Author Topic: Please help me sort out my muddled AA  (Read 1483 times)

shanghaiMMM

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Please help me sort out my muddled AA
« on: December 03, 2015, 12:47:32 AM »
Hi all,

I was looking for a little help. My situation and future aren't overly clear, and this has led to a muddled AA. I'm British, I live in China but may well be moving to America in the next 2-3 years (my wife is American). But then again that's not set in stone. I've only been invested in the market about 15 months or so and all these factors have led to me just dumping money into Index Funds and hoping that the AA will figure itself out later.

Another factor is that I'm investing using Fidelity UK, and none of the handy Vanguard funds MMM recommends are available to me. I have some Vanguard alternatives as you can see:


Fidelity Index UK Fund P-Acc                                   42.12%
Vanguard U.K. Government Bond Index Acc               1.63%
Vanguard Emerging Markets Stock Indx Acc               2.65%
Vanguard FTSE Dev World ex UK Eq Ind Ac               12.66%
HSBC S&P 500 ETF                                                  40.94%

(some of this is invested in British tax free ISAs, others in regular taxable accounts)

And the return has been unspectacular, about 1% return overall. The S+P has saved me going into negatives. The FTSE 100 is just scraping back to evens, Emerging is -18%, Dev World is -3%.

I would guess your first question may be: 'Well, look at your AA and figure it out dummy'. That would be pretty fair but I've struggled to form a coherent AA due to the multitude of unknowns in my future (i.e. I can't form an AA using concrete tax situations, only assumptions)

So my thoughts/questions (bear in mind I know past performance is not indicator etcetc)

1) Should I ditch the Devel world excluding UK and go more into FTSE 100 / SP 500? It seems to be an unnecessary allocation now I think about it.
2) Should I raise the SP 500 % level, as the FTSE 100 has been fairly flat for a long time and SP500's average of 7% seems more reliable?
3) If / when I move to the USA, what will the tax implications be?
4) Are there any good places to research similar complicated situations for investing?
5) Is there any point to my bonds/emerging markets? They seem more like a token at diversification to me now!


I'm 29, newly married, and fairly new to investing and just wanted to get involved when I learnt about MMM/ere/investing etc, but now I feel I should do some tweaking! Go easy on the ramshackle look of my portfolio!

Thanks in advance!


Heckler

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Re: Please help me sort out my muddled AA
« Reply #1 on: December 03, 2015, 11:44:50 AM »
1.  If you live in China, and plan to move to US, why do you have such a large percentage in the UK market?  That would make sense if you lived and plan to live in the UK and spend GBP later in life.  Global diversification is a good thing!

5.  Yes, 2% of bonds will not be reducing your risk at all, as you've noticed.  Start reading here:  https://www.bogleheads.org/wiki/Risk_and_return:_an_introduction
  Then read and understand here (go through the entire thing):  https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy


Don't use past performance to decide and chase your AA.  The S&P's big crash is around the corner! 

shanghaiMMM

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Re: Please help me sort out my muddled AA
« Reply #2 on: December 06, 2015, 08:48:46 PM »
1.  If you live in China, and plan to move to US, why do you have such a large percentage in the UK market?  That would make sense if you lived and plan to live in the UK and spend GBP later in life.  Global diversification is a good thing!

5.  Yes, 2% of bonds will not be reducing your risk at all, as you've noticed.  Start reading here:  https://www.bogleheads.org/wiki/Risk_and_return:_an_introduction
  Then read and understand here (go through the entire thing):  https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy


Don't use past performance to decide and chase your AA.  The S&P's big crash is around the corner!

Thanks for the reply!

1) I guess that's due to the uncertain nature of my future, when I set out with investing, returning to the UK was still an option.

2) Thanks for those, I will read thoroughly and then reply again.