Dealing with LTA excess

jamesd

RickyB2000 wrote: »

Isn't it about timescales and probability?

If there wasn't likely to be a drop in the market in the timescales you need the money then you would be better crystallising, taking the hit and getting straight back in again. If there was likely to be a drop better waiting for it to happen.

Yes. Looking at market history we know a drop is likely fairly soon for a value that looks sufficient in this case but it's never guaranteed.

RickyB2000 wrote: »

I was always told not to try and time the markets.

Same here but when people start getting Nobel Prizes for work showing how to time markets on a medium timescale - years rather than days or months - things can get a bit more interesting.

Yes, doing a bit of crystallising at a time is an option. Quite likely but not certain that in this case that would also cause enough to be done at low market value times to eliminate the LTA bill.

zagfles

jamesd wrote: »

Yes, both are potential outcomes. We just know from the past that it's likely that while on average there will usually be growth, there are dips along the way. While there's no guarantee that a dip will happen in time to be useful it is likely. Not certain but not certain of not paying the charge beats the certainty of paying without waiting.

Err...but the charge will increase if the investment goes up. But then you can just wait for the next dip can't you :rotfl:

zagfles

RickyB2000 wrote: »

Isn't it about timescales and probability?

If there wasn't likely to be a drop in the market in the timescales you need the money then you would be better crystallising, taking the hit and getting straight back in again. If there was likely to be a drop better waiting for it to happen.

I was always told not to try and time the markets.

Exactly. Trying to time the market for crystallisation is no different to trying to time it for investment.

jamesd

zagfles wrote: »

Exactly. Trying to time the market for crystallisation is no different to trying to time it for investment.

Wrong. All LTA waiting does is just stay invested until the change happens. While market timing for investing or not has the cost of being out of the market.

You planning to stop pretending that markets don't go down as well as up any time soon?

zagfles

jamesd wrote: »

Wrong.

You might want to look up the last time you replied "wrong" to me. You quickly ate your words :rotfl:

All LTA waiting does is just stay invested until the change happens. While market timing for investing or not has the cost of being out of the market.

You planning to stop pretending that markets don't go down as well as up any time soon?

You really don't get it, do you? OK let's use some numbers. You have £1.2M in your SIPP, £200k over the LTA.

What value do you wait for before crystallising?