Suddenly nervous of investing in shares. Do some people not do it and only trust cash

ZiggerZagger

In 15 years, I'll be 57 (hopefully ). I hope to retire at 55 if I play my cards right.


I think I will have to make a call in 2 years time re paying off the mortgage. If I am still in this job, and the investments are paying off (and I know I'd have to take a view at a point in time), and I can still get a low interest % on the mortgage when I remortgage, I may well leave everything where it is. If I've lost my job, interest rates have gone up and I can't remortgage to a good % etc., I'm more likely to pay it off.


Yes, I think the markets are making a lot of people wibbly (for want of a better word!)

atush

your mtg is low, and dpenong ont he rate in 2 years I would not pay it off. No one will lend you money should you lose your job and need cash.

So keep some in cash, some in bonds and the ret in equitiesd.

I am awaiting why exactly you can't use pensions for some of it. After all, you need a pension. If you have one already, how much is it worth, and if FS what will it pay at 55 (which means an actualrial reduction of 25-60%)

BLB53

Over 109 different 5 year periods (1899-2013):

in 81 periods, shares performed better than cash
in 28 periods, shares performed worse than cash

Stats will look a lot better over 10 yrs and I think shares have always shown a positive return over any 20 yr period.

Maybe with all the uncertainty, and inflation very low, it may be an option to leave things for a while - sleep easy?

ZiggerZagger

I have no pension at all. I lost all that in the divorce so I am starting from scratch but have made provision for the full allowable contribution a year already (as long as I keep this job). No point contributing more than that as it's not tax efficient. So that contribution comes out of monthly earnings each month.

Tbh, if they did not have an annual allowance cap on pensions, I would have put the whole lot into a pension. It's actually annoying for me that I can't especially as I'm in my 40s and starting from scratch and this would have been a perfect place for it. I have no carry forward I can use etc. etc.


If I lost my job and did not get another where I could pay the maximum allowance, I would invest in the pension from this amount.

Keep_pedalling

How on earth do you lose 100% of your pension in a divorce?

atush

ZiggerZagger wrote: »

I have no pension at all. I lost all that in the divorce so I am starting from scratch but have made provision for the full allowable contribution a year already (as long as I keep this job). No point contributing more than that as it's not tax efficient. So that contribution comes out of monthly earnings each month.

Tbh, if they did not have an annual allowance cap on pensions, I would have put the whole lot into a pension. It's actually annoying for me that I can't especially as I'm in my 40s and starting from scratch and this would have been a perfect place for it. I have no carry forward I can use etc. etc.


If I lost my job and did not get another where I could pay the maximum allowance, I would invest in the pension from this amount.

I agree with the above, you dont lose 100% of a pension in divocrce- you lose 50%. Unless you chose to, in lieu of other assets?

In your case you have made 40K contributions this year, or your income- ok fine. You might hav e mentionned this?

Set aside this amt in cash- getting interest- alongside your cash pile for emergencies/kn own expenses. then invest it in the pension next april.

Mistermeaner

The lesson here; don't get married (or at least get divorced when you're young and poor)

ZiggerZagger

I mentioned in the first post that the pension wasn't an option

Divorce a long story. Partner had an incredible final salary pension. So lucrative (but also expensive). Agreement we had was that I paid the mortgage while he paid into the pension as his contributions were high and he couldn't pay into the mortgage because of it (he was also 10 years older than me so nearer retirement).

I lost the right to half of it in the divorce in return for me keeping the house plus me buying him out of a % share. Pensions in divorce discounted in value sadly - was biggest bone of contention. I felt they should be worth more, especially as he was v near retirement and I would be left with no provision. Anyhow, water under the bridge now.

BeachNut

Put your money where you feel the most comfortable putting it. If keeping all/most in cash helps you sleep at night instead of worrying about losing it on shares I'd say that's fine. You may not get the financial return on cash that you might get on equity or property, and cash may return you less than inflation, but if you're earning then your cash pool and asset base is growing and you just need to ensure it gets to an amount that you need for retirement. You could then take advice on how to invest your cash pot to fund your retirement.

AndyT678

BeachNut wrote: »

Put your money where you feel the most comfortable putting it. If keeping all/most in cash helps you sleep at night instead of worrying about losing it on shares I'd say that's fine. You may not get the financial return on cash that you might get on equity or property, and cash may return you less than inflation, but if you're earning then your cash pool and asset base is growing and you just need to ensure it gets to an amount that you need for retirement. You could then take advice on how to invest your cash pot to fund your retirement.

Sorry but I really don't get that logic. Your suggestion seems to break down as:

1. If you're worried about the capital risk associated with investment keep your money as cash.
2. Watch the value of your cash become eroded over time by inflation. Possibly adding more from earnings.
3. Wait for some time to pass then get some advice about investing what now remains.

What has changed during steps 1&2 to address the original concern over capital risk? Why not skip straight to step 3 which OP has already done? See post 1.