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

ffacoffipawb

kidmugsy wrote: »

Why didn't you lock it in?

Hindsight is more reliable than foresight sadly.

DairyQueen

OP's thread is timely. The market's performance over the last month provides an opportunity to review the theoretical stress-testing, and attitude to risk, against reality before the nasty stuff really hits the fan.

This is the first time that markets have taken a bump since I began managing a decent sized portfolio. I am hoping that I can remain sufficiently emotionally detached to follow my plan.

The really tough decisions are yet to come. If the fall continues then rebalancing will be 'interesting'. My strategy includes an annual review (due Nov-Jan) during which I sell the best performing sectors/funds and buy the worst.:eek:

Think I may need a glass or two before hitting the 'buy' button.

Portfolio is currently still marginally up on the year (0.4%) but down 5.7% on the month. Nothing significant yet (says she calmly ignoring the butterflies currently performing somersaults in her stomach).

Note to self: this is a learning opportunity.

OldMusicGuy

ffacoffipawb wrote: »

Cash protection in a SIPP is limited so could lose a lot more. Interest wouldnt cover the fees either.

There's the opportunity cost though. If you are planning to retire soon, you need some of your money available. If the markets are going down by 10 to 20%, your cash isn't, despite small inflation and fees. If you have an HL SIPP, there is no cost in holding cash (just inflation, which I think is irrelevant in the short term).

I retired seven months ago and have around 23% of my SIPP sat as cash. That, plus savings, gives me at least a 5 year secure buffer, probably more if I need it. That way the early years of my retirement are protected from market swings (which I think are much more likely in the next 5 years than the previous 5). If you are risk averse (like me), that strategy allows you to sleep at night.

ffacoffipawb

OldMusicGuy wrote: »

There's the opportunity cost though. If you are planning to retire soon, you need some of your money available. If the markets are going down by 10 to 20%, your cash isn't, despite small inflation and fees. If you have an HL SIPP, there is no cost in holding cash (just inflation, which I think is irrelevant in the short term).

I retired seven months ago and have around 23% of my SIPP sat as cash. That, plus savings, gives me at least a 5 year secure buffer, probably more if I need it. That way the early years of my retirement are protected from market swings (which I think are much more likely in the next 5 years than the previous 5). If you are risk averse (like me), that strategy allows you to sleep at night.

I shall be moving to a 30% cash position for the Summer. For PCLS only. Now at 90% LTA so that tax is less of an issue than it was last month when I was at 105% LTA.

Hopefully the LTA will go up slightly in April, though I would have expected an announcement last week. Too much hope that Spreadsheet Phil will abolish it, even at the cost of a reduced AA.

marlot

DairyQueen wrote: »

...Portfolio is currently still marginally up on the year (0.4%) but down 5.7% on the month...

My DIY portfolio is up 3.6% on the YTD, but down 6.7% from the 1st Oct. Fairly heavily invested in US trackers so fluctuates considerably as the £ moves. If we get a decent Brexit deal I might lose a lot more!

My Scottish Widows lifesyled pension is down 3.1% YTD, and down 6% from 1st Oct.


As you say, a time to hold your nerve!

Thrugelmir

DairyQueen wrote: »

Think I may need a glass or two before hitting the 'buy' button.

Maintain a clear rational head. :rotfl:

ffacoffipawb

DairyQueen wrote: »

Portfolio is currently still marginally up on the year (0.4%) but down 5.7% on the month.

I can but dream of figures like that. Down 10% on the year and maybe 13% on the month.

As JC would say "could be worse ..."

vulcanrtb

Anyone considering converting their pension pot to cash for a period of volatility? My neighbour converted his to cash (not drawing on it, just converted) just prior to the credit crunch. I don't know why he did it, but he did. Lucky man as it turned out!

kidmugsy

ffacoffipawb wrote: »

Hindsight is more reliable than foresight sadly.

Feeble excuse. If you had accumulated enough then there is no good case for risking it to make more that you had judged you needed. If you'd still needed growth, that would have been different.

As an American writer says "if you've won the game, stop playing".

MK62

kidmugsy wrote: »

Feeble excuse. If you had accumulated enough then there is no good case for risking it to make more that you had judged you needed. If you'd still needed growth, that would have been different.

As an American writer says "if you've won the game, stop playing".

However, you never really know at the time if you've won the game, as you never know how much you really need in your pot today, as you don't know what will happen in the future (inflation running rampant, global trade war and recession, market crash....then again....years of below normal returns etc.....hopefully not, but possible).

Plus, you have to then add in the issue of differentiating need from want......;)