IFA Withdrawal Request Timing?

AnotherJoe

Prism said:

Deleted_User said:

jamesd said:

Deleted_User said:

There is indeed a term. Existence of the term does not make the practice beneficial.

This is drawdown so it's just a case of where to take the money from.

Outside that, taking profits is a matter of some debate. I tend to let the profit stay invested, regarding it at least in part as a momentum play..

Unless the individual’s risk is suddenly reduced, I find it hard to justify changing asset allocation. Keeping the allocation steady in percentage terms does mean selling mostly stocks during the good times and bonds during the bad times. 

I think its pretty hard to beat a static asset allocation between stocks and bonds like you say. Its certainly a simple option and simple being easy to follow is usually best. Some research suggests you might be able to eek an extra 0.5% withdrawal rate by using some form of flexible balancing model - there are quite a few that have been tested historically. I am not sure that its worth it though for the added worry that if the risk level creeps up or down too much people might start to dabble.

Interestingly one of the models that has worked the best historically is sell bonds first and never rebalance. I'm not sure many people could follow it though since you would end up with 100% equities after about 10 years of retirement. 

In which case you might as well start with 100% equities, which is where i am

Prism

AnotherJoe said:

Prism said:

Deleted_User said:

jamesd said:

Deleted_User said:

There is indeed a term. Existence of the term does not make the practice beneficial.

This is drawdown so it's just a case of where to take the money from.

Outside that, taking profits is a matter of some debate. I tend to let the profit stay invested, regarding it at least in part as a momentum play..

Unless the individual’s risk is suddenly reduced, I find it hard to justify changing asset allocation. Keeping the allocation steady in percentage terms does mean selling mostly stocks during the good times and bonds during the bad times. 

I think its pretty hard to beat a static asset allocation between stocks and bonds like you say. Its certainly a simple option and simple being easy to follow is usually best. Some research suggests you might be able to eek an extra 0.5% withdrawal rate by using some form of flexible balancing model - there are quite a few that have been tested historically. I am not sure that its worth it though for the added worry that if the risk level creeps up or down too much people might start to dabble.

Interestingly one of the models that has worked the best historically is sell bonds first and never rebalance. I'm not sure many people could follow it though since you would end up with 100% equities after about 10 years of retirement. 

In which case you might as well start with 100% equities, which is where i am

Yeah fair enough
I am 100% equities in my SIPP too but I'm not yet in drawdown. I will tone it down a bit when I get there.

Thrugelmir

GSP said:

AnotherJoe said:

GSP said:

QAnotherJoe said:

GSP said:

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.

The answer to that is keep it invested and not try to time the market, which essentially is what you are planning to do however much you try to pretend you arent. "I  am exploring the timing of withdrawals" - how is that not market timing?

Just sell on your regular basis, either each month / three months / six months / yearly / 137 days,  (whatever works for you) unless theres been a  crash (of a magnitude as determined by you)  in which case take some out of your cash buffer instead and dont sell  anything or sell less and take out less, depending how severe a crash and what flexibility you have .

The only timing feature I am looking at is withdrawing when my fund has grown rather than withdrawing when it has contracted and delaying that decision on the latter if possible. Is it beneficial to withdraw when your fund has grown, rather than withdraw when your fund balance has fallen?

Yes it is. Avoids getting into a spiral of decreasing pool with constant amount withdrawal meaning increasingly higher % withdrawal. If you withdrew a constant % it would be b better because that would reduce the amount the pot fell by, however are you withdrawals such that (say) a 30% drop in withdrawal didn't affect you. 

This is why many propose a cash buffer you withdraw from after a decrease in the pot. 

Of course this depends if you didn't wish to decrease the pot, maybe your plans mean that's fine. Either because other pensions mean you can cope or because you,plan to decrease it anyway

Thanks AJ. If you mean one year with a 30% drop in withdrawal, I am sure we could live with that or at least do whatever it takes to get through.
I am in the process of running all sorts of scenario’s (perhaps some I haven’t thought of yet) to see how these project forward. Just an example of one of many a contraction every 3 years followed by fairly good growth of 4% and 6% with withdrawal size differing for all 3, with less in fact than the 30% drop you mention when it contracts. With this my fund balance is more or less protected and is bolstered in 9 years when my state pension kicks in.
My plan is that I decrease the pot and enjoy it while I can. Then at a certain level SP covers around a third to a quarter of outgoings, and this “should” keep the fund fairly stable thereafter with less spending also apparently not far after this time.

