The time has come to buy more units during this ‘’sale’’

GeoffTF

Audaxer said:
The saying "Never invest money that you can't afford to lose" seems a bit out of date as most retirees have significant sums invested that they can't afford to lose as it provides needed income.

On the contrary, I do not believe that age old wisdom is out of date. Most retirees who do not have defined benefit pensions have indeed gone down that route (90% I have seen quoted). That does not make it wise. If we get a long lived crash, they will find themselves much poorer than they expected to be. There is a basic state pension and social security as back up, but I expect that we are about to see just how ungenerous that can be. I am not impressed by governments that are pushing people down this route, whilst ensuring that their investment returns will be poor (through interest rate cuts and QE).

adindas

Audaxer said:

GeoffTF said:

k6chris said:
Perhaps drip feed that in over the next few months.  Guessing how low the market will go is impossible.

The problem is that the market may be resilient for the next few months and then crash. There is no substitute for not getting out of your depth. Getting out of your depth gradually does not work. You need to decide how much risk you can take. The old adage says do not put more on the stock market than you can afford to lose.

GeoffTF said:

k6chris said:
Perhaps drip feed that in over the next few months.  Guessing how low the market will go is impossible.

The old adage says do not put more on the stock market than you can afford to lose.

The saying "Never invest money that you can't afford to lose" seems a bit out of date as most retirees have significant sums invested that they can't afford to lose as it provides needed income.

Pensioners living in the UK and most countries in the EU, most pensioners are still getting state pension.

Life will be screwed unexpectedly but most people could still effort to live with that.

It is different if they are borrowing money to invest. You lose it you will be chased by the debt collector for the rest of your life.

Prism

GeoffTF said:

Audaxer said:
The saying "Never invest money that you can't afford to lose" seems a bit out of date as most retirees have significant sums invested that they can't afford to lose as it provides needed income.

On the contrary, I do not believe that age old wisdom is out of date. Most retirees who do not have defined benefit pensions have indeed gone down that route (90% I have seen quoted). That does not make it wise. If we get a long lived crash, they will find themselves much poorer than they expected to be. There is a basic state pension and social security as back up, but I expect that we are about to see just how ungenerous that can be. I am not impressed by governments that are pushing people down this route, whilst ensuring that their investment returns will be poor (through interest rate cuts and QE).

Its not just retirees, its pretty much everyone with a job who is invested in the stock market. Its the only way to have much of a pension pot at retirement. Its been this way for many for their whole working life. Although technically they can afford to lose the lot and end up on state pension and benefits, I am sure they wouldn't consider their investments as something they could lose.

Hexane

Prism said:

GeoffTF said:

Audaxer said:
The saying "Never invest money that you can't afford to lose" seems a bit out of date as most retirees have significant sums invested that they can't afford to lose as it provides needed income.

On the contrary, I do not believe that age old wisdom is out of date. Most retirees who do not have defined benefit pensions have indeed gone down that route (90% I have seen quoted). That does not make it wise. If we get a long lived crash, they will find themselves much poorer than they expected to be. There is a basic state pension and social security as back up, but I expect that we are about to see just how ungenerous that can be. I am not impressed by governments that are pushing people down this route, whilst ensuring that their investment returns will be poor (through interest rate cuts and QE).

Its not just retirees, its pretty much everyone with a job who is invested in the stock market. Its the only way to have much of a pension pot at retirement. Its been this way for many for their whole working life. Although technically they can afford to lose the lot and end up on state pension and benefits, I am sure they wouldn't consider their investments as something they could lose.

yes, get over it?

GeoffTF

Prism said:

GeoffTF said:

Audaxer said:
The saying "Never invest money that you can't afford to lose" seems a bit out of date as most retirees have significant sums invested that they can't afford to lose as it provides needed income.

On the contrary, I do not believe that age old wisdom is out of date. Most retirees who do not have defined benefit pensions have indeed gone down that route (90% I have seen quoted). That does not make it wise. If we get a long lived crash, they will find themselves much poorer than they expected to be. There is a basic state pension and social security as back up, but I expect that we are about to see just how ungenerous that can be. I am not impressed by governments that are pushing people down this route, whilst ensuring that their investment returns will be poor (through interest rate cuts and QE).

Its not just retirees, its pretty much everyone with a job who is invested in the stock market. Its the only way to have much of a pension pot at retirement. Its been this way for many for their whole working life. Although technically they can afford to lose the lot and end up on state pension and benefits, I am sure they wouldn't consider their investments as something they could lose.

Saving for retirement is different. You spread your risk by putting money in each month over your working life. Pound cost averaging works in your favour. With draw down, it works against you.

Suppose that you go into draw down with 2/3 bonds and 1/3 equities. The old adage suggests that your bonds are safe, but your equities could be toast. (In reality, your bonds will not be completely safe, and your equities will probably have some residual value in a mighty crash.) Annuities are effectively a bond investment, but with pooling of the risk that you might live longer than average. In rough terms, you are accepting that your draw down pension might be 2/3 of what it would have been if you had taken an annuity, in exchange for the chance that it will be more.

