Wednesday 2 December 2020

End of November "12% solution" portfolio changes

My "12% solution" portfolio did well during November, due to the general market bullishness. For the end of November to signal was to say invested 60% in IWM (iShares Russell 200 ETF (All Sessions)) and 40% in JNK. This was the same as last month, so I don't need to do any trades this month, which helps reduce trading costs.  Unfortunately when I was looking at the costs of trading a "12% solution" using my IG markets account I had overlooked the fact that there would be a quarterly account keeping fee. This will have a negative impact on the overall performance compared to the "theoretical" 12% solution portfolio performance, so the $10,000 I've allocated to testing this asset allocation was probably insufficient. I won't be increasing the size of this portfolio though, as I also want to make an investment in a GenLife Insurance Bond to try out it's use for estate planning purposes. I'll write a post about that once I've made my investment as I'm still working out the details on how to implement exactly what I have in mind.

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mOOm said...

I invested the money my mother left for one of our children with GenLife. As her will didn't actually set up a trust and the money was now in my and brother's accounts the other options all were higher taxed given either the high tax rates on children or even our marginal tax rates. With the insurance bond, if we make an extra contribution before the money is eventually withdrawn the tax rate eventually paid will revert to the child's rate then rather than the 30%. said...

If you contribute up to 125% of the previous year's contribution into an existing insurance bond than the 10-year 'clock' for tax free withdrawals (ie no CGT on gains in unit prices) will still apply, so no child tax rate either.

If you invest more than 125% of the previous years amount the 'clock' resets - so it may be worth making additional investments into a new ChildBuilder investment bond, rather than adding to the existing bond, if you didn't make any contributions last FY.