There's a lot of hyperbolic when people refer to crashes.  A market crash is actually defined as a 5% fall in a trading session. Taking the S&P 500 as an example and to give perspective. In the 92 years ending March 2020. Out of over 20,000 trading days there were only 85 when the market declined by over 5% (0.4%).  Worst decline was 20.5%. The 16th March 2020 was 12%. On average such a fall happens once every 23 years. 

More interestingly there were 12,120 days in the past 92 years where the S&P recorded a gain. As opposed to recording a loss for some 10,734 days. Though this takes no account of companies going ex-dividend. 

Question is will you pick the right days to liquidate holdings or the wrong ones?  Get it wrong consistently and eventual returns could be considerably lower. As your capital depletes. 

GSP

Thrugelmir said:

GSP said:

AnotherJoe said:

GSP said:

QAnotherJoe said:

GSP said:

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.

The answer to that is keep it invested and not try to time the market, which essentially is what you are planning to do however much you try to pretend you arent. "I  am exploring the timing of withdrawals" - how is that not market timing?

Just sell on your regular basis, either each month / three months / six months / yearly / 137 days,  (whatever works for you) unless theres been a  crash (of a magnitude as determined by you)  in which case take some out of your cash buffer instead and dont sell  anything or sell less and take out less, depending how severe a crash and what flexibility you have .

The only timing feature I am looking at is withdrawing when my fund has grown rather than withdrawing when it has contracted and delaying that decision on the latter if possible. Is it beneficial to withdraw when your fund has grown, rather than withdraw when your fund balance has fallen?

Yes it is. Avoids getting into a spiral of decreasing pool with constant amount withdrawal meaning increasingly higher % withdrawal. If you withdrew a constant % it would be b better because that would reduce the amount the pot fell by, however are you withdrawals such that (say) a 30% drop in withdrawal didn't affect you. 

This is why many propose a cash buffer you withdraw from after a decrease in the pot. 

Of course this depends if you didn't wish to decrease the pot, maybe your plans mean that's fine. Either because other pensions mean you can cope or because you,plan to decrease it anyway

Thanks AJ. If you mean one year with a 30% drop in withdrawal, I am sure we could live with that or at least do whatever it takes to get through.
I am in the process of running all sorts of scenario’s (perhaps some I haven’t thought of yet) to see how these project forward. Just an example of one of many a contraction every 3 years followed by fairly good growth of 4% and 6% with withdrawal size differing for all 3, with less in fact than the 30% drop you mention when it contracts. With this my fund balance is more or less protected and is bolstered in 9 years when my state pension kicks in.
My plan is that I decrease the pot and enjoy it while I can. Then at a certain level SP covers around a third to a quarter of outgoings, and this “should” keep the fund fairly stable thereafter with less spending also apparently not far after this time.

There's a lot of hyperbolic when people refer to crashes.  A market crash is actually defined as a 5% fall in a trading session. Taking the S&P 500 as an example and to give perspective. In the 92 years ending March 2020. Out of over 20,000 trading days there were only 85 when the market declined by over 5% (0.4%).  Worst decline was 20.5%. The 16th March 2020 was 12%. On average such a fall happens once every 23 years. 

More interestingly there were 12,120 days in the past 92 years where the S&P recorded a gain. As opposed to recording a loss for some 10,734 days. Though this takes no account of companies going ex-dividend. 

Question is will you pick the right days to liquidate holdings or the wrong ones?  Get it wrong consistently and eventual returns could be considerably lower. As your capital depletes. 

Thanks Thrugelmir. As stated as other people raised their concerns I’ve ‘gone off’ that idea to turn all into cash as the pitfalls are not good. Interesting analysis above. Any ideas with the 5% falls you mentioned how quickly things recovered? Even in the short time (3 and a bit years) I have been involved in drawdown there have been a few dips. I would say two of these took about six months to recover while the larger one last Spring was much the same, around six months.

