New Post Advanced Search

Coronavirus: The latest from MSE


The MSE team is working extremely hard to keep the info we have about your travel rights, cancellation rights, sick pay (and more) up to date.
The official MSE guides: NEW MSE Coronavirus Guides

NEWSFLASH 31/3
RESCUE FLIGHTS FOR STRANDED BRITS * SCHOOL MEALS VOUCHERS * BRIGHTHOUSE COLLAPSES

Uncomfortable ...

12 replies 1.6K views
ffacoffipawbffacoffipawb Forumite
3.3K posts
Part of the Furniture 1,000 Posts Photogenic
✭✭✭✭
I did a spreadsheet analysis at the start of the year. It showed me that my required drawdown with annual indexation, plus DB and state pension when available, was sustainable based on equity returns of -20%, -20% then +4% pa thereafter (thus allowing for a bad sequence of return risk). Inflation assumed to be 3%.

Drawdown is now 3.00% as I have reduced it a bit.

My SIPP is 100% equity via Investment Trusts.

I am now down just 10% (bearing in mind my worse case scenario above) on capital value this week (plus whatever gets thrown at me today which already looks bad) and getting a bit worried. I am sure things will be OK but this Coronavirus stuff is something we havent seen before.

EDIT: Ran the same spreadsheet with todays reduced values and I run out of SIPP assets at at age 85 though the DB will continue. This is still OK as I still have my ISAs and other non pension assets so probably all is fine. It doesnt stop the worry, however I am glad I didnt become a 'One More Year' work person.
Retired Cymro

🏴󠁧󠁢󠁷󠁬󠁳󠁿 Cymru am Byth 🏴󠁧󠁢󠁷󠁬󠁳󠁿
«1

Replies

  • princeofpoundsprinceofpounds Forumite
    8K posts
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    ✭✭✭✭
    Not sure why you're too worried. World markets are down 4% year-to-date, which is actually when you ran your scenario. Even if you measure from the very peak, you're only a quarter of the way to your lower-limit scenario. Based on history, 4% is somewhat conservative, and would be even more conservative after a straight market decline of 36%, although I understand why you are building that in.

    I happen to think it all get a bit worse before things stabilise, but even if markets fall another 10% I wouldn't be overly worried for you.
  • ffacoffipawbffacoffipawb Forumite
    3.3K posts
    Part of the Furniture 1,000 Posts Photogenic
    ✭✭✭✭
    Not sure why you're too worried. World markets are down 4% year-to-date, which is actually when you ran your scenario. Even if you measure from the very peak, you're only a quarter of the way to your lower-limit scenario. Based on history, 4% is somewhat conservative, and would be even more conservative after a straight market decline of 36%, although I understand why you are building that in.

    I happen to think it all get a bit worse before things stabilise, but even if markets fall another 10% I wouldn't be overly worried for you.
    Just a belt and braces approach. Assume the worst and hope for the best I guess.
    Retired Cymro

    🏴󠁧󠁢󠁷󠁬󠁳󠁿 Cymru am Byth 🏴󠁧󠁢󠁷󠁬󠁳󠁿
  • MK62MK62 Forumite
    609 posts
    500 Posts Second Anniversary
    ✭✭
    If you are feeling nervous/uncomfortable over this current drawback's effect on your SIPP, then "My SIPP is 100% equity via Investment Trusts" probably isn't helping there tbh........perhaps de-risk your SIPP a tad..... ;) 
  • BravepantsBravepants Forumite
    812 posts
    Ninth Anniversary 500 Posts Photogenic
    ✭✭✭
    Didn't you just buy some Royal Dutch Shell? So you can't really be THAT worried surely?
    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
    Be brave enough to invest against the herd!
  • MarkCarnageMarkCarnage Forumite
    355 posts
    100 Posts Name Dropper
    ✭✭
    Your drawdown rate can't be far above the natural yield? Which I'm guesstimating at around 2% unless it's tilted a lot to income or growth.
    If your worries on the portfolio prove true, then we will all have a lot more to worry about! 
  • edited 27 February at 12:07PM
    ffacoffipawbffacoffipawb Forumite
    3.3K posts
    Part of the Furniture 1,000 Posts Photogenic
    ✭✭✭✭
    edited 27 February at 12:07PM
    Didn't you just buy some Royal Dutch Shell? So you can't really be THAT worried surely?
    A small holding in a smaller drawdown pot with Hargreaves Lansdown which is not being drawn down. This pot comes on line at 75 in my projection with 25% PCLS ignored as assumed to be in excess of LTA so HMG gets that. An 8% yield which I couldnt resist. Had my eye on Shell at £21 after it dropped from £25 but got it for under £18.
    Retired Cymro

