IFA Withdrawal Request Timing?

Thrugelmir

Deleted_User said:

Prism said:

BritishInvestor said:

AlanP_2 said:

BritishInvestor said:

AlanP_2 said:

Unless it is an unexpected requirement I would have thought most people would be planning their drawdown strategy for at least the next year if not the next 2 or 3 years?

What I would do is in the 12/24 months leading up to starting drawdown sell the next 12/24 months amounts and leave the pension in cash in the SIPP. At the start of drawdown carry on with the same approach so that you always have 12 to 24 months cash available and not subject to vagaries of market.

Holding an amount of cash outside the pension, say another 12 months worth, adds flexibility around halting sales whilst markets are falling and adjusting up again once markets have stabilised and (hopefully) gone back up.

If there are transaction fees per sale / per investment then quarterly or annual selling may be better.

In summary, I wouldn't want to be selling on a whim if I could avoid it.

"adds flexibility around halting sales whilst markets are falling and adjusting up again once markets have stabilised and (hopefully) gone back up."
Just equity markets or bond markets as well?

I'm not at this point yet so my comment was more generic than specific re asset classes. But to answer your question as my main investments would be in multi-asset funds then both.

Given that it's the multi-year market drawdowns (potentially coupled with inflation) that tend to put retirement pots under stress I'm not sure that having a year or two in cash is going to deliver what you seek.

Yeah, I see the 1-2 years of cash idea mentioned quite a bit. It doesn't even come close to working in a stress scenario where someone needs to be able to cope with possibly 15-20 years of negative equity returns while being hit with above average inflation. 

15 -20 years of negative equity returns would be tough.  Never happened for world stock market.

Nikkei index still languishes. There's an entire generation who've never experienced 50% of their capital being irrecoverably wiped out. Was a major cause of endowment policies subsequently failing to deliver expected returns. 

[Deleted User]

Thrugelmir said:

Deleted_User said:

Prism said:

BritishInvestor said:

AlanP_2 said:

BritishInvestor said:

AlanP_2 said:

Unless it is an unexpected requirement I would have thought most people would be planning their drawdown strategy for at least the next year if not the next 2 or 3 years?

What I would do is in the 12/24 months leading up to starting drawdown sell the next 12/24 months amounts and leave the pension in cash in the SIPP. At the start of drawdown carry on with the same approach so that you always have 12 to 24 months cash available and not subject to vagaries of market.

Holding an amount of cash outside the pension, say another 12 months worth, adds flexibility around halting sales whilst markets are falling and adjusting up again once markets have stabilised and (hopefully) gone back up.

If there are transaction fees per sale / per investment then quarterly or annual selling may be better.

In summary, I wouldn't want to be selling on a whim if I could avoid it.

"adds flexibility around halting sales whilst markets are falling and adjusting up again once markets have stabilised and (hopefully) gone back up."
Just equity markets or bond markets as well?

I'm not at this point yet so my comment was more generic than specific re asset classes. But to answer your question as my main investments would be in multi-asset funds then both.

Given that it's the multi-year market drawdowns (potentially coupled with inflation) that tend to put retirement pots under stress I'm not sure that having a year or two in cash is going to deliver what you seek.

Yeah, I see the 1-2 years of cash idea mentioned quite a bit. It doesn't even come close to working in a stress scenario where someone needs to be able to cope with possibly 15-20 years of negative equity returns while being hit with above average inflation. 

15 -20 years of negative equity returns would be tough.  Never happened for world stock market.

Nikkei index still languishes. There's an entire generation who've never experienced 50% of their capital being irrecoverably wiped out. Was a major cause of endowment policies subsequently failing to deliver expected returns. 

“World”

GSP

Deleted_User said:

GSP said:

Deleted_User said:

Are you trying to time the market by withdrawing just before a fall?  If so, a delay is more likely to benefit you as stocks have an overall upward trend. Timing the market does not work.
If you are talking about a real drawdown strategy then the answer is in Alan’s post. 

No, time it when your pot has grown sufficiently. Why take it when the markets are down and your fund is down, unless you really need to?

