stockmarkets -are we nearing the bottom or is there further to go ??

Alcorn60

Why is this time so different?
Simply put ,I,m now retired and I am panicking because its my main income . I do have a cash buffer but seeing my pension drop is worrying as it cant be replaced and is paid up. I have not started to utilise my pension yet and am in the process of transfering my fund to a SIP so I can then drawdown on it. The intention was to take my 25% tax free and draw funds as and when I required. I will make sure the balance of tranfered funds are re-invested into less volatile assets,and hopefully claw back some of the current loss ,. Over the years I didnt really take notice of what was happening . I just contributed to my pension . I realise its par for the course. Ill just have to accept it and hope its hit bottom and now on the up.

george4064

Alan_Corner wrote: »

Why is this time so different?
Simply put ,I,m now retired and I am panicking because its my main income . I do have a cash buffer but seeing my pension drop is worrying as it cant be replaced and is paid up. I have not started to utilise my pension yet and am in the process of transfering my fund to a SIP so I can then drawdown on it. The intention was to take my 25% tax free and draw funds as and when I required. I will make sure the balance of tranfered funds are re-invested into less volatile assets,and hopefully claw back some of the current loss ,. Over the years I didnt really take notice of what was happening . I just contributed to my pension . I realise its par for the course. Ill just have to accept it and hope its hit bottom and now on the up.

I don't know what you are invested in, but switching your pension allocation into less risky assets will reduce your ability to claw back your losses (or exceed them).

masonic

BananaRepublic wrote: »

So that makes sense if your aim is to smooth out your losses and gains and reduce volatility at the cost of overall long term gain. Or put another way, you get some exposure to the more volatile asset but reduce the risk. Which might make sense if you need the money at a given date i.e you cannot wait for the stock market to recover.

Well, if you are of the disposition that you'd ordinarily put all of your investable assets into equities, then I agree it would not benefit your potential long term returns to diversify into lower risk assets, but most people will tend to arrive at a target asset allocation that contains some bond / property / commodities exposure and the point I was trying to convey is that for those people, rebalancing allows them to "pile in during crashes", albeit to a lesser extent than if they were sitting on the sidelines in cash waiting for it to come along, but without the market timing implications.

What is quite interesting about rebalancing is that while you'd perhaps expect the overall returns to approximate to the weighted mean of the returns from the constituent asset classes, they actually tend towards the better performing assets. So, admittedly, this is only really of benefit to those with a lower risk tolerance than 100% equities, since it is unusual for this approach to lead to a result that beats all of the constituent assets, there is a tangible benefit that arises from rebalancing between asset classes where you do not reduce your level of risk in order to participate.

masonic

Alan_Corner wrote: »

Ill just have to accept it and hope its hit bottom and now on the up.

Let me play devil's advocate. Suppose we are only half-way to the bottom. Market falls of 40% or more are not out of the question. Worst case peak to trough falls from the past 100 years was of the order 70%. Could you ride out such falls assuming a recovery came along within a few years?

Linton

Alan_Corner wrote: »

Why is this time so different?
Simply put ,I,m now retired and I am panicking because its my main income . I do have a cash buffer but seeing my pension drop is worrying as it cant be replaced and is paid up. I have not started to utilise my pension yet and am in the process of transfering my fund to a SIP so I can then drawdown on it. The intention was to take my 25% tax free and draw funds as and when I required. I will make sure the balance of tranfered funds are re-invested into less volatile assets,and hopefully claw back some of the current loss ,. Over the years I didnt really take notice of what was happening . I just contributed to my pension . I realise its par for the course. Ill just have to accept it and hope its hit bottom and now on the up.

Suggest you keep at least say 3-4 years drawdown worth of investments in a wealth preservation portfolio (WPP) - eg strategic bonds, absolute return funds, possibly cash, possibly bricks and mortar property. In the bad times take drawdown from there but do not replenish it. When times improve build up the WPP. The rest of your wealth can be held in 100% equity. You can then weather the fluctuations without sleepless nights as you have 3-4 years before you need to crystallise any serious losses.

I suggest you dont move all your wealth into safe investments, especially not now as you will ensure that your potential losses turn into real ones.

Alcorn60

I am hoping that once funds are transfered to a SIP. I will take out my 25% tax free portion and have the remaining cash re-invested,and hopefully not draw down until required.i.e leave to grow for a good few years. . As I am unsure and totally out of my depth as what and where to place funds I will take advice . Hence why I am reading posts on the forum. It obvious some on here know exactly what their doing with investents /pensions etc unfortunatly I dont understand it all . But I am trying to get my head round it.

MiserlyMartin

The problem is nobody knows really if we are at bottom. You could switch out into cash funds and this would be good if we have a drop down to about 4000 (FTSE 100) possible.... depends on your view, then you switch back in. The next problem is, when do you call the bottom?. You should have called top at the end of the year, the signs were there a summer fall in China, an overheated bull run since 2008 ish. I too took my eye off the ball, a lot of us are too busy with other things than switching pensions funds tactically.

masonic

Alan_Corner wrote: »

I am hoping that once funds are transfered to a SIP. I will take out my 25% tax free portion and have the remaining cash re-invested,and hopefully not draw down until required.i.e leave to grow for a good few years. . As I am unsure and totally out of my depth as what and where to place funds I will take advice . Hence why I am reading posts on the forum. It obvious some on here know exactly what their doing with investents /pensions etc unfortunatly I dont understand it all . But I am trying to get my head round it.

You might find it helpful to examine your own risk profile. There are tools like this one (free) and this one (paid), which could be quite insightful for you.

BananaRepublic

masonic wrote: »

Let me play devil's advocate. Suppose we are only half-way to the bottom. Market falls of 40% or more are not out of the question. Worst case peak to trough falls from the past 100 years was of the order 70%. Could you ride out such falls assuming a recovery came along within a few years?

In principle, but let's look behind the figures you quote. We have seen big drops during wars, and in the great crash when there was a massive asset bubble, and turmoil in many countries. The last big crash happened due to junk debt spread across many banks, and the consequent risk to the stability of the entire financial system. At present the UK economy is sound, unemployment is low and falling, the national deficit is falling, and the debt will start falling in the years to come. UK banks are far more stable than they were. Europe is mostly sound, far more so than 8 years ago. There are genuine worries over the oil price, and Chinese debt. So it is not all rosy, but neither is it doom and gloom.

So I think you are dare I say guilty of scaremongering.

BananaRepublic

Linton wrote: »

I suggest you dont move all your wealth into safe investments, especially not now as you will ensure that your potential losses turn into real ones.

I quite agree. The popular press tend to shout sell, sell, sell when the market crashes, and buy, buy, buy when it is at a peak. Quite obviously that is the opposite of what you should be doing, but the popular press like to scare us, or highlight big gains. There is even something to be said for the idea that some financial speculators have a vested interest in us selling as the market falls, so it falls further, and they can buy cheap.

I would advise keeping as much as possible in the market. Or rather that is what I would do, having weathered such storms before, and cringed as I saw my assets plummet, and then smiled again a few years later. Of course if you need money soon, you have no choice but to cyrstallise some losses.