Having looked at my current cash and near cash positions and the expected cash flows between now and retirement in mid-2013, I have concluded that I will have too much of our retirement invested in cash or near cash.
Cash and short term bonds have their place in a portfolio in that they provide a buffer for meeting expenses and a war chest for opportunities, but they currently produce negative real returns.
With our mortgages costing an averaged of around 1% p.a. (tax deductible), paying off the some of our mortgage debt was not an attractive alternative so I have opted to add some more shares in Hutchison Whampoa to the portfolio. The yield of around 2.5% is not particularly attractive in absolute terms, but it is secure and is certainly better than cash or short term bonds so long as I am prepared to ride out any fluctuations in the price of the shares.
I paid HKD 80.75 for the additional shares.
I will be looking for some more stable dividend shares when I get back from holiday in the New Year.