It's time to start digging up those Squirrelled Nuts!!!!

cfw1994

Psychologically speaking.....to *me*, the pot is the pot.   
I don't think I am going to 'overthink' what the value of very pound that I would take out.   
Of course, I am still working and not touching it, so maybe that will change, & certainly where there may be several sources (drawdown, ISA, GIA, Premium bonds (ie - cash), there is certainly some thought to go into it....
I have something similar on some US work stock options....some bought in the distant past are way up in value, some bought the past 18 months under water.   There it *does* matter, as there are tax implications when cashed, so I need to track those quite closely.   The drawdown pot?   Less so.   For now ;-)

Notepad_Phil

Sea_Shell said:

On a different tack....what about the psychology of drawing down on investments?

As we know investments are for the long term, say 10 years.

Say you have been putting money away into an S&S ISA for over 10 years, with some of your first £££ buying units at, say, £1 each.   You have also recently put in money at say £1.70 a unit, as the price over that time has increased.    If you then need (want) to pull some money out of that fund, at say £1.50 per unit, do you tell yourself you're withdrawing your OLD units, that have made money, or do you feel that you are pulling out your NEW units that have lost money???

Or if you'd been putting £1000 a month away for 10 years, stop, and then start withdrawing it at £1000 per month, then your money (each £1000) has always been invested for at least 10 years.  

Psychologically, the easiest way of dealing with this may have been to have a new fund for each tax year, then only draw from the oldest fund, I suppose, but that horse has bolted!!

Thoughts?

I'm early retired and hence am in the drawdown phase but my strategy had coincidentally meant that I didn't have any such concerns as I had invested globally and had been living off the natural yield without needing to sell at any time - apart from the occasional rebalancing of my funds.

This had been fine but obviously is now going to be under pressure with all the dividend cuts that are going on. Luckily I have a big chunk of cash set aside which means that even should dividends dry up completely then we can continue with our current lifestyle for many years to come.

However if I did ever need to start selling down any of the funds then my take on it would be that having this pot of funds that I was able to use was the reason for having invested in the first place. I don't think it would make any difference as to whether I thought it was old or new money that I was drawing from.

Anonymous101

Sea_Shell said:

On a different tack....what about the psychology of drawing down on investments?

As we know investments are for the long term, say 10 years.

Say you have been putting money away into an S&S ISA for over 10 years, with some of your first £££ buying units at, say, £1 each.   You have also recently put in money at say £1.70 a unit, as the price over that time has increased.    If you then need (want) to pull some money out of that fund, at say £1.50 per unit, do you tell yourself you're withdrawing your OLD units, that have made money, or do you feel that you are pulling out your NEW units that have lost money???

Or if you'd been putting £1000 a month away for 10 years, stop, and then start withdrawing it at £1000 per month, then your money (each £1000) has always been invested for at least 10 years.  

Psychologically, the easiest way of dealing with this may have been to have a new fund for each tax year, then only draw from the oldest fund, I suppose, but that horse has bolted!!

Thoughts?

If you must get into the unit price then wouldn't the best measure be the average cost across the units irrespective of when they were purchased against the current price?
It all sounds massively over complicated to me. I don't really think about it as the individual components of the pot but more the pot as a whole. The price of what you bought the units for is irrelevant, the only important thing to my mind is whether the pot is large enough to sustain a level of spending.

michaels

I guess you just need to think that you have put in £x altogether and it has increased to £y - adjust for inflation and hopefully it still looks much better than you could have made in a savings account and you decide that investing was the right decision.

Edit:  My DWs Fidelity platform, although criticised, at least shows the average annual return overall and for each holding - compare this to my Scottish Widows which all I can do is get a valuation for a specific date and see contributions and it is light years ahead.  Not sure how SW get away with this TBH

Stubod

..our SS "pot" has taken a bit of a battering, and I have still not actually looked at the actuals. We have been in SS ISAS for a few years and have never really done "that well", but have been happy to at least make a percent or two over savings accounts. Although we have been retired from full time work for two+ years we had only just started to draw down our pot last December. (Mainly because that's what it was there for, and it seemed daft not to).

At the advice of our IFA we decided to put this on hold for a while. (I am thankful that despite much IFA pressure that "we had too much in cash" I am now really glad that we have!).

Our pot was set up to fund the gap between finishing full time and State pensions in another 3/4 years, but there is still more than enough in, (assuming it does not drop too much further!)

So I am now considering going back to a monthly draw. Originally we planned to use the income for "traveling", but seeing as that is not going to happen anytime soon we would reduce the monthly drawdown somewhat.

