Best allocation across Cash, Bonds & Equities?

Canuck01

I am transitioning to retirement in the next 12 months.  I have good DBs and also a big self managed pot, partly DC.  I see the non DB stuff as the icing on the cake in a quite defensive setup.  45% stocks, 25% cash, 30% Bonds.  Thanks for this thread, got me thinking and I had to calculate my numbers and feel they are are about right for me, now I have done it.
Reason for my defensive thinking is I think a major crash is on the way.  Stock market seems totally out of control, and is behaving more like a ponzi scheme with a steady 1% a month growth.  
For my perspective 2007 crash was very severe being talked about as a blip amazes me.  Millions around the world had their financial futures destroyed and it's sad that so many of the simple lessons have been forgotten almost like it never happened.

[Deleted User]

Even if the stockmarket is overpriced (and we don’t know that because we don’t know future interest rates or profits), the bull could continue for the next 10 years.  Timing the market is a bad idea.

The crashes of 2008 and 2020 were short.  Markets recovered very soon; within a year for a balanced portfolio (even faster in 2020). That does not have to be the case.   Retiring in either 1970 or 2000 would have been much harder than in either 2008 or 2020. And the 1970 retiree would have struggled a lot more than the year 2000 one.  Not to mention 1929. 

Canuck01

Sorry but 2008 was not a blip, many people got financially destroyed by it, do some research.  It was a wrecking ball that did enormous damage to the real economy.  The fact that governments printed trillions to pay for the mess, pretty much repeated in 2020, is a partial fix and a good way to get money flowing mostly towards the wealthy and underserving, but who knows how many times that will work.  Of course the bull market could go on for years but so could a bear.  As long as people are positioned for both from the point of view of their own financial journey that's fine.  

[Deleted User]

We are talking about pension portfolios.  Nobody who held the nerve got hurt in 2008.  Didn’t feel good but the bear was comparatively short. Thats just a fact. A simple plot shows what happened to a balanced portfolio. 

If you want to rant about something else, be it governments or the wealthy,  its fine but has nothing to do with the topic. I don’t need to “do some research” any more than you do. 

Prism

Canuck01 said:

Sorry but 2008 was not a blip, many people got financially destroyed by it, do some research.  It was a wrecking ball that did enormous damage to the real economy.  The fact that governments printed trillions to pay for the mess, pretty much repeated in 2020, is a partial fix and a good way to get money flowing mostly towards the wealthy and underserving, but who knows how many times that will work.  Of course the bull market could go on for years but so could a bear.  As long as people are positioned for both from the point of view of their own financial journey that's fine.  

Having been invested and working through the 2008 crash I have to say I barely noticed it so those who had their financials futures destroyed must have been invested in very different stuff or working in the financial industry. From my perspective 2000 was more significant as the investment drop lasted much longer and along the way I lost my job.

Thrugelmir

Deleted_User said:

The crashes of 2008 and 2020 were short.  Markets recovered very soon; within a year for a balanced portfolio 

That's the illusion that's been created by the sharp decline in 2008 and subsequent bounce back.  The reality was that markets peaked in 2007 and didn't recover to the same level until 2013.  Depending where you are in your personal investment journey will result in very different outcomes. For someone with over a decade to go at the time. There's plenty of time to recover the losses or indeed make further contributions. Which provided better than average returns. 

Canuck01

"During the great financial crash In the US 10 million people lost their homes" there's my 4 seconds of research (not fact checked sorry).  You can bet they sold out everything they had at the very bottom.  I just found it found it amazing to call it a blip.   No rant at all.  My first post was to the original poster with my very defensive portfolio.

[Deleted User]

They didn’t own their homes to start with. Borrowed more than they could afford. Yet others walked away from negative equity because its way, way too easy in the US. I know a guy like that he now owns another house and has another mortgage. Gained in the process. The original bank ended up with a loss. There will be different stories but none of them relevant to pensions. 

Prism

Thrugelmir said:

Deleted_User said:

The crashes of 2008 and 2020 were short.  Markets recovered very soon; within a year for a balanced portfolio 

That's the illusion that's been created by the sharp decline in 2008 and subsequent bounce back.  The reality was that markets peaked in 2007 and didn't recover to the same level until 2013.  Depending where you are in your personal investment journey will result in very different outcomes. For someone with over a decade to go at the time. There's plenty of time to recover the losses or indeed make further contributions. Which provided better than average returns. 

I would say that by 2013 the markets were in full recovery and on the rise. In general the markets (MCSI World) had recovered by mid 2010 so 3 years after the beginning of the crash in 2007. Of course not everyone was invested globally.

Thrugelmir

Prism said:

Thrugelmir said:

Deleted_User said:

The crashes of 2008 and 2020 were short.  Markets recovered very soon; within a year for a balanced portfolio 

That's the illusion that's been created by the sharp decline in 2008 and subsequent bounce back.  The reality was that markets peaked in 2007 and didn't recover to the same level until 2013.  Depending where you are in your personal investment journey will result in very different outcomes. For someone with over a decade to go at the time. There's plenty of time to recover the losses or indeed make further contributions. Which provided better than average returns. 

I would say that by 2013 the markets were in full recovery and on the rise. In general the markets (MCSI World) had recovered by mid 2010 so 3 years after the beginning of the crash in 2007. Of course not everyone was invested globally.

Markets didn't crash in 2007....... The reference to crashes is emotive. The markets were already reacting to the woes in the USA where the downturn had commenced in 2006 with an increase in mortgage defaults. What finally completely unnerved the markets was the near collapse of the global banking system in October 2008.  When the UK's listed international banks were effectively 48 hours away from collapse.

If you were invested in RBS, HSBC and Barclays. Whether you liked it or not. You had a global exposure. RBS by balance sheet size being the largest banking group in the world.