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Investing in Drawdown
Comments
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The annuity quotes I have been given have not tempted me to hand over a whole lot of cash for not really a lot of income.
Yet a portfolio with no equities would likely result in a worse option or at best similar but with risk taken.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
It sounds to me (not being mean) that you know nothing about investments, assets classes, risk, etc. which isn't unusual or bad, per say,
but you need to bone up and learn pronto, or you need to hire a professional ie an IFA (not a FA and no one with our bank)0 -
If you're considering P2P, you should go into it with your eyes open; it is not a risk free option.
Gambling institutions don't typically do things like this which one of the P2P places does:No I don't think so. Sounds a bit more like gambling than investing to me.
1. Secured on buildings at no more than 75% current value (or value in development)
2. If there's a loss after sale of the security they lose the first 5% of the amount lent that is lost themselves, because they are also invested.
3. Then a protection fund backs that up if there is still a shortfall.
Or consider a place that does pawn-based lending where the pwn shop holds goods at 50% LTV (based on pawn resale value), takes the losses if any and also where the platform backs them up.
It's a different world from the ups and downs of equities or corporate bonds, one where you get actual capital value protection as well as interest if you choose the platforms that offer it.0 -
Yet a portfolio with no equities would likely result in a worse option or at best similar but with risk taken.
Not remotely close to true when you consider P2P as part of the mixture. At the moment I could meet my income need from investing just quarter of my capital in P2P. Secured lending is available at 12%+ before inflation, beating the long term average performance of the UK stock market. Same for a VCT that has just about 100% security and pays 10% tax free a year.Are you sure drawdown is suitable for you? without equities, you will almost certainly be putting your fund at shortfall risk and inflation risk. It is unlikely to meet your income requirements unless they happen to be very very low.
What there isn't at the moment is capacity if everyone was to do it. And if that capacity ever does arrive I assume that the market will become more efficient and the current interesting returns vs risk opportunities may not still be around.
Equities, corporate bonds, gilts and commercial property are far more commonly recommended but that's to be expected since they are the traditional types of investment.
I don't think that Aged currently has a well formed attitude to risk of various types. Describing secured lending as gambling makes me wonder how Aged would regard equities with no capital value protection or bonds that are much further down in the payment precedence order than you get with P2P that normally uses a first charge. Lots of exploring, learning and experimenting to do, I think, and better not with all of the money yet.Why? Given your risk profile, you should consider them.0 -
It sounds to me (not being mean) that you know nothing about investments, assets classes, risk, etc. which isn't unusual or bad, per say,
Absolutely right.
I'm trying to learn, that's why I'm here asking questions. I have an adviser, but I need to be able to understand what's going on for myself.but you need to bone up and learn pronto, or you need to hire a professional ie an IFA (not a FA and no one with our bank)0 -
As I've already said, it sounds interesting and I will check it out. I didn't say it was gambling, I said that to me, it sounds a bit more like gambling than investing. I'm sorry if that offended you, I can assure you that no offence was meant by it.I don't think that Aged currently has a well formed attitude to risk of various types. Describing secured lending as gambling makes me wonder how Aged would regard equities with no capital value protection or bonds that are much further down in the payment precedence order than you get with P2P that normally uses a first charge. Lots of exploring, learning and experimenting to do, I think, and better not with all of the money yet.0 -
As I've already said, it sounds interesting and I will check it out. I didn't say it was gambling, I said that to me, it sounds a bit more like gambling than investing. I'm sorry if that offended you, I can assure you that no offence was meant by it.
Capital protection is one of the primary rules of investing. More so in retirement. As ones labour isn't available to replenish it. As the old saying goes if it's too good to be true it probably is. Nothing wrong with boring investments.0 -
Seems a bit of wanting to have your cake and eat it too.
You want no risk but you want to take income and for the rest to grow. An annuity is not attractive but neither are cash rates.
Pretty much anything that is going to provide a decent return above cash is going to be exposed to some risk, whether it is equities, ETFs, P2P, Corporate Bonds, Property etc.
What has your pre-drawdown pension been invested in? In other words what got you to this position, surely you have taken some risk in the past?I don't want to achieve immortality through my work, I want to achieve it through not dying0 -
It didn't offend me, just something to clarify.As I've already said, it sounds interesting and I will check it out. I didn't say it was gambling, I said that to me, it sounds a bit more like gambling than investing. I'm sorry if that offended you, I can assure you that no offence was meant by it.0 -
I'm trying to learn, that's why I'm here asking questions. I have an adviser, but I need to be able to understand what's going on for myself.
What is your adviser advising?
You've been asked but not answered yet but it might help if the answers were known?
1. What size is the pot?
2. What annuity quotes have you got?
3. How much would you want to drawdown each year?
You really have to decide if you're going to be comfortable with a drawdown strategy. There's no point in going down that route if you're going to worry each night about how your investments are performing, whether your pot is growing or more importantly falling and whether you'll have enough money to last your lifetime.
For many the annuity route will still be the best because they can just forget about it and take the income. I wouldn't totally discount it if it gives you peace of mind.0
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