All in all it will be a balancing act between drawing down cash and Investments.

coyrls

Psychologically, I look at drawdown as the opportunity to rebalance my portfolio and so I make an annual withdrawal from the asset class(es) that have performed the best to rebalance back to my model.  It helps that currently I am only withdrawing a small percentage that is almost certainly sustainable.  I guess in later phases where I will increase my percentage, I may find it more difficult but I will be maintaining a cash buffer so that I can avoid withdrawals if I consider it necessary.

Sea_Shell

Thanks all, I'm overthinking things ... again!!  (what else is there to do??!)

We do have large cash buffer, so in reality we shouldn't need to touch those ISAs for a while yet.  

We're also on the Fidelity platform.

Thrugelmir

Sea_Shell said:

On a different tack....what about the psychology of drawing down on investments?

As we know investments are for the long term, say 10 years.

Say you have been putting money away into an S&S ISA for over 10 years, with some of your first £££ buying units at, say, £1 each.   You have also recently put in money at say £1.70 a unit, as the price over that time has increased.    If you then need (want) to pull some money out of that fund, at say £1.50 per unit, do you tell yourself you're withdrawing your OLD units, that have made money, or do you feel that you are pulling out your NEW units that have lost money???

Or if you'd been putting £1000 a month away for 10 years, stop, and then start withdrawing it at £1000 per month, then your money (each £1000) has always been invested for at least 10 years.  

Psychologically, the easiest way of dealing with this may have been to have a new fund for each tax year, then only draw from the oldest fund, I suppose, but that horse has bolted!!

Thoughts?

Investments covers a broad spectrum of asset classes. That's where the "pots" are important. Do you review your portfolio every so often. To ensure it meets your objectives depending on where you are along the path. 

Sea_Shell

Thrugelmir said:

Sea_Shell said:

On a different tack....what about the psychology of drawing down on investments?

As we know investments are for the long term, say 10 years.

Say you have been putting money away into an S&S ISA for over 10 years, with some of your first £££ buying units at, say, £1 each.   You have also recently put in money at say £1.70 a unit, as the price over that time has increased.    If you then need (want) to pull some money out of that fund, at say £1.50 per unit, do you tell yourself you're withdrawing your OLD units, that have made money, or do you feel that you are pulling out your NEW units that have lost money???

Or if you'd been putting £1000 a month away for 10 years, stop, and then start withdrawing it at £1000 per month, then your money (each £1000) has always been invested for at least 10 years.  

Psychologically, the easiest way of dealing with this may have been to have a new fund for each tax year, then only draw from the oldest fund, I suppose, but that horse has bolted!!

Thoughts?

Investments covers a broad spectrum of asset classes. That's where the "pots" are important. Do you review your portfolio every so often. To ensure it meets your objectives depending on where you are along the path. 

Yeah, we do that.  Cash, a 20-60 fund, 100% fund, plus pensions (40-85 ish), plus DH s final salary ones.

We're still on course for 3% w/d rate, even on recently reduced values.

It was just the thought of putting £X in the ISA now, with savings rates being so pathetic, and maybe pulling it out again in under the 10 year period.

I understand the pot is the pot, regardless of when the money was invested.   Head knows that.  That's why I'm maxing out my pension contributions too.  But that won't be available to me for at least 6 years, unlike the ISA which I could raid tomorrow!!

Thrugelmir

Sea_Shell said:

Thrugelmir said:

Sea_Shell said:

On a different tack....what about the psychology of drawing down on investments?

As we know investments are for the long term, say 10 years.

Say you have been putting money away into an S&S ISA for over 10 years, with some of your first £££ buying units at, say, £1 each.   You have also recently put in money at say £1.70 a unit, as the price over that time has increased.    If you then need (want) to pull some money out of that fund, at say £1.50 per unit, do you tell yourself you're withdrawing your OLD units, that have made money, or do you feel that you are pulling out your NEW units that have lost money???

Or if you'd been putting £1000 a month away for 10 years, stop, and then start withdrawing it at £1000 per month, then your money (each £1000) has always been invested for at least 10 years.  

Psychologically, the easiest way of dealing with this may have been to have a new fund for each tax year, then only draw from the oldest fund, I suppose, but that horse has bolted!!

Thoughts?

Investments covers a broad spectrum of asset classes. That's where the "pots" are important. Do you review your portfolio every so often. To ensure it meets your objectives depending on where you are along the path. 

It was just the thought of putting £X in the ISA now, with savings rates being so pathetic, and maybe pulling it out again in under the 10 year period.

Matching inflation isn't a bad return. Only risk what you can afford to lose.