Covid crash #2 started

Thrugelmir

NottinghamKnight said:

Thrugelmir said:

NottinghamKnight said:

csgohan4 said:

ProDave said:

Sailtheworld said:

csgohan4 said:

ProDave said:

Prism said:

ProDave said:

The main thing that was making me nervous of a crash was the rising cases of Covid and lockdowns in the UK and Europe.  Another lockdown and business shut down again is not going to help the markets.

But I also saw some analysis of how the FTSE 100 was doing, you know where people draw lines on the chart and where the lines intersect tell you it is about to "break out" of it's current trend. That analysis basically said if it went below 6000 it would carry on falling, if it stopped short of 6000, it would turn upwards.

Now you can argue whether studying charts like that and drawing lines is an accurate way of predicting where it will go, but it had seemed as though it had taken the downward path.

Why are you nervous of a crash? You mentioned your pension fund in the first post so I assume this is a long term investment for you. If you are still accumulating a crash is a great thing as it means you buy cheaper for a while. If you are in drawdown then a crash isn't quite as beneficial but a well structured plan can cope with almost anything. There is nothing to worry about.

The money is in a SIPP which I anticipate to start drawing in just under 3 years.  It is only a small pot, and it's intended functions is to be drawn down in full by the time I reach state pension age in 10 years time.  I will be drawing my main DB pension in 3 years and this little SIPP pension will help to give some income until I reach SP age by which time I will be comfortable.

So the investment window left is short, and I don't want to end up in 3 years time with less than I started with.  So it is to be invested cautiously and that means trying to avoid anything that will make it crash.

with that short of a period I would consider converting some of your SIPP to bonds earlier, but everyone has different risk appetites

I'd missed that from Dave. He's currently 100% equities and needs to be spending some of the fund in 3 years time. No wonder he's nervous.

To get where he wants to go he shouldn't have started from here.

Indeed, but what are my options?

Leave it in cash and it will devalue by inflation?

It is already in what most consider a safe dependable low risk fund, but that is not immune from a crash.

I have asked before but nobody here wants to suggest what exactly to do with it.  It's in a HL SIPP and there does not seem to be a "2% per year savings account" option.  It's shares, bonds, funds or cash.

sadly the time to do something about it was 2+ years ago, prior to draw down, one reduces their risk exposure by converting their equities to glits. You have not done so and due to current events are in a bad position. 

What was your investment strategy, why are you 100% equities 3 years from draw down, what were you hoping to achieve. If you were wanting more growth then sadly your gamble may not have completely paid off

Well assuming a diversified portfolio the OP is far better off now than he would have been going all cash three years ago. If this is now too rich then adjust, I'm bond averse as things stand but moving into cash would be a short term solution at least.

Portfolios are often far less diversified than people assume. 

Yes, though my intent was that there were some scenarios which wouldn't have done well. A highly concentrated investment in us/ tech, which I assume you allude to, would have done far better.

The art of portfolio diversification is to optimise returns rather than maximise.  Markets are akin to a game of musical chairs. When you are least expecting the music to, it stops. Main markets have been already been drifting lower for a couple of months. 

ProDave

Cus said:

Have you looked at money market funds as an alternative to cash?

No not aware of those.  Give me an example available within a HL SIPP please.

DairyQueen

Cus said:

Have you looked at money market funds as an alternative to cash?

I checked out money market funds. Platform fees apply (unlike cash) and returns are little different. Net affect: inflation risk + platform fees = worse return than cash.

Sea_Shell

My crystal ball tells me that the FTSE will open down on Monday!!! 😉

Cus

DairyQueen said:

Cus said:

Have you looked at money market funds as an alternative to cash?

I checked out money market funds. Platform fees apply (unlike cash) and returns are little different. Net affect: inflation risk + platform fees = worse return than cash.

Did that relate to being in a SIPP where you can't get any interest on a cash balance? (and not able to take out yet)
I was just thinking of a return of 0% for cash versus a fund sounds poor.
I appreciate that for cash outside a SIPP, where you have flexibility, and also for retail sizes it might not make sense. 

ColdIron

ProDave said:

Cus said:

Have you looked at money market funds as an alternative to cash?

No not aware of those.  Give me an example available within a HL SIPP please.

The return on MM funds is usually less than the OCF of the fund (which you won't pay if you simply keep cash at HL) and the platform charge (which you won't pay if you simply keep cash at HL either) combined. You would be taking on risk to stand still

garmeg

Sea_Shell said:

My crystal ball tells me that the FTSE will open down on Monday!!! 😉

You are probably right but this seems more of a Tier 4 than a full lockdown.

We can still get our cars serviced and MOTd I think.

And we do have an end date (at the moment).

Shocked that the Conservative party has such an awful PM though. Having said that we haven't had a good PM in this country, of either hue, since Mrs Thatcher.

Cus

ColdIron said:

ProDave said:

Cus said:

Have you looked at money market funds as an alternative to cash?

No not aware of those.  Give me an example available within a HL SIPP please.

The return on MM funds is usually less than the OCF of the fund (which you won't pay if you simply keep cash at HL) and the platform charge (which you won't pay if you simply keep cash at HL either) combined. You would be taking on risk to stand still

So HL don't charge at all to hold cash in a SIPP if you also have other investments in it, in that it doesn't add to the overall SIPP charge based on size? Or they don't charge only if all your SIPP is cash?

I had a quick search at some MM funds and there were many that have better returns ytd than the annual charge but then I did search for best performing ones, so I'm sure there are many that don't as you say.
I have no experience in MM funds from a retail or personal perspective, just see large amounts being traded in these funds at work.

Thrugelmir

Sea_Shell said:

My crystal ball tells me that the FTSE will open down on Monday!!! 😉

Hopefully that will panic people into selling and retweet again the message that the FTSE is crap. In the process driving some individual stock prices even lower. In every cloud there's a silver lining. 

Sea_Shell

Thrugelmir said:

Sea_Shell said:

My crystal ball tells me that the FTSE will open down on Monday!!! 😉

Hopefully that will panic people into selling and retweet again the message that the FTSE is crap. In the process driving some individual stock prices even lower. In every cloud there's a silver lining. 

We have a little cash waiting a buying opportunity.   😉🤫