Loss of 10% do I cut and run

Orby

In January Transferred out of dc pension 203,00 to Royal London Governed Portfolio 3 .Took 50,000 lump sum - portfolio of 153 now worth 142000. Not used personal allowance this year thinking of taking out tomorrow  45000 and paying 7000 tax rather than more losses. Intended to live off this the 153000 and 50000 lump over next 10 years when other pension kicks in. Unemployed and no other income. Financial Advisor on holiday !  This is supposed to be low risk (as advised) . 

badmemory

The idea of taking the lump sum is to tide you over things like this.  So no do not cut & run.  Even if it doesn't improve why would you want to pay a massive tax bill if you don't need to?

DairyQueen

If you are reliant on this pot for short-term income ( <10 years is short-term) then your FA should have positioned your portfolio against sequence of returns risk. As the pot has so far dropped less than 8% it appears that the job is a good'un.

Do not panic. Do nothing. Discuss with your FA at the earliest opportunity. It seems that your main problem is a lack information.

Yukster

It seems sensible, for those who are in the market to do nothing and wait it out.

I'm due to start a DC pension. My plan was to invest in a diversified fund/s but following the recent downturn, I am wondering whether I should invest in a cash fund to use this year's allowance,  wait for the right time and move to something like VLS 60 when the markets have stabilised?

Mick70

Yukster said:

It seems sensible, for those who are in the market to do nothing and wait it out.

I'm due to start a DC pension. My plan was to invest in a diversified fund/s but following the recent downturn, I am wondering whether I should invest in a cash fund to use this year's allowance,  wait for the right time and move to something like VLS 60 when the markets have stabilised?

The experienced posters on here with more knowledge than me will almost always say sit tight and dont panic , that is the advice I would follow

Albermarle

- portfolio of 153 now worth 142000

Your % loss is modest compared to what has been happening in the markets . This is because you are in a relatively low risk fund designed to take the sting out of market drops. So it has done its job and no reason to complain or move .

I am sure your IFA would have warned you at some point that 'investments can go down as well as up' 

steampowered

It sounds like you have a 10 year investment horizon.

Do you think the coronavirus crisis is going to last 10 years?

Personally I see this as an excellent opportunity to increase my investments as much as possible - and buy good companies on the cheap. The stock market equivalent of a sale.

dunstonh

This is supposed to be low risk (as advised) . 

And the loss you have suffered indicates it is.

 Intended to live off this the 153000 and 50000 lump over next 10 years when other pension kicks in. 

A 10 year period would have expected one or two major crashes.    So, an event like this should not be a surprise or a concern as it was going to happen sooner or later. 

thickasabrick

Orby said:

In January Transferred out of dc pension 203,00 to Royal London Governed Portfolio 3 .Took 50,000 lump sum - portfolio of 153 now worth 142000. Not used personal allowance this year thinking of taking out tomorrow  45000 and paying 7000 tax rather than more losses. Intended to live off this the 153000 and 50000 lump over next 10 years when other pension kicks in. Unemployed and no other income. Financial Advisor on holiday !  This is supposed to be low risk (as advised) . 

In your case it is worth understanding the reason why you are "invested" in the stock market and here  I quote the fund objective.
"This portfolio aims to deliver above inflation growth in the value of the fund at retirement, whilst taking a level of risk consistent with a cautious or moderately cautious risk attitude over a short time period"

https://www.trustnet.com/factsheets/p/j8hx/royal-london-governed-portfolio-3-pn

I bookmarked a couple of articles which I found helped me understand my attitude to investing my hard earned cash in the stockmarket (stocks/equities/funds etc.).
JL Collins "Stocks — Part 1: There’s a major market crash coming!!!! and Dr. Lo can’t save you."
The Escape Artist "There’s a major market crash coming…"

Hopefully after reading the above articles you will come to the conclusion that it is better to stay invested.

What exactly are you trying to achieve by selling £45000 today when you don't need to. You will be locking in a 7% loss which is about  £3150.

Even with a wasting asset model over 10 years that £142000 selling 10% (£14200) this year means the loss is only £994. Who knows what is going to happen over the remaining 9 years but historically investment in the stockmarket outperforms savings.

molerat

The FTSE has dropped 30% since Jan so under -10% in the same period seems to be doing well !