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

Thrugelmir

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The saying "Never invest money that you can't afford to lose" seems a bit out of date as most retirees have significant sums invested that they can't afford to lose as it provides needed income.

On the contrary, I do not believe that age old wisdom is out of date.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).

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.

I suspect there's many that have never previously managed their own investments in anything else than a bull market.  Until you are living the moment as we are today. Doesn't matter how many historical books you read on previous market events. Nothing prepares you for how you'll personally react or feel. When it becomes a rush to get on the lifeboats people tend to look after their own interests first in the stampede. Volatile markets make for challenging and potentially financially life changing decisions. Far from easy. 

Albermarle

Collyflower1 said:

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!

The difference is that the first scenario gives you a guaranteed loss, but the second scenario gives you a possible bigger loss but a probable gain . Would be a very bad decade to lose 20% on investments , before inflation .

The problem is that ALL options bring potential risk but you still have to do something , which for most people is to sit tight and not panic.

k6chris

Many (many) years ago I went to a presentation by an FA, who after nearly 2 hours of utter <rubbish> left us with the twin nuggets of 'buy low, sell high' and 'no-one ever lost money taking a profit'.  It was that idiot that gave me the confidence to trust my own knowledge, limited though it is!  I wonder what similar modern-day purveyors of snake oil will be tempting the scared with, if the downturn continues? 

adindas

Malthusian said:

 Warren Buffet's Rule #1: Don't lose money.

It is good to understand What Buffet's rule mean

"Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1."

https://www.investopedia.com/financial-edge/0210/rules-that-warren-buffett-lives-by.aspx

He is not suggesting that you do not take risk losing money in the stock market. There is always be a risk losing money in investing in the stock market. If you can not accommodate some level of risk then the best option is probably to put money into savings, T-Bonds, etc. But it is a certain money losing strategy as your money will be eaten by inflation day by day.

Warren Buffet personally lost about $23 billion in the financial crisis of 2008.

Also recently he lost money a few billions selling Airlines, Banking stocks during the COVID-19 pandemic.

https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-missed-5-billion-selling-airline-stocks-2021-3-103022486

GeoffTF

Audaxer 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).

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.

As I have said, including equities in your portfolio when paying into a DC pension throughout your working life makes sense, because pound cost averaging works for you. It works against you when going into draw down. Buying an annuity is much more sensible then.

Our state pension is much lower than that in most other developed countries. Successive governments also killed of DB pensions by ending ACT and making them increase their benefits.