Stress Testing your Retirement plan....have you??

MK62

bostonerimus wrote: »

I retired in 2014 with the Dow Jones around 16k and cashed in some of my pension pot to buy a guaranteed lifetime income. The Dow is now at 25k so if I'd waited I would have done better. But how could I know that?

You couldn't.......decisions would be easy if we had the benefit of hindsight when we make them, but we don't. It's human nature to ponder over what could have been.....when you back a winner you wish you'd put more than a twenty on it.....if it loses you wish it had only been a fiver.....

I did what was strategically sensible at the time....I took some of my pot and bought enough lifetime income to make my retirement secure and left the rest to compound in the market. A good strategic decision might not result in the greatest possible return, but that doesn't necessarily make it a bad decision.

At the end of the day, we just have to hope that our good decisions will outweigh the not so good ones (even if they were sound at the time, they can still turn out poorly - they were made with all the information available at the time, but of course, that information is always incomplete).

Simply "converting to cash" is not a plan....or if it is it is a foolish one for most people.....what did your friend do with the cash...set up a savings bond ladder, Invest in a BTL or keep it a current account while inflation eats away at it?

True enough - however, it's pointless trying to tell a lottery winner that it's a poor "get-rich" plan - even though it is for most people.;)

ffacoffipawb

kidmugsy wrote: »

All this is true, alas. I hope I'm not being heartless - I take no joy in his misfortune. But the poster did start off by saying that he had had enough at the start of the year, and mentioned a portfolio of ITs. Perhaps that was the point for the IT-lover to swap to Personal Assets Trust, Ruffer Investment Company, Capital Gearing Trust, and the like. Or to consider whether he could have imitated their portfolios without paying their fees. Oh well: next time, eh?

No offence taken by the way.

YTD approximate return (ignoring dividends)
Personal Assets -2.50%
Ruffer -3.00%
Capital Gearing +2.00%

Not bad, perhaps I should have switched some into these. Probably wouldn't have helped much.

I am down 9% YTD including dividends (received and XD due). Could have been worse. Sadly in 2017 I only broke even.

I hope to be retired for a long time. Not a disaster, a bit sad but probably a wake up call.

JoeEngland

OldMusicGuy wrote: »

No. And how "lucky" he was depends how quickly he reinvested it, because he could have missed out on big gains as the market recovered.

I hold plenty of cash so that I will not be affected by market downturns in the short term. I planned that before I retired.

However, my goal of matching or beating inflation isn't working well so far, as my SIPP today is exactly where it was (within a few hundred pounds) in August 2017. It's down around 3.5% since its peak this year. But I am invested for the long term so hopefully that's not a concern (get back to me in 5 years and we'll see).

Are you talking about the official inflation rate or your own inflation based on how it affects your expenditure?

DairyQueen

ffacoffipawb wrote: »

a bit sad but probably a wake up call.

A learning experience. I bet there are plenty with worse performance but they are keeping their heads down.

Ironically, a few weeks ago I discovered that one of husband's DCs had been the subject of 'retirement profiling' for 18 months. By the time this came to light 75% of the funds had been transferred from equities to fixed assets. I spent the next two weeks nagging OH to switch-off the danged profiling. This was achieved last week. Interesting timing.

I now have a credibility problem.

Even when you win you lose.

OldMusicGuy

DairyQueen wrote: »

I spent the next two weeks nagging OH to switch-off the danged profiling. This was achieved last week. Interesting timing.

I did the same thing in February - I felt I was holding too much cash so moved 100K into a multi-asset fund 2 days before the correction. It had recovered its losses from February over the year but of course is now underwater again. If I hadn't done that, I would be in a better position now than I am, even allowing for inflation. But as I intend holding that investment for at least 5 years or longer I am confident it will have time to grow before I need to sell it.

Tell your OH he will just have to keep working a bit longer until that DC pot recovers I don't think he was showing much intention to retire, so maybe you have given him the excuse he needs....:rotfl:

OldMusicGuy

JoeEngland wrote: »

Are you talking about the official inflation rate or your own inflation based on how it affects your expenditure?

For my long term plan, I would like my investments to match "official" inflation. Some of these investments will be our "backstop" for care home fees if needed, and that's something I can't control. I've done the long term plan based on today's numbers and have to assume that care home fees will rise at least in line with inflation.

I'm not concerned about "official" inflation impacting my large cash holdings. I think people get far too worked up about inflation, which IMO is pretty much irrelevant in a 3 to 5 year timeframe (if it stays at current levels).

I'm currently holding at least five years cash and am getting an average of 1.8% interest. When we downsize next year, we could have enough cash to last us 10 years. I'm not too worried if that is earning slightly below "official" inflation, because in the next 10 years we will control our personal inflation rate. For example, we have reduced our water usage by 30% through simple economy measures. I've reduced our pet insurance costs by over 10% by shopping around and choosing a slightly lower level of cover.

shinytop

Through general laziness, inertia and lack of planning I never got around to putting about £60k of cash ISAa into S&S over the last year. Kind of glad I didn't now but I know the 'do nothing' approach won't always work.

Malthusian

shinytop wrote: »

Through general laziness, inertia and lack of planning I never got around to putting about £60k of cash ISAa into S&S over the last year.

I'm guessing that £60k has been in cash for considerably longer than just the last year (it takes some time to accumulate £60k in cash ISAs thanks to the yearly allowance, and you didn't mention cashing out of S&S ISAs). Were you equally glad in the previous years when you lost money by leaving it in cash?

shinytop

not much longer as it's ISA allowances x 2. Overall I'm happy with my inactivity.;)

ffacoffipawb

Thrugelmir wrote: »

CTY - UK markets out of favour. Investors prefer global (FAANGs) Though Nasdaq moved sizably today.

ADIG - Not a trust I'm familiar with. Not personally keen on trusts that hold trusts.

MYI - 5 year performance doesn't look good

If dividends are maintained at current levels at least you'll be gaining from reinvestment as the market gyrates.

ADIG sold today (27,000 shares, about £32,000) for a 16% loss (£5,500 ish) (breakevenish with dividends). Has held up OK this month but going nowhere really.

SIPP now at 17% cash. Two more sales by summer for my 25% PCLS.

Sold SCAM last week for a small gain (plus dividends).