New boy here (to the site & DIY investing), would welcome some help from you good folk.
I am looking to invest the vast majority of my capital yikes (just sold up abroad & returned to UK after 20 years away) for 12 months in a portfolio targeted to produce 5% gross returns, enabling me (I hope!) to get back into the UK property ladder in a year’s time. I don’t want to put my capital at risk, & will obviously need access to it in a year (hence not interested in equities), & am ideally looking for a relatively simple solution that won’t require lots of time & attention once things are set up. Will probably use YouInvest, they appear competitive for the type of trading I envisage (30-40 buys in the space of 4-6 weeks, 30-40 sells on exit in a year’s time, hopefully not much activity in between)
Have done a fair bit of research last few weeks but completely new to this, anyhow the state of play on my portfolio idea is as follows:
35% in renewable energy vehicles (a sector I know well so not looking for help here), returns of around 6.5 - 7%
20% in cash
10% in a mix of miscellaneous higher return things (including about half of this in Peer to Peer lending, Assetz Capital, RateSetter & Zopa the ones I’m looking at, any comments welcome here as new to this too, am hoping to achieve close to 5% on the P2P’s)
That leaves the remaining 35% which is a fairly hefty chunk & the part of the portfolio I’m really looking for help on. Returns here need to be in the region of 5%, perhaps a tad more. My thinking is to aim for a mixture of corporate bonds & funds with perhaps 2 to 3 levels of returns all/mostly in the 4 – 5.5% bracket. (I could be tempted to put a little into something that yields more, if I’m confident of the issuer/track record/prospects)
From the reading I’ve done (& with the likelihood of interest rates perhaps going up some time in 2H 2014) it would appear I should be aiming at bonds with a short maturity (less sensitive to interest rate hikes) & high coupons/yields? Does that make sense, & if so where best to look at these in a way that summarises the complete picture for the item (eg including the minimum investment amount needed, how easy it will be to exit in a year’s time, & any other useful key indicators given that being away so long I’m not hugely clued up on the recent history of UK corporates )
I’ve had a quick look at the ORB index & there are 70 or so corporate bonds with a “flat yield” (?) of over 5%, so imagine my targets could be realistic, but short of sticking a pin in at random not sure how best to choose among them! Seeing as I will be exiting completely within the next year can I afford to be less worried about the company going under & just take the coupons (making sure I hold the bond when the coupon is due to be paid out)?
Some other questions perhaps some of you good folk can help clear my mind on:
1. Suggested Corporate bonds / Funds ratio mix?
2. Number of corporate bonds/funds I should be aiming to have in my portfolio? (Seeing as would like to keep things simple would say 3 individual corporate bonds & 7 funds be a reasonable proposition or will I need more to spread risk? Am envisaging 50-80k of hard earned lifetime savings so would like reasonable coverage)
3. Which funds could be worth looking at?
4. Will I be able to buy all I need via YouInvest?
5. Any other fixed/stable income or other alternatives (property funds etc?) worth considering (for the 5% target)?
Thanks very much to any & all that can help out in some way or other, Jack