Jump to content
House Price Crash Forum
Guest_ringledman_*

House Deposit - Asset Allocation

Recommended Posts

Saving for a house deposit, what asset class split are you holding?

I guess the biggest questions are:

1) Timeframe you see for property to bottom?

2) will cash collapse in real terms at a quicker rate than property does?

Personally I see us taking 3-5 years to bottom out in terms of the property market. On point 2, hard to call, originally I felt that cash was trash and it will be over the long term with the CBs destroying its value. However over a 3 or so year period perhaps it will perform better than UK property.

My ideal asset allocation for a deposit to be used sometime in the next 3-5% something like -

15% Precious metals

45% High yield defensive stocks

30% Cash

10% Bonds

Currently 0% in bonds as cant see much value at present. May go into corporate if yields rise further. Likewise would like to get further into gold but think a correction is due sometome this year.

What is your strategy once the market bottoms, and when do you foresee this to be?

Share this post


Link to post
Share on other sites

Saving for a house deposit, what asset class split are you holding?

I guess the biggest questions are:

1) Timeframe you see for property to bottom?

2) will cash collapse in real terms at a quicker rate than property does?

Personally I see us taking 3-5 years to bottom out in terms of the property market. However once property bottoms it usually does nothing for another 2-3 years so this could influence what to hold (providing you are willing to wait up to 8 years to buy!).

On point 2, hard to call, originally I felt that cash was trash and it will be over the long term with the CBs destroying its value. However over a 3 or so year period perhaps it will perform better than UK property.

My ideal asset allocation for a deposit to be used sometime in the next 3-5% something like -

15% Precious metals

45% High yield defensive stocks

30% Cash

10% Bonds

Currently 0% in bonds as cant see much value at present. May go into corporate if yields rise further. Likewise would like to get further into gold but think a correction is due sometome this year.

What is your deposit strategy until we get to the market bottoming, and when do you foresee this to be?

Also what percentage deposit are you looking at having for the market low? Personally I would like to have a good 30% to put down on a nice 3-4 bed property in 3-5 years time.

Edited by ringledman

Share this post


Link to post
Share on other sites

Saving for a house deposit, what asset class split are you holding?

I guess the biggest questions are:

1) Timeframe you see for property to bottom?

2) will cash collapse in real terms at a quicker rate than property does?

Personally I see us taking 3-5 years to bottom out in terms of the property market. On point 2, hard to call, originally I felt that cash was trash and it will be over the long term with the CBs destroying its value. However over a 3 or so year period perhaps it will perform better than UK property.

My ideal asset allocation for a deposit to be used sometime in the next 3-5% something like -

15% Precious metals

45% High yield defensive stocks

30% Cash

10% Bonds

Currently 0% in bonds as cant see much value at present. May go into corporate if yields rise further. Likewise would like to get further into gold but think a correction is due sometome this year.

What is your strategy once the market bottoms, and when do you foresee this to be?

Mine is 100% cash in variable rate deposit accounts. Precious metals is the next bubble, and I'm avoiding it for that reason. Bonds move in the opposite direction to interest rates, and as rates can only stay the same or go up, bonds can only stay the same or go down. That's why I'm avoiding them. Shares could make money if you pick the right ones, but I'm not sure I can, so I'm staying out of them. Also, prices are affected by interest rates, which could put a downward pressure on that asset class in general.

Share this post


Link to post
Share on other sites

Mine is 100% cash in variable rate deposit accounts. Precious metals is the next bubble, and I'm avoiding it for that reason. Bonds move in the opposite direction to interest rates, and as rates can only stay the same or go up, bonds can only stay the same or go down. That's why I'm avoiding them. Shares could make money if you pick the right ones, but I'm not sure I can, so I'm staying out of them. Also, prices are affected by interest rates, which could put a downward pressure on that asset class in general.

Over a 5 year time frame if you are saving your money for a house this is the only safe allocation for your savings IMO. Might be worth dipping your toes if any opportunities arise (e.g. panic driven 30% drop in the FTSE) but otherwise not worth risking money you will definitely need.

Share this post


Link to post
Share on other sites

Mine is 100% cash in variable rate deposit accounts. Precious metals is the next bubble, and I'm avoiding it for that reason. Bonds move in the opposite direction to interest rates, and as rates can only stay the same or go up, bonds can only stay the same or go down. That's why I'm avoiding them. Shares could make money if you pick the right ones, but I'm not sure I can, so I'm staying out of them. Also, prices are affected by interest rates, which could put a downward pressure on that asset class in general.

I think I'd broadly agree with your macroeconomic analysis, as far as it goes. But I'm a lot less in cash than you. Especially sterling. I guess cash is thirtysomething percent.

I'm taking a bet on some parts of the world not being in a bubble. Particularly emerging markets that are in economic growth. Yes, huge amounts of money have poured in, but while they're still so far 'behind' us there's got to be ample scope for real growth. Shares in companies in healthier markets, or with exposure to such markets.

Also modest exposure to shares in developed markets, and to bonds (through funds).

Main UK exposure (other than cash) is Venture Capital, for the tax breaks and to nurture tomorrow's successful companies.

Share this post


Link to post
Share on other sites

Over a 5 year time frame if you are saving your money for a house this is the only safe allocation for your savings IMO. Might be worth dipping your toes if any opportunities arise (e.g. panic driven 30% drop in the FTSE) but otherwise not worth risking money you will definitely need.

There's nothing safe about cash. Your £40k in 2000 would've bought a house, but keep it in cash over the next five years and watch it shrivel and die.

Share this post


Link to post
Share on other sites

Hmm, I know some of you on here have monster deposits so mine will probably seem a bit tame but I can't really afford to lose it:

70% Cash

25% Equities

5% Bonds (bond fund held through S&S ISA)

Share this post


Link to post
Share on other sites

There's nothing safe about cash. Your £40k in 2000 would've bought a house, but keep it in cash over the next five years and watch it shrivel and die.

If house prices go down then your 40000 won't have shrivelled and died will it?

Share this post


Link to post
Share on other sites

If house prices go down then your 40000 won't have shrivelled and died will it?

If house prices go down nominally in any significance, yes.

If HPC happens with a mix of nominal / real falls then you are already onto a loser. If it happens mainly in real falls as we inflate away, then you may as well use your cash as BBQ lighter fuel.

Edit: If you really want to, go ahead. Have a virtual cash account - I'll set up a virtual investment account. We'll compare notes in 5 years. Or 5 months. Or even 5 days, these days. I know one account will definitely lose, the other at least has a chance of keeping up.

Edited by Cash with Nowhere to Go

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 285 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.