Is a DC derisking/"Lifestyle Strategy" worthwhile if I intend to drawdown?

Audaxer

AnotherJoe said:

Deleted_User said:

tacpot12 said:

If you expect to live more than 15 years more, you want a large proportion of your portfolio to remain invested in equities. The amount you need to live on for the next three years or so should be held in cash or cash-like investments. 
Lifestyling is a bad idea of most people IMHO.

Equities have high short-term risks. 10 years or less is short term. If you need to withdraw from your portfolio in the next 10 years, putting everything except a couple of years’ worth of income into stocks is a high risk strategy. Unfavourable sequence of returns can undermine your plans. 

I'm withdrawing now, so that's within the next ten years, I have 90% in equities. If the equities halved I'd still be fine, I'd take from the 10% cash. 

Interested to know what percentage you are drawing per year?

AnotherJoe

Audaxer said:

AnotherJoe said:

Deleted_User said:

tacpot12 said:

If you expect to live more than 15 years more, you want a large proportion of your portfolio to remain invested in equities. The amount you need to live on for the next three years or so should be held in cash or cash-like investments. 
Lifestyling is a bad idea of most people IMHO.

Equities have high short-term risks. 10 years or less is short term. If you need to withdraw from your portfolio in the next 10 years, putting everything except a couple of years’ worth of income into stocks is a high risk strategy. Unfavourable sequence of returns can undermine your plans. 

I'm withdrawing now, so that's within the next ten years, I have 90% in equities. If the equities halved I'd still be fine, I'd take from the 10% cash. 

Interested to know what percentage you are drawing per year?

Roughly 2% (of total not just pension)
Which will halve soon in terms of need as small DB and then SP kick in. 

But I will likely keep it up or increase to try not to hit the LTA at 75. 

I'll just have to be resigned to paying tax after 4 years without. First world problem. 

Lucky / smart / fortunate/ solid (through crashes) with Investments. 

[Deleted User]

AnotherJoe said:

Deleted_User said:

tacpot12 said:

If you expect to live more than 15 years more, you want a large proportion of your portfolio to remain invested in equities. The amount you need to live on for the next three years or so should be held in cash or cash-like investments. 
Lifestyling is a bad idea of most people IMHO.

Equities have high short-term risks. 10 years or less is short term. If you need to withdraw from your portfolio in the next 10 years, putting everything except a couple of years’ worth of income into stocks is a high risk strategy. Unfavourable sequence of returns can undermine your plans. 

I'd say the opposite, if you intend to withdraw from your portfolio in the next ten years then unless you are withdrawing the absolute maximum you need to live on then you want as much to be invested as possible and a few years in cash as a guard against falls. 

I'm withdrawing now, so that's within the next ten years, I have 90% in equities. If the equities halved I'd still be fine, I'd take from the 10% cash. 

I've got, hopefully another 20 years of investing. Would be crazy to go to 10% equities 90% cash. 

There is more than 1 variable. If you have a large fund compared to your expenditure, if you can easily reduce your expenditure and if you have DB income then the answer will be different. Someone who has “won the game” andhas just enough needs lots of fixed income as he is approaching retirement. And it does not have to be 90% but certainly more than 10%. The question I ask myself is “what if stock prices halve and stay down for 10 years? or loose 70% and stay down for 5years” And if the answer is “So?” then stay in 100% equities.

[Deleted User]

People tend not to miss what they never had, so "de-risking" serves the industry purpose of managing your expectations, even if you don't feel quite ready for the rocking chair. In many ways, 50's 60's 70's are the easiest and best years for accumulating wealth. Every proposed investment in shares comes with the warning that "prices could halve;" hardly any mention the opportunity cost of sitting out a 50% rise.  Don't tell yourself that a profit or loss is not actual until it is crystallised, the consequences are real.

dunstonh

People tend not to miss what they never had, so "de-risking" serves the industry purpose of managing your expectations, even if you don't feel quite ready for the rocking chair. 

Which is one of the reasons why moving to quarterly statements was a bad thing.    very often crashes would occur and recover mostly within the period of the statement and go unseen.    With quarterly statements, they get to see the zig zags more and many have reduced risk because of that, which in turn lowers their long term returns.

[Deleted User]

ZingPowZing said:

People tend not to miss what they never had, so "de-risking" serves the industry purpose of managing your expectations, even if you don't feel quite ready for the rocking chair. In many ways, 50's 60's 70's are the easiest and best years for accumulating wealth. Every proposed investment in shares comes with the warning that "prices could halve;" hardly any mention the opportunity cost of sitting out a 50% rise.  Don't tell yourself that a profit or loss is not actual until it is crystallised, the consequences are real.

If your objective = the best chance of making the most money then you should put everything into a few stocks. 

If, on the other hand, your objective is to have the least chance of dying in poverty, then you should have a diversified portfolio with different asset classes. 

Greed does not serve well as a retirement planning strategy. 

[Deleted User]

Greed does not serve well as a retirement planning strategy.  
As opposed to what? Boosting your Godly score?
Disagree entirely. Senior people have advantages towards accumulating wealth today that are unprecedented. 

[Deleted User]

The point I was trying to make is that for most people about to retire the real risk isn’t that they are going to lose out on the maximum profits.  You win this game by not losing. 

[Deleted User]

Ok. Mordko: What is the cut off age for ambition?

Linton

ZingPowZing said:

Ok. Mordko: What is the cut off age for ambition?

If you have planned it well, about the age you retire.  If you have planned it badly 10 years or more before then and you are continuing to work because you cannot afford not to.  There comes a point when you realise there are more important things in life than maximising your income and wealth.  There is no point in having more than you can reasonably spend in the time remaining.