IFA Withdrawal Request Timing?

Malthusian

Why does it matter if the funds you aren't going to withdraw are subject to wild movements?

If you don't want any risk of wild movements why do you have anything invested in funds at all?

If you need £25,000 out in the next few weeks it makes sense to sell £25,000 now, because it's a pure coin flip as to whether the markets will go up or down in that time. If the rest of the account is going to remain invested for the long term (5-10 years), it doesn't make sense to sell that part.

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.

The statistical expectation is that the funds which were held in cash for no reason for 1-3 weeks would be buying back into the market at higher prices, and you would lose money. Same as any other market timing.

GSP

Malthusian said:

Why does it matter if the funds you aren't going to withdraw are subject to wild movements?

If you don't want any risk of wild movements why do you have anything invested in funds at all?

If you need £25,000 out in the next few weeks it makes sense to sell £25,000 now, because it's a pure coin flip as to whether the markets will go up or down in that time. If the rest of the account is going to remain invested for the long term (5-10 years), it doesn't make sense to sell that part.

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.

The statistical expectation is that the funds which were held in cash for no reason for 1-3 weeks would be buying back into the market at higher prices, and you would lose money. Same as any other market timing.

Yes thanks. Can see that now.

GSP

A question. I have 7% of cash within my portfolio. When I instruct my IFA to withdraw, does he use part of that 7%, or would he sell x amount of investments and convert into cash to fund the withdrawal. Thanks

AnotherJoe

GSP said:

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? 

It sounds idiotic and over time will lower the return from your investments because they will be in cash for an appreciable % of time. And its misplaced because all you are covering is the downside risk and forgetting the upside risk (eg it goes up after you sold) and statistically thats more likely to happen and absolutely certain over a long period.

Just keep (say) one years drawdown in cash, drawdown from that and occasionally top it up selling just what you need to top it up.

Really, with the shenanigans you are contemplating i wonder if investing is for you because you are so worried about the downside, and you'd be better with an annuity.

You seem to be soemone who might panic and go to cash every time theres a market drop and then you'll never get up the nerve to reinvest.

AnotherJoe

GSP said:

A question. I have 7% of cash within my portfolio. When I instruct my IFA to withdraw, does he use part of that 7%, or would he sell x amount of investments and convert into cash to fund the withdrawal. Thanks

Depends completely upon what you've instructed him to do,whether  you always want a constant 7% or if that can be variable and if so by what amount.

[Deleted User]

“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? “

Feasible? yes. Doable? yes. Makes sense? No. All you are doing is taking yourself out of the market for a short period of time. I cannot think of any reason to do that. 

ETFs extend to any type of equity or any other asset but they are suitable for people with a bit more knowledge. 

GSP

AnotherJoe said:

GSP said:

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? 

It sounds idiotic and over time will lower the return from your investments because they will be in cash for an appreciable % of time. And its misplaced because all you are covering is the downside risk and forgetting the upside risk (eg it goes up after you sold) and statistically thats more likely to happen and absolutely certain over a long period.

Just keep (say) one years drawdown in cash, drawdown from that and occasionally top it up selling just what you need to top it up.

Really, with the shenanigans you are contemplating i wonder if investing is for you because you are so worried about the downside, and you'd be better with an annuity.

You seem to be soemone who might panic and go to cash every time theres a market drop and then you'll never get up the nerve to reinvest.

Yes agree, this is a bonkers idea as acknowledged in the Retirement Planner Key Info thread. I am not looking and trying to anticipate falls in the market, just looking at ways that might ‘maximise’ my fund.
Rather than sticking to a plan made 1,2,3 years previous, I am exploring the timing of withdrawals if there was some leeway in when these are done. Better to take from your fund if the balance is healthy rather than one that has contracted. If annuity rates ever picked up to an acceptable level, I’d certainly look at them. No, I would never panic, that bit you have got wrong, this is a marathon not a sprint. Sometimes it can be a case of just sitting tight and trying to make a better call on things rather than staying with a rigid planner.

jamesd

GSP said: 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.

There are ETFs for almost anything except human active management and maybe even that. For things that could be considered passive there's probably a broader range of approaches available in ETFs than traditional funds. Investment trusts provide the active management part of the picture.

There are proper risk management products available but you should avoid them for at least a few years because their knowledge requirements make them far too dangerous for you. They include:

1. Short ETFs and their doubly or triply leveraged cousins. These go down 1 when the markets go up one. The leveraged ones 2 or 3 in simple analysis but really less in real volatile markets.
2. Options and covered warrants.
3. Financial spread betting, shorts can be used to reduce risk. You can lose many times your investment.

Consider that I have and have used in half a dozen markets a spread betting account that I could use for those things but haven't for years. I don't need to use them and you don't either.

A suitably experienced investor might place a long bet on the FTSE and protect the value at risk from a drop in money beyond 30% by also buying three month out shorting options that will become in the money after a 30% drop. They will also ensure that they have almost instantly available cash of at least 30% of the VAR. Placing the long bet might cost 2% of the VAR. Use of what is gobbledygook to you is to partly illustrate the amount of learning required.

Thrugelmir

Deleted_User said:

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”

The US markets haven't always dominated. Was another era. Though holding overseas equities was very different back then. No passive global trackers. 

[Deleted User]

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.

No experience with HL, but your description seems strange. During trading hours ETFs are traded in real time. You do not “accept” anything. You make an offer, which may or may not lead to a trade. Or you just buy/sell without a constraint on price. There is never a guarantee a trade will take place but if the stock is liquid and the offer is good, its very likely.  A slight delay in how the price is displayed is possible and is a function of your operating platform but your transaction will be completed based on the actuals at that moment in time. Its a good practice to use Limit Orders (Minimum price if you are selling) regardless of hours. And its not a good practice to trade outside market hours. And if you don’t use the Limit Order, there is no guarantee on the deal price. Could be better or worse than what you had seen displayed on screen.