You are saying “yes, I am trying to time the market”. 

Sorry yes, but not just before a fall. No one can tell exactly when falls will occur. I would be looking for good growth during the year that’s unique to when my fund started, or since the last withdrawal. You cannot look at and fix two points in time in the future and make a decision.

AnotherJoe

Prism said:

I BritishInvestor said:

AlanP_2 said:

BritishInvestor said:

AlanP_2 said:

Unless it is an unexpected requirement I would have thought most people would be planning their drawdown strategy for at least the next year if not the next 2 or 3 years?

What I would do is in the 12/24 months leading up to starting drawdown sell the next 12/24 months amounts and leave the pension in cash in the SIPP. At the start of drawdown carry on with the same approach so that you always have 12 to 24 months cash available and not subject to vagaries of market.

Holding an amount of cash outside the pension, say another 12 months worth, adds flexibility around halting sales whilst markets are falling and adjusting up again once markets have stabilised and (hopefully) gone back up.

If there are transaction fees per sale / per investment then quarterly or annual selling may be better.

In summary, I wouldn't want to be selling on a whim if I could avoid it.

"adds flexibility around halting sales whilst markets are falling and adjusting up again once markets have stabilised and (hopefully) gone back up."
Just equity markets or bond markets as well?

I'm not at this point yet so my comment was more generic than specific re asset classes. But to answer your question as my main investments would be in multi-asset funds then both.

Given that it's the multi-year market drawdowns (potentially coupled with inflation) that tend to put retirement pots under stress I'm not sure that having a year or two in cash is going to deliver what you seek.

Yeah, I see the 1-2 years of cash idea mentioned quite a bit. It doesn't even come close to working in a stress scenario where someone needs to be able to cope with possibly 15-20 years of negative equity returns while being hit with above average inflation. 

If you think that's a realistic proposition buy an annuity and remove the worry and angst over such an incredibly unlikely situation, because investing/drawdown clearly isn't for you. 

Prism

AnotherJoe said:

Prism said:

I BritishInvestor said:

AlanP_2 said:

BritishInvestor said:

AlanP_2 said:

Unless it is an unexpected requirement I would have thought most people would be planning their drawdown strategy for at least the next year if not the next 2 or 3 years?

What I would do is in the 12/24 months leading up to starting drawdown sell the next 12/24 months amounts and leave the pension in cash in the SIPP. At the start of drawdown carry on with the same approach so that you always have 12 to 24 months cash available and not subject to vagaries of market.

Holding an amount of cash outside the pension, say another 12 months worth, adds flexibility around halting sales whilst markets are falling and adjusting up again once markets have stabilised and (hopefully) gone back up.

If there are transaction fees per sale / per investment then quarterly or annual selling may be better.

In summary, I wouldn't want to be selling on a whim if I could avoid it.

"adds flexibility around halting sales whilst markets are falling and adjusting up again once markets have stabilised and (hopefully) gone back up."
Just equity markets or bond markets as well?

I'm not at this point yet so my comment was more generic than specific re asset classes. But to answer your question as my main investments would be in multi-asset funds then both.

Given that it's the multi-year market drawdowns (potentially coupled with inflation) that tend to put retirement pots under stress I'm not sure that having a year or two in cash is going to deliver what you seek.

Yeah, I see the 1-2 years of cash idea mentioned quite a bit. It doesn't even come close to working in a stress scenario where someone needs to be able to cope with possibly 15-20 years of negative equity returns while being hit with above average inflation. 

If you think that's a realistic proposition buy an annuity and remove the worry and angst over such an incredibly unlikely situation, because investing/drawdown clearly isn't for you. 

It is unlikely however if you take the S&P in the last 100 years there has been a 19 year period of zero total returns, a 16 year period and a 13 year period, all when you factor in inflation. Even if you ignore inflation there have been very extended periods of pretty terrible returns. In drawdown you should really plan for these possibilities. Close to 100% equities with 2 years of cash is unlikely to cut it.

