Investing during retirement

ams25

Being early retired in my 50s, like some others here, I use a 3 bucket approach

* 2 or 3 years in cash
* at least 5 years in safer investments, ie bonds
* the rest in equities for long term growth and inflation protection.

Like OMG I have more cash than I should, but the numbers appear to work so I prefer to take less risk at the front end of retirement (and 6 years from a DB that will cover much of our essential costs, but not more and 14 years from SP.) But that said the equity bucket has some decent growth tilts such as smaller companies and emerging markets and I see no reason not to be reasonably agressive with this bucket. Hopefully I won't need to draw from it for a good few years.

Stubod

..unfortunately we came to "investing" fairly late as in the good times I was happy to search out the best savings accounts as in the good old days these normally beat inflation. We "retired" 2 years ago and so far our investments over this time have only just achieved an annual equivalent gain" of about 0.5%. (ie would have been better in a "normal" savings account).

We never expected "huge" gains, and would be happy to just match inflation. (Our long term "budget" assumes interest rates at about 50% of inflation for safety).

I am now thinking that as soon as our "investments" have recovered (assuming they do), I may then put them all into a "normal" savings account. I know that we will then have "inflation" risk, but I feel that is more predictable than "investment" risk?!..but knowing my luck probably not!

Thrugelmir

Stubod wrote: »

..unfortunately we came to "investing" fairly late !

Don't be lulled into feeling you missed something in the past decade. No one foresaw the intervention of Central Banks following the GFC. Policy has yet to be reversed. Somebody is going to incur pain. Not everbody can end up being a winner. As takes two parties to conduct a trade.

bostonerimus

Stubod wrote: »

.
I am now thinking that as soon as our "investments" have recovered (assuming they do), I may then put them all into a "normal" savings account. I know that we will then have "inflation" risk, but I feel that is more predictable than "investment" risk?!..but knowing my luck probably not!

I think you might be committing some classic financial errors.

I don't know the structure of your portfolio, but something simple like VLS60 is up 6% over the last 2 years...so do you have an appropriate asset allocation?
You are trying to time the market.
Then you might be making the mistake of being too conservative by going to cash.

Stubod

bostonerimus wrote: »

I think you might be committing some classic financial errors.

I don't know the structure of your portfolio, but something simple like VLS60 is up 6% over the last 2 years...so do you have an appropriate asset allocation?
You are trying to time the market.
Then you might be making the mistake of being too conservative by going to cash.

..thanks for the advice, we are currently with an FA and have a "medium risk" portfolio....as ever "our past years performance (up to 2 years ago), has averaged 8%" pa.
We are aware that the last few months has been fairly volatile S&S's wise but we have some funds in "cash" so we don't need to do anything for a while and we are aware that "over the long term" S&S "have" outperformed cash....just sods law that since we have "retired" they have taken a bit of a downturn....would have been delighted with 6%, (or anything over inflation for that matter!)

darkidoe

Linton wrote: »

Our finances are split 3/7 in 100% equity growth, 2/7 in income generation from both dividends and interest, and 2/7 in cash+wealth preservation. The income tranche, together with annuities, SP and a small DB pension, will cover all our day to day expenditure. The Cash/WP provides cover for large one off expenditures, emergencies and enables me to sleep at night despite the higher risk/return strategy of the growth portfolio.



Every year, around this time, the 3 portfolios are rebalanced against each other to maintain the allocation prior to rebalancing the investments within each.


As it happens the overall allocation is about 60% equity and 40% bonds+cash. However arriving at this figure through a logical top down analysis gives me a lot more confidence than would have been achieved had 60/40 been chosen just because it seemed right at the time. As circumstances change and we get older I am sure the overall allocation to equities will change, but it will change because of changes to the 3/2/2 portfolio allocation whioch in turn will arise from changes to objectives..

Interesting. I like your top down approach with
1) Percentage allocation to different pots according to specific goals, Growth, Income, Wealth Preservation
2) Specific Pot asset allocation to meet the specific goals of that pot.

This corresponds to our changing aims and goals in life which may evolve as we grow older. Not the simplest approach but very methodical.

schiff

Would these constitute a reasonable spread at a reasonable cost without additional concerns over and above the usual fluctuations in the markets? A collection to leave alone (within reason). For a £20K cash ISA maturing next month.

Not particularly looking for above average growth or above average income:

L&G US Index Trust
Royal London UK Equity Income M Acc
HSBC Global Strategy Balanced Portfolio C Acc
LS 40% Equity Fund Acc

In recent times I've read encouraging reports about them, both on here and elsewhere.

Comments gratefully received

Thrugelmir

schiff wrote: »

Not particularly looking for above average growth or above average income:

Danger is that they maybe below what you need to maintain the standard of living you aspire to.

schiff

I am into retirement and have the standard of living I aspire to

I just want to maintain it hence not really needing above average growth and income.

Do the choices I've listed have a decent chance of achieving that - all things being equal of course?

bostonerimus

Well, your portfolio has lots of asset duplication and as you haven’t given us an idea of the ratios of the funds it’s hard to comment.