    🏴󠁧󠁢󠁷󠁬󠁳󠁿 Cymru am Byth 🏴󠁧󠁢󠁷󠁬󠁳󠁿
  • ffacoffipawbffacoffipawb Forumite
    3.3K posts
    Part of the Furniture 1,000 Posts Photogenic
    ✭✭✭✭
    Your drawdown rate can't be far above the natural yield? Which I'm guesstimating at around 2% unless it's tilted a lot to income or growth.
    If your worries on the portfolio prove true, then we will all have a lot more to worry about! 
    IT portfolio yields 4% from year 3 onwards hence assumes 4% dividend and zero capital appreciation. Year 1 and 2 are 4% dividend plus 20% drop at start and 1st anniversaries with no offsetting gains in these two years.

    Pessimistic? Possibly but more likely to be able to react if things go mammaria verticulus.
    Retired Cymro

    🏴󠁧󠁢󠁷󠁬󠁳󠁿 Cymru am Byth 🏴󠁧󠁢󠁷󠁬󠁳󠁿
  • BravepantsBravepants Forumite
    812 posts
    Ninth Anniversary 500 Posts Photogenic
    ✭✭✭
    Didn't you just buy some Royal Dutch Shell? So you can't really be THAT worried surely?
    A small holding in a smaller drawdown pot with Hargreaves Lansdown which is not being drawn down. This pot comes on line at 75 in my projection. An 8% yield which I couldnt resist. Had my eye on Shell at £21 after it dropped from £25 but got it for under £18.
    Yes indeed, the 8% yield is a tempter! I have my eye on it, but I'd also like some CTY at some point.

    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
    Be brave enough to invest against the herd!
  • edited 27 February at 12:11PM
    ffacoffipawbffacoffipawb Forumite
    3.3K posts
    Part of the Furniture 1,000 Posts Photogenic
    ✭✭✭✭
    edited 27 February at 12:11PM
    Didn't you just buy some Royal Dutch Shell? So you can't really be THAT worried surely?
    A small holding in a smaller drawdown pot with Hargreaves Lansdown which is not being drawn down. This pot comes on line at 75 in my projection. An 8% yield which I couldnt resist. Had my eye on Shell at £21 after it dropped from £25 but got it for under £18.
    Yes indeed, the 8% yield is a tempter! I have my eye on it, but I'd also like some CTY at some point.

    I have CTY as one of my 13 IT's in my main SIPP which is in drawdown. Not the worst of performers which are ASEI and LTI , though the latter was only bought this year so would be worse if I had paid nearly double last year!

    The SIPP has a year of dividends to pay drawdown so is technically 96% equity not 100%, not that it makes much difference!
    Retired Cymro

    🏴󠁧󠁢󠁷󠁬󠁳󠁿 Cymru am Byth 🏴󠁧󠁢󠁷󠁬󠁳󠁿
  • SailtheworldSailtheworld Forumite
    728 posts
    Eighth Anniversary 500 Posts
    ✭✭
    Are you retired and already in drawdown awaiting state pension age?

    If you're that worried go back to work for a year. That'll be a year of life funded by work and a year's less draw on investments.
Sign In or Register to comment.

Quick links

Essential Money | Who & Where are you? | Work & Benefits | Household and travel | Shopping & Freebies | About MSE | The MoneySavers Arms | Covid-19 & Coronavirus Support