[Deleted User]

Prism said:

AnotherJoe said:

Prism said:

I BritishInvestor said:

AlanP_2 said:

BritishInvestor said:

AlanP_2 said:

Unless it is an unexpected requirement I would have thought most people would be planning their drawdown strategy for at least the next year if not the next 2 or 3 years?

What I would do is in the 12/24 months leading up to starting drawdown sell the next 12/24 months amounts and leave the pension in cash in the SIPP. At the start of drawdown carry on with the same approach so that you always have 12 to 24 months cash available and not subject to vagaries of market.

Holding an amount of cash outside the pension, say another 12 months worth, adds flexibility around halting sales whilst markets are falling and adjusting up again once markets have stabilised and (hopefully) gone back up.

If there are transaction fees per sale / per investment then quarterly or annual selling may be better.

In summary, I wouldn't want to be selling on a whim if I could avoid it.

"adds flexibility around halting sales whilst markets are falling and adjusting up again once markets have stabilised and (hopefully) gone back up."
Just equity markets or bond markets as well?

I'm not at this point yet so my comment was more generic than specific re asset classes. But to answer your question as my main investments would be in multi-asset funds then both.

Given that it's the multi-year market drawdowns (potentially coupled with inflation) that tend to put retirement pots under stress I'm not sure that having a year or two in cash is going to deliver what you seek.

Yeah, I see the 1-2 years of cash idea mentioned quite a bit. It doesn't even come close to working in a stress scenario where someone needs to be able to cope with possibly 15-20 years of negative equity returns while being hit with above average inflation. 

If you think that's a realistic proposition buy an annuity and remove the worry and angst over such an incredibly unlikely situation, because investing/drawdown clearly isn't for you. 

It is unlikely however if you take the S&P in the last 100 years there has been a 19 year period of zero total returns, a 16 year period and a 13 year period, all when you factor in inflation. Even if you ignore inflation there have been very extended periods of pretty terrible returns. In drawdown you should really plan for these possibilities. Close to 100% equities with 2 years of cash is unlikely to cut it.

Source? In the 1930s they had deflation rather than inflation. If you account for that, and assume dividend reinvestment (dividends were very large) then the recovery was surprisingly fast. 

Prism

Deleted_User said:

Prism said:

AnotherJoe said:

Prism said:

I BritishInvestor said:

AlanP_2 said:

BritishInvestor said:

AlanP_2 said:

Unless it is an unexpected requirement I would have thought most people would be planning their drawdown strategy for at least the next year if not the next 2 or 3 years?

What I would do is in the 12/24 months leading up to starting drawdown sell the next 12/24 months amounts and leave the pension in cash in the SIPP. At the start of drawdown carry on with the same approach so that you always have 12 to 24 months cash available and not subject to vagaries of market.

Holding an amount of cash outside the pension, say another 12 months worth, adds flexibility around halting sales whilst markets are falling and adjusting up again once markets have stabilised and (hopefully) gone back up.

If there are transaction fees per sale / per investment then quarterly or annual selling may be better.

In summary, I wouldn't want to be selling on a whim if I could avoid it.

"adds flexibility around halting sales whilst markets are falling and adjusting up again once markets have stabilised and (hopefully) gone back up."
Just equity markets or bond markets as well?

I'm not at this point yet so my comment was more generic than specific re asset classes. But to answer your question as my main investments would be in multi-asset funds then both.

Given that it's the multi-year market drawdowns (potentially coupled with inflation) that tend to put retirement pots under stress I'm not sure that having a year or two in cash is going to deliver what you seek.

Yeah, I see the 1-2 years of cash idea mentioned quite a bit. It doesn't even come close to working in a stress scenario where someone needs to be able to cope with possibly 15-20 years of negative equity returns while being hit with above average inflation. 

If you think that's a realistic proposition buy an annuity and remove the worry and angst over such an incredibly unlikely situation, because investing/drawdown clearly isn't for you. 

It is unlikely however if you take the S&P in the last 100 years there has been a 19 year period of zero total returns, a 16 year period and a 13 year period, all when you factor in inflation. Even if you ignore inflation there have been very extended periods of pretty terrible returns. In drawdown you should really plan for these possibilities. Close to 100% equities with 2 years of cash is unlikely to cut it.

