‘Is my mix of stocks and funds right for my retirement in nine years?’

I’m a 58- year- old male cohabiting with my partner of the same age. I have private pensions that will be worth about £150,000 and a rental property that should be worth about £200,000 when I retire in nine years.

I have Isas that I have just started to save into over the past couple of years and they are worth about £35,000. The investments are spread between Dunedin Income Growth, Fundsmith Equity, Legal & General, Blue Whale Growth, Ashtead Technology, HSBC and a few others. I aim to put about £200 a month and a few lump sums into my Isa every year until I retire.

– Anon

Dear Reader

I have to admit I have a few more questions about your finances, such as whether you plan to use your rental property for income when you retire or if you aim to sell it and spend the £200,000 during your pension years.

I’m also wondering whether you have any dependants, and if so whether you want to leave them anything when the time comes. It would also have been good to know what percentage of your portfolio is in each investment and, when you say “and a few others” at the end of your list, I would love to know what they are.

It’s good to see you have diversified, with both funds and individual stocks where you feel comfortable. But depending on how much you have in each, there is a risk you could be too exposed to just a handful of individual companies.

I will look at your holdings first. Legal & General is often a top pick among Interactive Investor customers, and with good reason, particularly for someone like you who is close to retirement. Its annual dividend yield of more than 9pc is a fantastic source of income, but be mindful of its share price performance – the shares have fallen by more than 13pc so far this year, as the graph, right, shows, and that capital depreciation is eating away at your income gains. Before the pandemic it was a largely a steady, long-term gainer, but since then its performance has struggled. But over the longer term there is considerable potential for the savings and investment market, espec i a l ly given ageing demographics and likely welfare reform. For L&G, an ability to participate in this market on a number of fronts should provide opportunities for growth.

Despite a lot of uncertainty in the banking sector this year, with the American mid-sized banking crisis and the forced takeover of Credit Suisse, another one of your holdings, HSBC, has enjoyed an impressive share price climb and has a decent yield of more than 5pc – lots to get excited about. Its “price-to-book” ratio (its market value divided by the value of its assets) is towards the higher end at 0.9 – rivals Standard Chartered and Lloyds Banking

Group are at 0.5 and 0.6 respectively. This is not necessarily a bad thing, but it’s something to be mindful of. I’d say now may not be the best time to load up on more shares, particularly given the correlation between the banks and the economic backdrop; banks face a rising risk of loan losses at the moment.

You have done brilliantly to pick Ashtead Technology. While it is not offering much on the dividend side, its share price has enjoyed a stunning performance – a gain of about 50pc so far this year – and for good reason. Last month the company, an Aim- quoted specialist in subsea equipment, reported a sharp jump in first-half sales and profits, thanks to strong demand in offshore renewables as well as oil and gas. But a stock such as this does come with significant risk. Keeping your risk quite low at this stage of life would be a good strategy, so ensure Ashtead is just a small part of your portfolio.

In terms of changes or additions, you should add a few “core” positions that should provide steady growth and income via highly diversified portfolios.

A common investment approach is to have the bulk of a portfolio in core strategies and then various “satellite” positions on the side, such as single shares or concentrated funds like Fundsmith Equity, which owns just 27 stocks.

Portfolio building blocks to consider include Vanguard’s LifeStrategy 60pc Equity fund, which invests two fifths of its money in bonds and three fifths in stocks, or the iShares Core MSCI World Ucits ETF, which owns the 1,500 largest companies from developed countries. Both are part of our Super 60 list of recommended options and are a great way to “own the market” at low cost, rather than taking a punt on individual shares. Also take a look at the Vanguard FTSE All-World High Dividend Yield Ucits ETF as a source of income. It is well diversified, owning 1,845 shares, and yields 3.6pc at the low cost of 0.29pc a year.

So I’d say focus on a combination of income and growth via some core funds to make up the majority of your portfolio. Then top up with smaller

‘Keeping your risk quite low at this stage of life would be a good strategy’