Audaxer

AnotherJoe said:

Prism said:

Deleted_User said:

jamesd said:

Deleted_User said:

There is indeed a term. Existence of the term does not make the practice beneficial.

This is drawdown so it's just a case of where to take the money from.

Outside that, taking profits is a matter of some debate. I tend to let the profit stay invested, regarding it at least in part as a momentum play..

Unless the individual’s risk is suddenly reduced, I find it hard to justify changing asset allocation. Keeping the allocation steady in percentage terms does mean selling mostly stocks during the good times and bonds during the bad times. 

I think its pretty hard to beat a static asset allocation between stocks and bonds like you say. Its certainly a simple option and simple being easy to follow is usually best. Some research suggests you might be able to eek an extra 0.5% withdrawal rate by using some form of flexible balancing model - there are quite a few that have been tested historically. I am not sure that its worth it though for the added worry that if the risk level creeps up or down too much people might start to dabble.

Interestingly one of the models that has worked the best historically is sell bonds first and never rebalance. I'm not sure many people could follow it though since you would end up with 100% equities after about 10 years of retirement. 

In which case you might as well start with 100% equities, which is where i am

If your income is nearly fully covered by DB and State Pensions, then 100% equities is fine if you wish, but if a DC pension is someone's only source of income I don't think many would start with 100% equities in retirement.

Audaxer

Thrugelmir said:

GSP said:

AnotherJoe said:

GSP said:

QAnotherJoe said:

GSP said:

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.

The answer to that is keep it invested and not try to time the market, which essentially is what you are planning to do however much you try to pretend you arent. "I  am exploring the timing of withdrawals" - how is that not market timing?

Just sell on your regular basis, either each month / three months / six months / yearly / 137 days,  (whatever works for you) unless theres been a  crash (of a magnitude as determined by you)  in which case take some out of your cash buffer instead and dont sell  anything or sell less and take out less, depending how severe a crash and what flexibility you have .

The only timing feature I am looking at is withdrawing when my fund has grown rather than withdrawing when it has contracted and delaying that decision on the latter if possible. Is it beneficial to withdraw when your fund has grown, rather than withdraw when your fund balance has fallen?

Yes it is. Avoids getting into a spiral of decreasing pool with constant amount withdrawal meaning increasingly higher % withdrawal. If you withdrew a constant % it would be b better because that would reduce the amount the pot fell by, however are you withdrawals such that (say) a 30% drop in withdrawal didn't affect you. 

This is why many propose a cash buffer you withdraw from after a decrease in the pot. 

Of course this depends if you didn't wish to decrease the pot, maybe your plans mean that's fine. Either because other pensions mean you can cope or because you,plan to decrease it anyway

Thanks AJ. If you mean one year with a 30% drop in withdrawal, I am sure we could live with that or at least do whatever it takes to get through.
I am in the process of running all sorts of scenario’s (perhaps some I haven’t thought of yet) to see how these project forward. Just an example of one of many a contraction every 3 years followed by fairly good growth of 4% and 6% with withdrawal size differing for all 3, with less in fact than the 30% drop you mention when it contracts. With this my fund balance is more or less protected and is bolstered in 9 years when my state pension kicks in.
My plan is that I decrease the pot and enjoy it while I can. Then at a certain level SP covers around a third to a quarter of outgoings, and this “should” keep the fund fairly stable thereafter with less spending also apparently not far after this time.

Question is will you pick the right days to liquidate holdings or the wrong ones?  Get it wrong consistently and eventual returns could be considerably lower. As your capital depletes. 

That's true. It is more difficult with funds as you don't know the price you are going to get when you put the order in. I think that is an advantage of IT's as you know the price you are buying and selling at.

Audaxer

Prism said:

Audaxer 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. 

I think if there was a realistic chance of that happening with a balanced portfolio, I don't think it would be worth the risk of investing. If that happened I don't think that many DC pots would last for a 30 year retirement.

