Drawdown: safe withdrawal rates

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  • TheTracker
    TheTracker Posts: 1,223
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    kidmugsy wrote: »
    How is it handled if your company isn't active this tax year so that there is no Corporation Tax to pay? Is there some sort of back-dating mechanism?

    Losses can be carried forward and backward, though the company probably needs to be "active".
  • jamesd
    jamesd Posts: 26,103
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    edited 24 April 2017 at 7:29PM
    I recently added this to the first post:


    Investment highlight: April 2017: You should have lower than usual equity investments at the moment because cyclically adjusted price/earnings ratios (PE10) are above average in some major markets, particularly the US. You might also favour lower PE10 markets with higher than their usual equity weights. I like P2P lending rather than corporate or government bonds for this. See Guyton's sequence of return risk reduction and Bengen's interesting timing thought in the last paragraph of his 2016 small cap paper.

  • ukdw
    ukdw Posts: 280
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    Hyperlink to Bengen seems to have missing colon after http
  • kidmugsy
    kidmugsy Posts: 12,709
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    edited 24 April 2017 at 6:26PM
    jamesd wrote: »
    Bengen's interesting timing thought in the last paragraph of his 2016 small cap paper

    On his page 1 he writes "1. Bonds rarely proved useful in portfolios seeking to maximize the safe withdrawal rate for a 30-year period."

    The best substitute for bonds I know is annuity-equivalents bought by deferring the old-style State Retirement Pension, backed up by the 3A NIC top-up for the same SRPs. The former is still available to some codgers. Of course, you can't rebalance your allocation annually using those, but since their returns are so good that's a price worth paying for us, we decided.

    I hope nobody in the UK assumes that his comments mean that they should fill their portfolio with AIM shares. Small companies in the US can be quite big by our standards.
    Free the dunston one next time too.
  • michaels
    michaels Posts: 27,949
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    jamesd wrote: »
    I recently added this to the first post:


    Investment highlight: April 2017: You should have lower than usual equity investments at the moment because cyclically adjusted price/earnings ratios (PE10) are above average in some major markets, particularly the US. You might also favour lower PE10 markets with higher than their usual equity weights. I like P2P lending rather than corporate or government bonds for this. See Guyton's sequence of return risk reduction and Bengen's interesting timing thought in the last paragraph of his 2016 small cap paper.

    How can one invest ones (non-sipp) pension fund in p2p?
    kidmugsy wrote: »
    On his page 1 he writes "1. Bonds rarely proved useful in portfolios seeking to maximize the safe withdrawal rate for a 30-year period."

    The best substitute for bonds I know is annuity-equivalents bought by deferring the old-style State Retirement Pension, backed up by the 3A NIC top-up for the same SRPs. The former is still available to some codgers. Of course, you can't rebalance your allocation annually using those, but since their returns are so good that's a price worth paying for us, we decided.

    Isn't there an issue with deferring state pension for couples in that should one of the couple die then the deferral benefit is lost?
    I think....
  • bowlhead99
    bowlhead99 Posts: 12,295
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    michaels wrote: »
    How can one invest ones (non-sipp) pension fund in p2p?
    With a pension that's not a SIPP or SSAS, one can't.

    AFAIK there are some platforms offering P2P-type opportunities which will accept a SIPP trustee as an investor. They're not the mainstream platforms though, and you would still have to convince your SIPP manager that it was a legit investment, which the bare bones cheap DIY SIPPs wouldn't go for.

    Still, you don't have to do all your retirement planning inside a pension wrapper, there is IFISA (limited opportunities so far but more due to launch) or unwrapped options.
    Isn't there an issue with deferring state pension for couples in that should one of the couple die then the deferral benefit is lost?
    Yes, on the current (Apr 2016 onwards) version of the scheme if they die once they have come out of deferral. So you would compare it to the cost of an inflation-linked lifetime annuity, rather than an inflation-linked lifetime annuity with spouse provision.

    Although if you hit state pension age before 6 April last year, the benefit of extra annual pension generated was inheritable by spouse (as well as the rate of return being higher). There are a number of such people who have simply taken their state pension as soon as they could and not deferred yet, but still could if they wanted to.
  • kidmugsy
    kidmugsy Posts: 12,709
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    michaels wrote: »
    Isn't there an issue with deferring state pension for couples in that should one of the couple die then the deferral benefit is lost?

    Let me quote me: "annuity-equivalents bought by deferring the old-style State Retirement Pension". Old-style doesn't have this problem: I expect my widow to get 90% of my extra pension received for deferring.
    Free the dunston one next time too.
  • stoozie1
    stoozie1 Posts: 656 Forumite
    James,

    thank you for a fantastic resource.

    I have tried to read the article in point 1 of the OP a couple of times but it's going over my head a bit.

    Does anyone have anything a bit more basic/entry level I could look at first?
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- £560 April £2670
  • jamesd
    jamesd Posts: 26,103
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    edited 13 October 2020 at 6:57PM
    michaels wrote: »
    How can one invest ones (non-sipp) pension fund in p2p?
    There are some managed funds which invest in P2P lending but I don't really recommend those. BondMason now say that they have some pension options and that people should email them for details. SIPP of course, since P2P direct lending and what they do are classed as non-standard investments, a term which mostly means not traded on a stock market and potentially not able to be sold within thirty days.

    BondMason withdrew from this market in 2018 or 2019.
  • jamesd
    jamesd Posts: 26,103
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    edited 30 April 2017 at 10:07AM
    stoozie1 wrote: »
    I have tried to read the article in point 1 of the OP a couple of times but it's going over my head a bit.

    Does anyone have anything a bit more basic/entry level I could look at first?
    Have you tried my paraphrasing of the rules? I just modified the paragraph that has the link to it to be explicit in saying that it contains a summary.
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