Thrugelmir

GeoffTF said:

Prism said:

GeoffTF said:

Audaxer said:
The saying "Never invest money that you can't afford to lose" seems a bit out of date as most retirees have significant sums invested that they can't afford to lose as it provides needed income.

On the contrary, I do not believe that age old wisdom is out of date. Most retirees who do not have defined benefit pensions have indeed gone down that route (90% I have seen quoted). That does not make it wise. If we get a long lived crash, they will find themselves much poorer than they expected to be. There is a basic state pension and social security as back up, but I expect that we are about to see just how ungenerous that can be. I am not impressed by governments that are pushing people down this route, whilst ensuring that their investment returns will be poor (through interest rate cuts and QE).

Its not just retirees, its pretty much everyone with a job who is invested in the stock market. Its the only way to have much of a pension pot at retirement. Its been this way for many for their whole working life. Although technically they can afford to lose the lot and end up on state pension and benefits, I am sure they wouldn't consider their investments as something they could lose.

Annuities are effectively a bond investment, but with pooling of the risk that you might live longer than average. In rough terms, you are accepting that your draw down pension might be 2/3 of what it would have been if you had taken an annuity, in exchange for the chance that it will be more.

With an annuity does it matter? As it's performed it's job in the same way any other insurance has. What an annuity does give you is peace of mind. With equities you'll always be wondering what's going to happen tomorrow on the markets. 

Malthusian

Audaxer said:

The saying "Never invest money that you can't afford to lose" seems a bit out of date as most retirees have significant sums invested that they can't afford to lose as it provides needed income.

"Never invest money that you can't afford to lose" is the mantra of Ponzi and pyramid scams.

There is no reason any stockmarket investor should have to lose money. Hence Warren Buffet's Rule #1: Don't lose money.

GeoffTF

Thrugelmir said:

GeoffTF said:

Prism said:

GeoffTF said:

Audaxer said:
The saying "Never invest money that you can't afford to lose" seems a bit out of date as most retirees have significant sums invested that they can't afford to lose as it provides needed income.

On the contrary, I do not believe that age old wisdom is out of date. Most retirees who do not have defined benefit pensions have indeed gone down that route (90% I have seen quoted). That does not make it wise. If we get a long lived crash, they will find themselves much poorer than they expected to be. There is a basic state pension and social security as back up, but I expect that we are about to see just how ungenerous that can be. I am not impressed by governments that are pushing people down this route, whilst ensuring that their investment returns will be poor (through interest rate cuts and QE).

Its not just retirees, its pretty much everyone with a job who is invested in the stock market. Its the only way to have much of a pension pot at retirement. Its been this way for many for their whole working life. Although technically they can afford to lose the lot and end up on state pension and benefits, I am sure they wouldn't consider their investments as something they could lose.

Annuities are effectively a bond investment, but with pooling of the risk that you might live longer than average. In rough terms, you are accepting that your draw down pension might be 2/3 of what it would have been if you had taken an annuity, in exchange for the chance that it will be more.

With an annuity does it matter? As it's performed it's job in the same way any other insurance has. What an annuity does give you is peace of mind. With equities you'll always be wondering what's going to happen tomorrow on the markets. 

I agree. An annuity has always been the sensible option. As a result of mismanagement by successive governments (of both parties), interest rates became very low. Annuity rates also became very low as a result. The government did not want to say "tough luck, you will have to pay for our mismanagement in your retirement". Instead it encouraged the impression that investment in the stock market was less risky that it actually was particularly in that low interest rate environment. It also encouraged people to consult financial advisers, who would make little money by recommending an annuity, but could look forward to an ongoing cash flow from recommending draw down.

Audaxer

GeoffTF said:

Audaxer said:
The saying "Never invest money that you can't afford to lose" seems a bit out of date as most retirees have significant sums invested that they can't afford to lose as it provides needed income.

On the contrary, I do not believe that age old wisdom is out of date. Most retirees who do not have defined benefit pensions have indeed gone down that route (90% I have seen quoted). That does not make it wise. If we get a long lived crash, they will find themselves much poorer than they expected to be. There is a basic state pension and social security as back up, but I expect that we are about to see just how ungenerous that can be. I am not impressed by governments that are pushing people down this route, whilst ensuring that their investment returns will be poor (through interest rate cuts and QE).

So what do you expect retirees to do that do not have DB pensions? Their DC pensions are invested and while most accept there will be equity crashes and bear markets from time to time, they know it is a better long term alternative than keeping it in cash.

P933alilli

Maybe its a case of damage limitation?
Say as an example , someone with £100,000 savings, outside of any DC pension, puts it into fixed rate bonds at c.2% and inflation sticks at 5% for 10 years then in ten years time the 100k will be worth c.£75000 which is pretty naff!
  But if someone sticks it in a global tracker for the 10 years and  the market declines by 10-20%, say, then in ten years time potentially its 100k-.(0.20) = 80k which also depreciates through inflation which leaves c.£59,500!