something I can really give any pointers on, but perhaps others can.

In the meantime, you hopefully have some time to think on this and if that is the case the first thing I would focus on is reducing the volatility in your current investments. That is probably a more general takeaway for any of us who are reliant on investments to provide future income for us and our partners. Anyone of us could be knocked down by a bus tomorrow (probably not the greatest analogy at the current time as I am not sure that I have crossed a "main road" for 14 months or so.)

I actually think that it is a great show of character that you are thinking about your wife's future well being at this time.

There is for sure a conversation to be had there with her about what her future financial needs would be if you were no longer there, but also what things you both would really like to do with the remaining time you may have together.

If you can accommodate a joint "bucket list" and your wife's future needs, you may actually prove to be more fortunate than many of us.

Sorry I can't really help further at this time, but I wish you well with your ongoing treatment and hope you have a better outcome than your post implies.

mojomogoz

23rd Apr '21

Sad news and best wishes. If it were me I’d go investment trusts. Sadly I can’t help much on choice as not looking at these investments much myself.

Two I know and think do fit are Ruffer Investment (LON:RICA) and £AJOT. Ruffer as a core (and for simplicity it’s the sort of thing could go 100% in) and Avi Japan at modest weight as some judicious strategic risk (low valuation, profitable, cash and asset rich neglected Japanese companies that may be one of best returns globally and diversifying).

You/your wife may prefer something more targeted at high ongoing income though and I don’t have a view there re which trusts/funds.

As an income risk I’d perhaps go for basket of 3 large domestic banks Lloyds Banking (LON:LLOY) Natwest (LON:NWG) and Barclays (LON:BARC) -why? It’s my belief that this decade we will rediscover a need for banks n the U.K. and the credit (so growth) they can create (particularly as the govt is using its balance sheet to a relative extreme). Functioning and lending banks are necessary for general economic well-being of the less affluent...and that seems a political objective for all sides. If inflation comes they also provide some hedge against it. I have this position along with some smaller bank and bank like institutions and believe I will get capital and income growth over the next decade...so much so that banks could be the darlings and everyone loves them. Obviously I could be wrong so again don’t back up the truck.

Finally, a bit of gold might be good strategic diversification. I’m not a gold bug but in some circumstances it could prove valuable diversification/ upside. Timing is tricky as right now we could be at a kind of peak period or there could be much much more to go. Depends on how economic and policy things unfold. I’m more latter but some concerns. Weight by your disposition between 5 and 20%. Also, the wealthier you are the more valuable a higher weight for diversification is (and you can risk the downside scenario more with wealth cushion as your regular investments probably do alright if gold is trash). Avoid the miners as they require active mgt.

gus 1065

24th Apr '21

Hi Lazzer.

Sorry to hear of your situation. Presumably you saw this thread from a few weeks ago on the same topic? If not, there are some relevant comments/suggestions that you might like to consider.

https://www.stockopedia.com/co...

Best wishes,

Gus.

Lazzer

24th Apr '21

Thanks very much, I missed this useful discussion.

Macro

24th Apr '21

Hi Larry,

Sorry to hear of your situation.

I suspect that like many others the Investment Trust route is very sensible, and combining this with something like the John Barron model portfolios would be a sound foundation for good performance over the longer term. It does require a little work - and you need to match this approach with the abilities of your wife and / or children to manage that approach.

There are other approaches you could take. You could look at the passive route based upon ETFs. One good example to look at is Scalable Capital which combines model portfolios of ETFs with an automated risk management model to reduce draw-downs. You can use their approach within an ISA or SIPP type mechansim: See: https://uk.scalable.capital/

Of course you could simply go to Vanguard or indeed iShares and use their standard model portfolios, too. ... You could apply a mixture of strategies.

If your illness progresses and you are no longer able to actively manage your investments you may need to put in place a Power of Attorney - if you have not done so already. Not all brokers offer a good PoA service - Barclays for instance is telephone only under a PoA. So, better to think through these things ahead of time if you can. Also, consider what powers you would like to give to your attorney(s) and which powers you wish not to give - you dont need to accept a standard off the shelf PoA template. Do you want individuals to be able to exercise all of their powers solely, or would you like them to act jointly?

