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Upside Gains vs Downside Protection
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chiang_mai said:Malthusian said:chiang_mai said:One last thought: which of us doesn't buy insurance of some sort in our daily lives, it seems odd that people would buy life insurance etc but not buy similar when investing.If I die and my spouse waits an indeterminate period of 5-10 years, I'm not going to come back to life.Most investors do have downside protection in the sense of 1) alternative asset classes to reduce volatility and 2) a cash emergency fund to ensure that it's unlikely they'll need to cash in investments during a downturn. Gung-ho DIY investors who go 100% equities are in a minority.Most investors hold any or all of 1) workplace pension default funds 2) Vanguard Lifestrategy type "60/40" funds 3) risk-targeted portfolios designed by advisers or the likes of Nutmeg 4) DIY portfolios with some downside protection.It does not make sense to me that a person would work all their life to acquire wealth and then in the final 10% of their life, risk losing a substantial portion of that wealth, simply because they didn't modify their approach.The final 10% of life for the typical investor is 80-90, possibly older.If your heirs are of a similar mindset to you, and are likely to leave any inherited funds invested, you are not necessarily running any more risk of loss than you were at 60. If your invested assets fall by 20% or 40% just before death you don't fall down the high score table.0
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Surely this depends on your ££ requirements each year/period, the size of your pot and your non portfolio cssh/other income etc?
E. G. If you had a healthy dB pension, a string of btls and your pot was 2mn, then you'd not 'need' downside protection, you'd not really even need the pot!.. So you'd be maximising for future generations.
If you had hardly any pension or other income, and a pot of 300k it's entirely different. You'd need to, probably, protect and grow, for your own requirements0 -
ChilliBob said:Surely this depends on your ££ requirements each year/period, the size of your pot and your non portfolio cssh/other income etc?
E. G. If you had a healthy dB pension, a string of btls and your pot was 2mn, then you'd not 'need' downside protection, you'd not really even need the pot!.. So you'd be maximising for future generations.
If you had hardly any pension or other income, and a pot of 300k it's entirely different. You'd need to, probably, protect and grow, for your own requirements
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Yeah, to some that means we literally have no use for it, and for others, we'll we don't *need* it as we can scrape by and not starve via other means!
I'd assume most people would use the first definition!0 -
ChilliBob said:Surely this depends on your ££ requirements each year/period, the size of your pot and your non portfolio cssh/other income etc?
E. G. If you had a healthy dB pension, a string of btls and your pot was 2mn, then you'd not 'need' downside protection, you'd not really even need the pot!.. So you'd be maximising for future generations.
If you had hardly any pension or other income, and a pot of 300k it's entirely different. You'd need to, probably, protect and grow, for your own requirements0 -
Thrugelmir said:chiang_mai said:Malthusian said:chiang_mai said:One last thought: which of us doesn't buy insurance of some sort in our daily lives, it seems odd that people would buy life insurance etc but not buy similar when investing.If I die and my spouse waits an indeterminate period of 5-10 years, I'm not going to come back to life.Most investors do have downside protection in the sense of 1) alternative asset classes to reduce volatility and 2) a cash emergency fund to ensure that it's unlikely they'll need to cash in investments during a downturn. Gung-ho DIY investors who go 100% equities are in a minority.Most investors hold any or all of 1) workplace pension default funds 2) Vanguard Lifestrategy type "60/40" funds 3) risk-targeted portfolios designed by advisers or the likes of Nutmeg 4) DIY portfolios with some downside protection.It does not make sense to me that a person would work all their life to acquire wealth and then in the final 10% of their life, risk losing a substantial portion of that wealth, simply because they didn't modify their approach.The final 10% of life for the typical investor is 80-90, possibly older.If your heirs are of a similar mindset to you, and are likely to leave any inherited funds invested, you are not necessarily running any more risk of loss than you were at 60. If your invested assets fall by 20% or 40% just before death you don't fall down the high score table.0
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chiang_mai said:
I know positively that I will die within five years hence I have taken the steps necessary to protect my investments
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eskbanker said:chiang_mai said:
I know positively that I will die within five years hence I have taken the steps necessary to protect my investments0 -
chiang_mai said:eskbanker said:chiang_mai said:
I know positively that I will die within five years hence I have taken the steps necessary to protect my investments
According to ONS data, a 69 year old male will live a further 17 years on average, with a 25% chance of reaching 92, but having the whole discussion based on those generic timescales is a waste of time if you're working off completely different undeclared assumptions....
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eskbanker said:chiang_mai said:eskbanker said:chiang_mai said:
I know positively that I will die within five years hence I have taken the steps necessary to protect my investments
According to ONS data, a 69 year old male will live a further 17 years on average, with a 25% chance of reaching 92, but having the whole discussion based on those generic timescales is a waste of time if you're working off completely different undeclared assumptions....0
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