25% Tax free and investing it or paying off debt

AnotherJoe

ThinkingOutLoud wrote: »

I don't disagree with you.

But, then when he likely did this there were plenty of harbingers of woe saying things would bomb. Many are still clear, it is very volatile.

And if doing what the markets said overall was always right - Soros and Buffet would be a lot less wealthy.

Hindsight today is 20/20.

I can't claim I saw the result coming, but my foresight immediately after was 20/20 in that I loaded up on the stocks that got badly beaten up in the week after the vote. Looked like free money to me. Not often that happens. Check Persimmon for example.

But, you are saying Brexit will all dusted in 2 years?

Nope, I'm saying that doing something in investment today that causes an ongoing loss (due to inflation) on the basis of a known macroeconomic event in 2 years time, when the actual effect of that event won't then be clear for likely another 5 years beyond that, is not a good plan!

Indeed it's more likely that buying stocks outside the U.K. is a reasonable idea (might be wrong but it's still reasonable) if you want to double guess what brexit and its aftermath means. That's what I've done to a large extent.

In contrast, storing all your investments into a currency you expect to decline on the grounds you expect its native economy to decline, is unreasonable and the opposite of what you should do.

AnotherJoe

ThinkingOutLoud wrote: »

Agreed.
But I think it is also possible to sympathise with the OP's fear and resultant desire to "de risk" from stocks as he saw it, given that the press was full of highly respected sources predicting uncertainty.
This doesn't mean it was wise behaviour or that he has not lost out on growth based on current markets. Not everyone is an infallible investment guru.

Agreed, which is why is suggested he should pay his mortgage off

DancingBadger

I'm struggling to think of a situation where paying off a mortgage from pension funds, especially at today's low rates, would be a good idea.

Overseas property is a minefield. Don't even consider it as a possible source of income; too many snakes and not enough ladders. And certainly never buy overseas if you can't afford to lose the money.

We have a flat in an up-market village in the Cape Winelands. It was bought outright with inherited money. Occasionally we let out it to friends to cover basic expenses (although it doesn't cost a fortune to maintain), most of the time we prefer to leave it empty. It's a nice place to go to escape the English winter, but we don't fool ourselves; the political situation in South Africa is tense. If it all goes wrong tomorrow we'll have lost a holiday home but not our pensions, and our standard of living in the UK won't suffer.

ThinkingOutLoud_2

AnotherJoe wrote: »

In contrast, storing all your investments into a currency you expect to decline on the grounds you expect its native economy to decline, is unreasonable and the opposite of what you should do.

Agreed. I can only guess the OP figured a period sitting it out losing to inflation was better than suffering some kind of market shock. Not yet a wining strategy...

kinger101

dunstonh wrote: »

Not really. There are posts on this site (mine included) before the referendum saying that sterling would fall (that was pretty much a given no-one could argue with). When sterling falls, the FTSE tends to go up as it is priced on the global stage.

You can never predict the future but in some areas you have a pretty good idea.

Saying sterling would fall if we voted for Brexit is one thing, but before 24 June, we didn't know the result of the referendum. No point saying it was a foregone conclusion given it was a close result.

Triumph13

I always think the correct response if someone says they're moving to cash to avoid risk in this kind of situation is:
"Oh really? Which currency?"

ThinkingOutLoud_2

Triumph13 wrote: »

I always think the correct response if someone says they're moving to cash to avoid risk in this kind of situation is:
"Oh really? Which currency?"

So noting that I didn't think the OP's 90% move was the right option with 6/7 years to retirement.

Good question, but why does it have to be only one currency and not spread proportionate to your prior global share mix?

woolly_wombat

Markdavid1962 wrote: »

With Brexit, I have already changed the pension plans to low risk (lifestyle) and 90% invested as cash in case the shares drop due to Brexit/Article 50 to protect the value of the pots.

Presumably, at age 54, that lifestyling also includes a significant percentage invested in gilts?

Gilt prices appear to have topped out around Aug/Sep 2016:

http://www.londonstockexchange.com/exchange/prices-and-markets/funds/chart.html?fundId=25126757&countryId=OX

Malthusian

ThinkingOutLoud wrote: »

But, then when he likely did this there were plenty of harbingers of woe saying things would bomb. Many are still clear, it is very volatile.

There are always plenty of harbingers of woe. At the beginning of 2016 (back when everyone including me assumed the serfs would know their place) there was an RBS pundit telling you to sell everything because China would cause a global stockmarket crash. At the beginning of 2018 they will probably tell you to sell everything because of Brexit, again. At the beginning of 2019 it will be China again, or the Trump boom unravelling, or the Trump crash causing contagion, or something I can't even conceive of.

If you sell everything (or 90% of everything) because people are forecasting doom you will be permanently in cash.

In any case, if you were an investor and genuinely believed that Brexit would cause holy fire to rain down on Britain, and that you were the only one who'd worked this out and that other investors weren't pricing in the disaster of Brexit, you'd sell UK shares and buy European ones, or whichever sectors you expected to carve out the UK's former export business once it was reduced to a pariah state. Moving into cash, especially sterling, makes no sense. It's simple fear.

And if doing what the markets said overall was always right - Soros and Buffet would be a lot less wealthy.

No, but it usually is. Which is why for every Soros there are 10 failed Soroses who lose their shirt and are forgotten.

ThinkingOutLoud_2

Yes, it was fear of losing. He is a man in the street who listened to many supposed experts from the IMF to every other headline.

To the experienced investors who quote their wise and sage words above and saw beyond the fear - their various truths have worked out so far.

How about some advice what he should do now, instead of salt in his wounds? (beyond the obvious of not becomes a Florida property magnate?) He is 90% in cash - but could "rebalance"? If he doesn't do something inflation alone will eat at his pot.

There are a couple of posts saying pay off the mortgage and some saying why do that. He is faced with the same dichotomy of expertise he saw before Brexit.

That is the challenge for this forum's collective wisdom.