Making sure that you have a Will and that you actually understand how it will be interpreted would be sensible too. For instance I do not think that my father considered how his joint account would be treated after his death. Joint accounts are considered to be outside of a Will - but their contents are split between your wife (typically 50%) and your other heirs - so you need to be specific if that is not what you intended. You dont need to create a whole new Will - you can add detail and modification by letter or even phone calls. Understanding what your wife's basic legal rights to your estate are under the law would also be sensible to ascertain and communicate.

Reviewing your pensions so that it is clear beforehand what your wife's widow's pension entitlement is would be a good step, too. For instance Prudential have quoted me a 11-12 week period just to ascetain whether my mother is elligible for a widow's pension. Detailing any active insurance policies on your life - again will save others time after you have gone. Essentially, work out what your wife's monthly income might be after your death. Doing this will make it easier, and quicker, to ascertain how much work investments need to do for her after you have gone.

Bonitabeach

25th Apr '21

Lasser,

I would be very wary of Fisher Investments. I made the mistake of contacting them some years ago and was bombarded with marketing material full of glossy ad speak, very short of fact. Ever more desperate telephone calls and emails followed. Requests for facts on fees and performance were denied until I had agreed to an appointment with an "advisor" aka. salesman.

A brief look at their website says things haven't changed.

Fees Can you find any disclosure on Fisher's fees, just negative comments on the fees of other financial institutions!

Performance Can you find any disclosure on Fisher's performance - only marketing babble.

I cannot make a recommendation but there has to be better out there than Fisher. Forced to make a decision I would split my money equally between the shares of:

Apollo Global Management, Aviva, Blackstone, Intermediate Capital Group, Partners Group Holding AG, Phoenix Group, Polar Capital Holdings, St James Place:

and make my money, like Mr Fisher, from managing other people's.

To catch volatility I would add IGG, CMC Markets and PLUS 500.

I hope you find a solution you are comfortable with.

Bonitabeach

Disclosure: I hold all of the above companies listed.

donald pond

25th Apr '21

I would put it all into the Fundsmith unit trust. It has performed well since launch and invests in huge companies, all of them global leaders unlikely to go bust. I think a one stop global fund or world tracker is the best approach for a "passive" (as in, don't touch) long term investment. I don't see the point buying a portfolio of funds if they aren't going to be monitored.

JimMcLad

25th Apr '21

Larry

I started to do the same as you when I was diagnosed with Leukaemia 14 years ago – so don’t think too negatively.

I select the investments within our ISAs and plan to have one in ITs and ETFs (though it’s heavily in cash at present). The other, currently mainly UK shares, will migrate in the same direction as I reach senility. It’s worth remembering your ISA can be transferred to your spouse should events require it. Both brokers (HL and Barclays) have procedures in place to allow the contents to be sold by them and the cash returned to a nominated bank account if required.

Your post has made me review my notes I’ll leave for my good lady. Good luck.

bryans1311

25th Apr '21

My initial response was going to be Fundsmith as well, but then I thought about key person risk. Will Terry Smith still be running the fund in 10/20/30 years time?

Trackers, absolutely agree.

bryans1311

25th Apr '21

Sorry to hear about your situation, Larry. But as others have mentioned, prostate cancer is very treatable these days, thanks to the wonders of medicine. I presume you’ve already looked at “investing in yourself”? That’s what I’d be looking at first eg. Are there any private treatments, ways to improve the odds etc.

After that I’d be looking at world trackers as an investment. Others mention fund managers and investment trusts. My opinion is will even the best ones still exist/be the best in 10/20/30 years time. You don’t mention what other diversified assets you have. Property, physical assets, cash etc.

You can see even from my amateur paragraphs above, how complicated it can be. I’d definitely suggest a truly independent financial advisor to help with planning. You might also take tax and legal advice depending on your wealth.

All the best with everything!

pka

25th Apr '21

If you would like to have a low volatility 'buy and hold' portfolio with some prospect of long-term capital growth, you might consider putting equal amounts into the following three investment trusts: Capital Gearing Trust, Personal Assets Trust and the Ruffer Investment Company. Each of them invests in a variety of different asset classes including global equities with the aim of achieving absolute returns each year.

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Lazzer

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