Excited about Bitcoin

I’m excited about bitcoin. Not just bitcoin, but crypto in general. But mainly bitcoin.

I’m a relative newcomer to the world of bitcoin, having made my first purchase at the beginning of 2017. But I sure as hell have learnt a lot in the past year and a half!

But right now I’m feeling optimistic that things are about to turn again. It feels like we are close to the bottom of the current bear market. Now feels like a good time to invest.

So I have decided to start drip-feeding in some more money. Money that would otherwise be allocated to my annual ISA allowance. As nobody really knows when is the right time to buy any investment, I’ve decided to make small regular purchases to average out the price.

I started a couple of weeks ago actually and have a novel way of getting money onto an exchange with the minimum of fees. My first 2 transactions have gone super smoothly.

My plan goes a little like this:

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100% Equities

It’s been a few months since I last posted any information about my investment strategy. Considering it changed shortly after that post, I thought it was worth a quick update.

Quite simply – all ISA and SIPP funds are now invested 100% in equities! To be more specific:

SIPP (IWeb) – 100% equities

  • 100% Vanguard U.S. Equity Index Fund

ISA1 (IWeb) – 100% equities

  • 100% Vanguard U.S. Equity Index Fund

ISA2 (Vanguard) – 100% equities

  • 100% Vanguard U.S. Equity Index Fund

I call that a maintenance-free investment portfolio!

A lot of the motivation for making this decision came from the excellent The Simple Path to Wealth by J L Collins. That book made so much sense to me and is one I will be gifting my children as they grow into adults for sure.

This really is a set-it-and-forget-it type strategy and the focus now falls on me to remain disciplined. I intend to stick to my guns no matter what the market decides to do over the next several years.

Simples! 🙂

The end of the tax year

It’s the last day of the 2017/18 tax year and I’ve achieved my goal. Hoorah! 🙂

I’ve managed to squirrel away £20K in both Mrs FmC and my own ISA accounts.

Due to some cashflow problems (i.e. peer-to-peer loans that didn’t get paid back on time!) I even had to borrow £9K from my parents. I wasn’t happy doing this (and neither was Mrs FmC, for fears of strings being attached) – but needs must. I’ve promised I will pay it back within 3 months (and I am a man of my word!).

I am going to have to tread very carefully over the next few weeks, as I have hardly any cash on hand whatsoever. So I will be deferring as much to next month’s credit card bill as I can. Thank goodness I get paid fortnightly, that’s all I can say! 😉

My plan is to try and contribute the full annual allowance into both ISAs each of the next 4-5 years, until I reach FI. They will then serve as a buffer between when I quit my job and when my main SIPP becomes accessible, 5 years later.

How have you got on making use of your tax free allowances?

Asset allocation strategy

Following my recent post on asset allocation ideas, I’ve decided how I am going to invest over the next several years.

Our retirement savings will be split across 3 main pots – 2 ISA accounts and 1 SIPP. The plan is that short of other available income at the time, the ISA accounts will help fund the period of age 50-55. I won’t be able to get my hands on the SIPP funds until at least age 55 (and possibly 57, depending on what date in 2028 the government decides to raise it).

I’ve decided to keep things simple to avoid unnecessary costs and rebalancing effort:

SIPP (IWeb) – 60/40 ratio

  • 100% Vanguard LifeStrategy 60% Equity Fund – Accumulation

ISA1 (IWeb) – 100% equities

  • 100% Vanguard LifeStrategy 100% Equity Fund – Accumulation

ISA2 (Vanguard) – 100% equities

  • 10% Vanguard FTSE U.K. All Share Index Unit Trust – Accumulation
  • 10% Vanguard Emerging Markets Stock Index Fund – Accumulation
  • 80% Vanguard FTSE Developed World ex-U.K. Equity Index Fund – Accumulation

The SIPP is the most important to us long-term, because it has the most in it and will be responsible for our long term income. That is why I have stuck to a 60/40 profile for that one. I feel I can be a little more risk tolerant in the 2 ISAs in the hope of greater gains.

Asset allocation ideas

I think I’ve finally settled on an asset allocation strategy that I feel comfortable with.

I am going to start with a 80/20 split between equities and bonds.

For the bond component, I might use this fund:

Vanguard Investments Funds ICVC-Vanguard U.K. Long Duration Gilt Index Fund A GBP Gross Accumulation

For the equity portion I’m going to keep things simple by using 4 equal chunks:

25% Vanguard US Equity Index Acc
25% Vanguard FTSE Developed Europe ex UK Equity Index Acc
25% Vanguard FTSE U.K. All Share Index Unit Trust Accumulation
25% Vanguard Global Emerging Markets Fund A GBP Acc

Some initial thoughts:

Yes, 80/20 is a little bit high – but better than the 100% equities I currently have! I need a degree of risk if I’m to stand any chance of growing my portfolio to my target £0.5M+ value within the next 10 years.

Yes, I quite like Vanguard funds 🙂 But I will consider other options.

This design makes it easy for me to change the equity/bond ratio in future, if I want less risk. I would just need to change the overall ratio and then divide the equity portion by 4.

I am not sure when the right time will be to implement this allocation strategy – considering my fund is still down following last week’s panic 🙁

Are bonds the right thing to be buying? I’ve heard a lot of negative press about them lately, which I don’t fully understand. I get the feeling the most I would get from them is to cover inflation each year!

Thoughts?