Retierment income

Audaxer

OldMusicGuy wrote: »

That's why I was trying to explain to the OP about investing in diversified, multi-asset funds, not single shares/stocks, which is what you are talking about here. Investing in a single company, corporate bonds or unregulated investments involves the potential for complete capital loss. The only chance of complete capital loss with a diversified, multi-asset fund is when the entire economy goes to hell in a handbasket. Everything else is a question of timing,
I never said that the value of units will recover quickly, I said they would recover over time.

But there could still be some capital loss if he does need to sell capital for whatever reason before it has a chance to recover. I know from previous posts that you, like me, hold a large amount in cash savings. If you are so confident of your investment capital not being at any risk of loss, why do you hold so much in cash rather than being fully invested?

OldMusicGuy

Audaxer wrote: »

But there could still be some capital loss if he does need to sell capital for whatever reason before it has a chance to recover. I know from previous posts that you, like me, hold a large amount in cash savings. If you are so confident of your investment capital not being at any risk of loss, why do you hold so much in cash rather than being fully invested?

Because I am using a bucket strategy. I am 100% confident that my significant multi-asset fund holdings will show a positive return over the 10 years or longer that I plan to hold them. I am insuring myself against pound cost ravaging early in my retirement by using cash to give me a risk free 5 to 10 years. I have plenty of money in my DC pot so I am insuring against downside risk.

If I was Jamesd I would be trusting in safe withdrawal rates and Guyton Klinger but I personally am not confident in that approach for a number of reasons (a lot of which are psychological). Hence my bucket strategy, and hence my advice to the OP to adopt a similar strategy if he is a "nervous" investor.

Like I keep saying, I will only actually lose capital if I sell at a low price. My strategy means that I should not be under pressure to sell anything when I don't want to. I can see myself moving my equity/bond investments into annuities later in life (post 75 age) on a phased basis.

Audaxer

OldMusicGuy wrote: »

Because I am using a bucket strategy. I am 100% confident that my significant multi-asset fund holdings will show a positive return over the 10 years or longer that I plan to hold them. I am insuring myself against pound cost ravaging early in my retirement by using cash to give me a risk free 5 to 10 years. I have plenty of money in my DC pot so I am insuring against downside risk.

If I was Jamesd I would be trusting in safe withdrawal rates and Guyton Klinger but I personally am not confident in that approach for a number of reasons (a lot of which are psychological). Hence my bucket strategy, and hence my advice to the OP to adopt a similar strategy if he is a "nervous" investor.

Like I keep saying, I will only actually lose capital if I sell at a low price. My strategy means that I should not be under pressure to sell anything when I don't want to. I can see myself moving my equity/bond investments into annuities later in life (post 75 age) on a phased basis.

Thanks, I agree as the OP is cautious he should consider a similar strategy. I am also holding a lot in cash savings currently and have investments in VLS40 and VLS60 and an income portfolio of single sector funds of around 56% equities. I am planning to move more cash into my investments and trying to decide whether to put it into the income portfolio which yields around 4%, or another multi asset fund. I'd be interested to know what multi asset funds you have invested in if you wouldn't mind sharing.

bostonerimus

OldMusicGuy wrote: »

Because I am using a bucket strategy

The "bucket strategy" is just a way to describe a particular asset allocation and to various extents it's how most people do things in retirement....they have some cash and some investments. There have been lots of books written about bucket strategy and people buy them when all they need to do is to have a sensible allocation and make sustainable withdrawals from the various asset types they hold.

Sue58

I prefer to hold single sector funds or IT's for my 60% equities and the remaining 40% is split between a good cash buffer and a Strategic Bond. Although, at the moment I am contemplating exiting the Strategic Bond fund and moving into CGT (Capital Gearing Investment Trust).

Sue58

Audaxer wrote: »

Thanks, I agree as the OP is cautious he should consider a similar strategy. I am also holding a lot in cash savings currently and have investments in VLS40 and VLS60 and an income portfolio of single sector funds of around 56% equities. I am planning to move more cash into my investments and trying to decide whether to put it into the income portfolio which yields around 4%, or another multi asset fund. I'd be interested to know what multi asset funds you have invested in if you wouldn't mind sharing.

IMHO I believe a portfolio of single sector funds/IT's with a good cash reserve and bonds is more the way forward than multi asset funds but obviously it goes without saying each to their own.

dunstonh

Sue58 wrote: »

IMHO I believe a portfolio of single sector funds/IT's with a good cash reserve and bonds is more the way forward than multi asset funds but obviously it goes without saying each to their own.

Me too. However, a portfolio of single sector funds needs to be built with a strategy. If someone doesnt have that knowledge and understanding then a multi-asset fund would be better.

We see quite a lot of posts on this board where people try and build bespoke portfolios and end up investing above their risk profile/capacity for loss, random allocations ("oh i think I will stick 10% in that one") and fashion investing. You can make more mistakes with a bespoke portfolio than a multi-asset fund.

Sue58

dunstonh wrote: »

Me too. However, a portfolio of single sector funds needs to be built with a strategy. If someone doesnt have that knowledge and understanding then a multi-asset fund would be better.

We see quite a lot of posts on this board where people try and build bespoke portfolios and end up investing above their risk profile/capacity for loss, random allocations ("oh i think I will stick 10% in that one") and fashion investing. You can make more mistakes with a bespoke portfolio than a multi-asset fund.

I totally agree with your comments and I have made mistakes with my own portfolio however hopefully I have learnt from this after doing a lot more research.

Audaxer

Sue58 wrote: »

IMHO I believe a portfolio of single sector funds/IT's with a good cash reserve and bonds is more the way forward than multi asset funds but obviously it goes without saying each to their own.

Thanks, I like ITs, especially the ones that have a history of growing dividends. My only reservation about ITs is that they are not covered by the Financial Services Compensation Scheme.

Sue58

Audaxer wrote: »

Thanks, I like ITs, especially the ones that have a history of growing dividends. My only reservation about ITs is that they are not covered by the Financial Services Compensation Scheme.

I fully understand that but yet again IMHO, long standing investment trusts such as Bankers, F&C or City of London would not make me lose any sleep.