Low risk investment/s or save cash

masonic

Audaxer wrote: »

Nearly there but if there is a full blown equity crash soon, will that not put you back a good bit?

What if there is a full blown house price crash? Alex will get there even quicker

Alexland

Audaxer wrote: »

Nearly there but if there is a full blown equity crash soon, will that not put you back a good bit? You must have a much higher risk tolerance than me as in your position I would be tempted to clear more of the mortgage by cashing in some of the investments when they recover from this correction.

Maybe but as share prices go down my % exposure and future growth expectations go up so it all averages out. I started investing young so experienced the dotcom crash and the financial crisis and have learned not to care too much about current valuations and focus on long term projected return. I would be happy to be 100% equities if the right market opportunity developed so another full blown crash might still be a good thing for me.

Alex

Stevensuperbike

Wow you guys really know your stuff. Your way above my level of financial intelligence. Your spinning some quotes that will make my head spin for weeks haha. It's really good to know there are person/s of your calibre out there invested into this kind of stuff who are thoughtful enough to share your opinions and experience with others for no gain of your own. Like I said before I keep my expenses really low and try and keep my income / cash flow high as much as possible. I have friends who earn more than me and barely make ends meet every month.

Audaxer

Alexland wrote: »

I would be happy to be 100% equities if the right market opportunity developed so another full blown crash might still be a good thing for me.

If you did that, would you go back to 70% equities when the markets recovered? Sounds a bit like market timing, but I think it could work if you dialled back to your normal risk tolerance of 70% or 75% equities when markets recovered.

Alexland

Market timing is trying to predict future price movements which I agree is almost impossible to do with accuracy given how emotions, trading algorithms, news, etc change the markets.

My strategy is to say I don't know what is going to happen, have a 'normal' asset allocation but am willing to start increasing my exposure after a dip has occurred as there would be less drop to the bottom wherever that might be which I am also not going to try and judge.

Alex

steampowered

Audaxer wrote: »

Nearly there but if there is a full blown equity crash soon, will that not put you back a good bit?

A market crash would have very little relevance if you are investing for the long term. Especially if you are investing a consistent amount each month - which would average out the valleys and the hills.

The average long term return of the main stock markets over the past 60 years has been about 8-10%.

Unless you are planning to sell your shares in the next couple of years, it makes no difference that your shares have gone up and down in the interim.

Audaxer

steampowered wrote: »

Unless you are planning to sell your shares in the next couple of years, it makes no difference that your shares have gone up and down in the interim.

I agree but a crash does have an effect on people in retirement taking an income from their portfolio.

Audaxer

Alexland wrote: »

My strategy is to say I don't know what is going to happen, have a 'normal' asset allocation but am willing to start increasing my exposure after a dip has occurred as there would be less drop to the bottom wherever that might be which I am also not going to try and judge.

But would you also dial back your equity allocation once the markets have recovered to pre-crash levels, even although they may well start on another bull run?

Alexland

Audaxer wrote: »

But would you also dial back your equity allocation once the markets have recovered to pre-crash levels, even although they may well start on another bull run?

Yes once things have recovered then I would go back to my normal allocation.

Alex

Voyager2002

Stevensuperbike wrote: »

Wow you guys really know your stuff. Your way above my level of financial intelligence. Your spinning some quotes that will make my head spin for weeks haha. It's really good to know there are person/s of your calibre out there invested into this kind of stuff who are thoughtful enough to share your opinions and experience with others for no gain of your own. Like I said before I keep my expenses really low and try and keep my income / cash flow high as much as possible. I have friends who earn more than me and barely make ends meet every month.

It is all fairly simple once you get used to the ideas... do some reading and join in the conversation and soon it will all make sense.