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Questions over advice received

  • 26-11-2015 01:44PM
    #1
    xertpo
    Registered Users, Registered Users 2 Posts: 330 ✭✭


    I friend of mine recently received some professional investment advice regarding what to do with some money and assets he inherited. I was hoping for your thoughts as to the advice.

    The bulk of the inheritance is in shares held in sterling. It was advised that some of these holdings should be changed with the proceeds to be reinvested in euro and dollar stocks. I would have thought now was a poor time to invest in US equities, and that it was a good time to hold stg stocks?

    He is 70 years of age, has a pension and his house is fully paid off. It was also suggested that a balanced portfolio would be 65% equities : 35% cash.

    Any thoughts are welcome.


Comments

  • #2
    Nody
    Moderators, Category Moderators, Arts Moderators, Business & Finance Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 18,508 CMod ✭✭✭✭Nody


    What does he want to do with the money is the biggest question here; at 70 years of age does he wants to create a nest egg for the future or is he interested in going around the world? Secondly in regards to selling them it's very much dependent on his goals and what type of shares they are to be honest...


  • #3
    Triangla
    Registered Users, Registered Users 2 Posts: 818 ✭✭✭Triangla


    65% equities and 35% cash at his age seems like a bit of a mismatch.

    At his age he should be looking at very low risk investments like government bonds and avoiding equities.

    He needs to seek advice elsewhere (independent) and seek a lower risk investment portfolio.


  • #4
    xertpo
    Registered Users, Registered Users 2 Posts: 330 ✭✭xertpo


    That was my initial thought too. From what I know and have read, a moderate risk portfolio would be 40 equities and 60 cash.

    Any thoughts on the selling of the sterling equities to buy Euro and US companies?


  • #5
    xertpo
    Registered Users, Registered Users 2 Posts: 330 ✭✭xertpo


    Nody wrote: »
    What does he want to do with the money is the biggest question here; at 70 years of age does he wants to create a nest egg for the future or is he interested in going around the world? Secondly in regards to selling them it's very much dependent on his goals and what type of shares they are to be honest...

    He wants to generate a small income, but with moderate to mild risk. At the moment, if he cashed it all, he would have plenty to last the next 25 years.


  • #6
    Nody
    Moderators, Category Moderators, Arts Moderators, Business & Finance Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 18,508 CMod ✭✭✭✭Nody


    xertpo wrote: »
    He wants to generate a small income, but with moderate to mild risk. At the moment, if he cashed it all, he would have plenty to last the next 25 years.
    Well I'd look for a 25/25/25/25 type of portfolio.

    25% shares (dividend based), 25% index funds, 25% interest funds, 25% raw material. For the dividend shares I generally find US based companies work better if you want it to supplement regularly (pay dividend monthly or quarterly) and can go relatively low risk (for example P&G has paid dividends for 59 years and are unlikely to close up shop tomorrow, current dividend is about 3.4% yearly paid quarterly) but there are plenty of others out there as well (and a good adviser will point you towards them).


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  • #7
    ixus
    Registered Users, Registered Users 2 Posts: 2,435 ✭✭✭ixus


    xertpo wrote: »
    That was my initial thought too. From what I know and have read, a moderate risk portfolio would be 40 equities and 60 cash.

    Any thoughts on the selling of the sterling equities to buy Euro and US companies?

    Sounds like the advisor is trying to get your friend to make transactions in order to benefit from transaction fees.

    Imho, at that age, one should only be selling to move to cash. That, or a bit of a flutter for someone with an interest in investing.

    Personally, I would cash in half of it, if it is 12.5yrs worth of income.


  • #8
    xertpo
    Registered Users, Registered Users 2 Posts: 330 ✭✭xertpo


    Nody wrote: »
    Well I'd look for a 25/25/25/25 type of portfolio.

    25% shares (dividend based), 25% index funds, 25% interest funds, 25% raw material. For the dividend shares I generally find US based companies work better if you want it to supplement regularly (pay dividend monthly or quarterly) and can go relatively low risk (for example P&G has paid dividends for 59 years and are unlikely to close up shop tomorrow, current dividend is about 3.4% yearly paid quarterly) but there are plenty of others out there as well (and a good adviser will point you towards them).

    Would you not see the poor euro to dollar exchange rate as factor to think about avoiding dollar stocks?


  • #9
    xertpo
    Registered Users, Registered Users 2 Posts: 330 ✭✭xertpo


    ixus wrote: »
    Sounds like the advisor is trying to get your friend to make transactions in order to benefit from transaction fees.

    Imho, at that age, one should only be selling to move to cash. That, or a bit of a flutter for someone with an interest in investing.

    Personally, I would cash in half of it, if it is 12.5yrs worth of income.

    This was my advice. I suggested 50% in low risk stocks with dividends. At age 70 why take the risk when you have your financial future guaranteed.


  • #10
    Nody
    Moderators, Category Moderators, Arts Moderators, Business & Finance Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 18,508 CMod ✭✭✭✭Nody


    xertpo wrote: »
    Would you not see the poor euro to dollar exchange rate as factor to think about avoiding dollar stocks?
    You can always wait until forever to try to catch the perfect exchange rate; the simple fact is the euro is likely to keep tanking for a couple of years at least (ECB pumping out more money, US Fed raising interest rates) and your dividends are in $ so you get back on the fact it's strong exchange rate :)


  • #11
    xertpo
    Registered Users, Registered Users 2 Posts: 330 ✭✭xertpo


    Nody wrote: »
    You can always wait until forever to try to catch the perfect exchange rate; the simple fact is the euro is likely to keep tanking for a couple of years at least (ECB pumping out more money, US Fed raising interest rates) and your dividends are in $ so you get back on the fact it's strong exchange rate :)

    Good point. Hadn't thought of that. Thanks.


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