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

Sea_Shell

Thrugelmir said:

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. 

That depends how you define "lose".

In the short, medium, or long term or completely, for ever!!!

I doubt many people's investment risk assessments include it all being wiped out, never to recover!! 

Thrugelmir

Sea_Shell said:

Thrugelmir said:

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. 

That depends how you define "lose".

In the short, medium, or long term or completely, for ever!!!

I doubt many people's investment risk assessments include it all being wiped out, never to recover!! 

Investments by their very nature fluctuate in value. To be sure of a positive return on equities , using historical data,  you'd need to hold them for a minimum of 12 years. Any period less than this, and you could be forced to realise a loss if circumstances dictated. The severity of the current situation hasn't fully hit home as yet. As the focus is on today rather than tomorrow. 

Anonymous101

Thrugelmir said:

Investments by their very nature fluctuate in value. To be sure of a positive return on equities , using historical data,  you'd need to hold them for a minimum of 12 years. Any period less than this, and you could be forced to realise a loss if circumstances dictated. The severity of the current situation hasn't fully hit home as yet. As the focus is on today rather than tomorrow. 

I've got to disagree with that. Equity prices don't just represent today, they also reflect likely future value. If you don't agree with the pricing level which that results in that's a different issue but it can't be the case that its just not factored in.
I'm a great believer in the "wisdom of crowds" theory and think markets are a great early indicator of future social conditions. I never really understand when people comment that such and such isn't "priced in".... everything is priced in. If you can think of a scenario someone else will have also thought of it and that will then be reflected in their thoughts on pricing. Of course hindsight is a wonderful thing and on reflection the market can be shown not to have assessed the likelihood of something correctly, mistakes can be made, risk not appropriately reflected or something ugly coming over the hill (corona virus) not fully understood, but its just not possible to leave something out. The market always represents today's best estimate of value.

Sea_Shell

I've just seen it posted that Santander's Regular Saver offering is now a whopping....0.75% !!!!   WOW.

We've got two of the 3% ones maturing in June.   Not sure we'll be bothering with the replacement product.    

It's getting increasingly hard to know what to do for the best, especially regarding our cash pot.   We want to keep a substantial amount in cash (5 years or so), so as to not have to touch investments, but the rates are getting so low, and you find yourself scrabbling around for 1.5% deals.    As each account matures, our average rate is plummeting.   We're currently getting 2.11%.

Who can say what is a "reasonable amount" to hold in cash at the moment.   Outgoings are all over the place, as we are unable to spend on the things we'd planned on spending on.   We'd used £15k as a budgeted figure, but we're on course to have only spent about £9k this year, if things carry on as they are.

Luckily (or he would say by judgement), DH put a good chunk of our cash in a 5 year, 2.2% account, which still has 17 months to run.   This is designed to bridge the gap between 55-67, should investments still not be looking great at that time.

Heaven only knows what the lie of the land will be in 17 months time!!!

shinytop

It looks like you've made (or saved) £9k, at least partly because of the current situation. That's going to more than offset any loss of interest because of rate reductions and will also cover any reduction in drawdown you might want to make (e.g. 3% instead of 4%).  Result!  

Just trying to be positive 

I have a chunk of cash in a SIPP earning nothing and some in Marcus.  Average will be less than 1% but I consider it a bit like insurance - if nothing happens I've lost a little and if there's a huge crash I'll save a lot. 

Thrugelmir

Anonymous101 said:

Thrugelmir said:

Investments by their very nature fluctuate in value. To be sure of a positive return on equities , using historical data,  you'd need to hold them for a minimum of 12 years. Any period less than this, and you could be forced to realise a loss if circumstances dictated. The severity of the current situation hasn't fully hit home as yet. As the focus is on today rather than tomorrow. 

I've got to disagree with that. Equity prices don't just represent today, they also reflect likely future value. If you don't agree with the pricing level which that results in that's a different issue but it can't be the case that its just not factored in.

I'm only stating factual historical data. If one is a forced seller in a depressed market. Invest for long enough and you'll ride the roller coaster. 

Anonymous101

Thrugelmir said:

Anonymous101 said:

Thrugelmir said:

Investments by their very nature fluctuate in value. To be sure of a positive return on equities , using historical data,  you'd need to hold them for a minimum of 12 years. Any period less than this, and you could be forced to realise a loss if circumstances dictated. The severity of the current situation hasn't fully hit home as yet. As the focus is on today rather than tomorrow. 

I've got to disagree with that. Equity prices don't just represent today, they also reflect likely future value. If you don't agree with the pricing level which that results in that's a different issue but it can't be the case that its just not factored in.

I'm only stating factual historical data. If one is a forced seller in a depressed market. Invest for long enough and you'll ride the roller coaster. 

Sorry I wasn’t clear, I agree with your comments on the 12 year investment horizon, as you say the data is there on that. I was more taking issue with your comment that the severity of the current situation hasn't fully hit home... I think it absolutely has within markets.

enthusiasticsaver

I have just read the last few pages and interesting discussions both on holidays and investments. 
We booked three holidays this year as this was our first big year with us both retired, I was 60 in February and the grandchildren are old enough for our daughter and son in law not to need so much support from us.  Little did we know what would happen.  We did our Caribbean cruise in February and returned mid Feb.  Although it was lovely I twisted my ankle the first day on board and had to get around with the air boot and crutches so we had planned to  rebook the same cruise for next February but held off.  We have a UK holiday for extended family booked for a months time but in current circumstances Centre Parks have suggested we do not pay the balance until a week before hand.  I doubt that will go ahead.  We also have a Canadian Rockies, Niagara Falls and Vancouver trip booked for early September and I am not sure if that will go ahead either.  At the moment I am leaning towards asking if we can delay by a year until a vaccine is found and there is some sort of global herd immunity. I think I will be highly unlikely to book overseas holidays for a few years now.  Cruises are off our radar certainly. 

On the subject of investments, like many others we delayed taking a drawdown from our pot in March due to the markets being so volatile.  I hear the advice we should not worry about the state of the market but obviously to get to the target amount we were due to draw on more units would have had to be sold.  I have always followed the maxim sell high and buy low and luckily we have a large cash buffer so can do without it this year and possibly next year too especially if we will not be doing big holidays. We can manage easily on our DB pensions and cash buffer. I would rather not sell at the moment unless forced to do so. 

happyandcontented

We are in a similar boat, two holidays down and one to go in October but it is to NY and Canadian cruise, so that doesn't seem likely or even desirable now. I will take early retirement in June as I work in a college and will not go back in the current climate. We had budgeted 12k for the three holidays and gradually the refunds are coming in. So, a no spend on holidays year is looking very likely for 2020. 

Next year OH retires early and it is our Ruby Wedding Anniversary, so we had big long haul plans for Australia/New Zealand and India, but whether that will happen is obviously up in the air.

We are in the process of transferring a DB pension of c960k and we hope to time the markets right, but we have kept back 4 years income in cash to ride the worst of the markets we hope! We also have other cash pots, further DC pots, and a mortgage-free property worth c 350k.

These are very uncertain times but I am optimistic that time will see markets right themselves.  and that we will just have to sit tight until then. I think we will emerge from lockdown to a very different world.

Sea_Shell

It's been a better day today.

Managed a 5 mile run this morning and the sun's been shining, so topped up those Vit D's.

We've had prosecco and I've been listening to some top feel good tunes, including...

Living on the Ceiling - Blancmange
Cake by the ocean - DNCE
Girls and Boys - Blur
Larger than life - Backstreet Boys
Song 4 Mutya (out of control) - Mutya Buena

It's a good day in lockdown land today.