Thats really my point though, a balanced portfolio of equities and bonds with a sensible withdrawal rate has always historically survived it. These long equity downturns are historically survived by having a decent allocation to bonds and a global allocation of equities. The 4% rule with a 60/40 pretty much comes from a starting retirement in 1968 as being the worst time ever with many years of terrible US equity returns

I'm not sure whether a fixed allocation multi asset fund like VLS60, or portfolio of a separate global equities fund and a separate global bonds fund would give the best outcome? If the separate funds were rebalanced back to the original 60:40 allocation after each withdrawal, presumably it would be simpler to hold the one fixed allocation multi asset fund like VLS60?

Thrugelmir

Audaxer said:

AnotherJoe said:

Prism said:

Deleted_User said:

jamesd said:

Deleted_User said:

There is indeed a term. Existence of the term does not make the practice beneficial.

This is drawdown so it's just a case of where to take the money from.

Outside that, taking profits is a matter of some debate. I tend to let the profit stay invested, regarding it at least in part as a momentum play..

Unless the individual’s risk is suddenly reduced, I find it hard to justify changing asset allocation. Keeping the allocation steady in percentage terms does mean selling mostly stocks during the good times and bonds during the bad times. 

I think its pretty hard to beat a static asset allocation between stocks and bonds like you say. Its certainly a simple option and simple being easy to follow is usually best. Some research suggests you might be able to eek an extra 0.5% withdrawal rate by using some form of flexible balancing model - there are quite a few that have been tested historically. I am not sure that its worth it though for the added worry that if the risk level creeps up or down too much people might start to dabble.

Interestingly one of the models that has worked the best historically is sell bonds first and never rebalance. I'm not sure many people could follow it though since you would end up with 100% equities after about 10 years of retirement. 

In which case you might as well start with 100% equities, which is where i am

If your income is nearly fully covered by DB and State Pensions, then 100% equities is fine if you wish, but if a DC pension is someone's only source of income I don't think many would start with 100% equities in retirement.

I'd feel extremely uncomfortable to be reliant on a 100% equity portfolio in retirement. Which is the direction people are being driven now. Long term bond yields (30 years) make for predictable low growth. Which results in equities having to do all the heavy lifting in an economic environment which is hardly conducive to the task. 

Prism

Audaxer said:

Prism said:

Audaxer 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. 

I think if there was a realistic chance of that happening with a balanced portfolio, I don't think it would be worth the risk of investing. If that happened I don't think that many DC pots would last for a 30 year retirement.

Thats really my point though, a balanced portfolio of equities and bonds with a sensible withdrawal rate has always historically survived it. These long equity downturns are historically survived by having a decent allocation to bonds and a global allocation of equities. The 4% rule with a 60/40 pretty much comes from a starting retirement in 1968 as being the worst time ever with many years of terrible US equity returns

I'm not sure whether a fixed allocation multi asset fund like VLS60, or portfolio of a separate global equities fund and a separate global bonds fund would give the best outcome? If the separate funds were rebalanced back to the original 60:40 allocation after each withdrawal, presumably it would be simpler to hold the one fixed allocation multi asset fund like VLS60?

I would say whatever an individual fancies - not much in it. The fees for a two fund model are a touch cheaper but I doubt it matters. There are some alternative options though that don't rebalance back to the original allocation after the withdrawal. For those a two (or more) fund model would be required.

jamesd

Deleted_User said:

jamesd said:

Deleted_User said:

There is indeed a term. Existence of the term does not make the practice beneficial.

This is drawdown so it's just a case of where to take the money from.

Outside that, taking profits is a matter of some debate. I tend to let the profit stay invested, regarding it at least in part as a momentum play..

Unless the individual’s risk is suddenly reduced, I find it hard to justify changing asset allocation. Keeping the allocation steady in percentage terms does mean selling mostly stocks during the good times and bonds during the bad times. 

That's how the Guyton-Klinger rules do it, according to an example withdrawal plan from Guyton:

"Following years with positive returns that cause an equity category to exceed its target allocation, the excess amount is sold and reinvested in Cash or Fixed Income to fund future WDs.

Yearly WDs are funded from equities when markets are favorable and from fixed income when they are not, using this priority: 1) Cash; 2) Selling Fixed Income assets; 3) Selling Equity assets in descending order of the prior year’s performance. No WDs are funded by selling an Equity asset after a negative return year as long as Cash or Fixed Income assets are able to fund that year’s WD amount."