Source? In the 1930s they had deflation rather than inflation. If you account for that, and assume dividend reinvestment (dividends were very large) then the recovery was surprisingly fast. 

Yes 1929 was one of them. The dividends helped so that returns returned to just about 0% by 1937 before falling again and then it was really 1948 before it fully recovered and began to rise above its initial level.

1968 took 16 years until 1984 to begin to turn positive mostly due to high valuations followed by relatively high inflation.

Then of course there is dot.com followed by the financial crisis.
As you pointed out earlier being global would have helped a lot during those times, especially the 1968 period when other countries were not as highly priced to start with.

I am fully aware that I have cherry picked these dates, and its pretty unlucky to start drawdown in exactly those years but my point is really just to be aware. During those times it seems that a nice allocation to bonds helped push through those years but I worry that with the price of bonds being so high already that it might not work this time, should equities take another long tumble.

I got all the numbers from https://dqydj.com/sp-500-return-calculator/

[Deleted User]

Yes, what I have is close: “ For a dollar invested on January 1, 1926, the inflation-adjusted value of the S& P fell below par only briefly in 1932; for a dollar invested at the top at end-August 1929, inflation-adjusted wealth briefly exceeded par in 1936 and again in 1945, finally permanently exceeding it in 1947.” https://www.goodreads.com/book/show/18428492-deep-risk

“but I worry that with the price of bonds being so high already”. 

Doesn’t matter. If the stock market is crashing, there are multiple scenarios. Could be deflation; then the bonds do well.  Or it could be coronovirus, and then the governments buy bonds and jack the prices up. Or the big banks could be going bust. We know what happens. Junk bonds will get busted. Company bonds - same thing, but less likely. But treasuries should be ok as long as the governments/gilts are functioning. And if they are not, we have other worries. 

I dont think the bonds will return much. Thats fine. Thats not why I have them. 

jamesd

GSP said:

In drawdown, from your request to your IFA to take x amount from your fund, how long does it take before your fund is debited and your bank account credited

If not using an IFA but instead giving online instructions at a place like HL:

1. sell ETF or investment trust and you'll be quoted a price with about ten seconds to accept. Accept and the deal is done at that price and shows up in lists of recent trades. Outside market hours you can set a minimum price if you want the deal done when the market next opens.
2. give an instruction to sell an ordinary fund by 8AM and the noon price on that day will be used. Later, the next day though you can cancel before 8AM.

In both cases settlement - the cash arriving in the account - is the standard three days later. You can then ask to withdraw the money.

So your exposure to market moves without an IFA in the middle can be none at all to four hours.

GSP

jamesd said:

GSP said:

In drawdown, from your request to your IFA to take x amount from your fund, how long does it take before your fund is debited and your bank account credited

If not using an IFA but instead giving online instructions at a place like HL:

1. sell ETF or investment trust and you'll be quoted a price with about ten seconds to accept. Accept and the deal is done at that price and shows up in lists of recent trades. Outside market hours you can set a minimum price if you want the deal done when the market next opens.
2. give an instruction to sell an ordinary fund by 8AM and the noon price on that day will be used. Later, the next day though you can cancel before 8AM.

In both cases settlement - the cash arriving in the account - is the standard three days later. You can then ask to withdraw the money.

So your exposure to market moves without an IFA in the middle can be none at all to four hours.

Thanks jamesd. I had to look up ETF - Exchange Traded Funds. Think reading through ETF’s aim to track the performance of a specific index such as the FTSE 100, so not sure if this would extend to all the other types of funds, stocks, bonds, equities etc that are usually held across a diverse portfolio.
I would never go it alone with looking after my own finds and would always use an IFA. It seems, if possible that to take out ALL the risk from your overall fund balance, you need to turn everything into cash on the day of instruction to the IFA to withdraw. The market can go up as well as down of course, but at least by doing this, if possible has frozen your balance, there is no risk of ‘wild’ movements? Once the money has been credited to your bank account 1, 2 or 3 weeks later, your fund is then turned back into all the investments you had previously.
Does this all sound feasible, and doable?