Upside Gains vs Downside Protection

masonic

I thought this thread was about garnering support for the view that your "hairy chest type" friends "don't understand what they've invested in" and should be more cautious like you. Did I get that wrong? Do your friends have similar a health conditions as you? Will their heirs want to cash in their investments rather than keep them, as you think yours will? If not, then it would be completely understandable why their risk tolerance differs from your own. Sorry to hear about your own poor health BTW. Perhaps your friends have been a little insensitive in encouraging you to increase your risk level, but they may not fully understand the position you are in. Your investments seem appropriate for someone who is sure they will not be around in 5 years and whose assets will be sold by their executors or heirs.

chiang_mai

masonic said:

I thought this thread was about garnering support for the view that your "hairy chest type" friends "don't understand what they've invested in" and should be more cautious like you. Did I get that wrong? Do your friends have similar a health conditions as you? Will their heirs want to cash in their investments rather than keep them, as you think yours will? If not, then it would be completely understandable why their risk tolerance differs from your own. Sorry to hear about your own poor health BTW. Perhaps your friends have been a little insensitive in encouraging you to increase your risk level, but they may not fully understand the position you are in. Your investments seem appropriate for someone who is sure they will not be around in 5 years and whose assets will be sold by their executors or heirs.

We are all in similar states of ageing and disrepair and have very similar objectives. And for clarity, as a reminder, the debate is not an attempt to garner support for my view, it was an attempt to understand yours. The degree of sidetracking and a meandering path, is making that difficult however.

chiang_mai

I didn't say so earlier because it wasn't relevant to my questions but I have broadly held the same investment funds for at least ten years, certainly they predate any medical issues I have currently.

On balance, this thread has ceased to be useful, perhaps the moderators can close it down. Thank you to those of you who made useful and sensible contributions.

masonic

chiang_mai said:

masonic said:

I thought this thread was about garnering support for the view that your "hairy chest type" friends "don't understand what they've invested in" and should be more cautious like you. Did I get that wrong? Do your friends have similar a health conditions as you? Will their heirs want to cash in their investments rather than keep them, as you think yours will? If not, then it would be completely understandable why their risk tolerance differs from your own. Sorry to hear about your own poor health BTW. Perhaps your friends have been a little insensitive in encouraging you to increase your risk level, but they may not fully understand the position you are in. Your investments seem appropriate for someone who is sure they will not be around in 5 years and whose assets will be sold by their executors or heirs.

We are all in similar states of ageing and disrepair and have very similar objectives. And for clarity, as a reminder, the debate is not an attempt to garner support for my view, it was an attempt to understand yours. The degree of sidetracking and a meandering path, is making that difficult however.

Risk tolerance is a multifaceted issue. As far as I can see, all of the side-issues raised are relevant to understanding the position they have taken. New information has come to light through discussion: that you "know positively that [you] will die within five years" and you believe your friends are in the same boat; and that none of you have heirs that would want to hold your investments after you pass. This makes it much more clear-cut. If your friends agree with that précis of their circumstances, then I agree with you that their choice of investments is unsuitable for their holding period, and 20-40% equities would be far more suitable to their investment horizon. The only explanation I can think of for their wildly differing viewpoint is that they are more optimistic about how long they will live, but delving into that would really be taking us off topic.

While the discussion around average life expectancies hasn't been of value to you personally, it may be of value to others.

Malthusian

The only explanation I can think of for their wildly differing viewpoint is that they are more optimistic about how long they will live, but delving into that would really be taking us off topic.

Or their wives are more financially aware than the OP's and don't plan on dumping everything into cash on their husbands' deaths.

chiang_mai

Malthusian said:

The only explanation I can think of for their wildly differing viewpoint is that they are more optimistic about how long they will live, but delving into that would really be taking us off topic.

Or their wives are more financially aware than the OP's and don't plan on dumping everything into cash on their husbands' deaths.

That's humorous, one can't even read English and none of them has any understanding of finance, markets, economics or investing. Actually, therein may lie part of my answer. The fellow ex-pats I've mentioned here (and we are good friends incidentally) all worked in offshore oil and gas for many years whereas I worked in financial services et al. Perhaps ignorance is bliss in many respects.

eskbanker

chiang_mai said:

There is nothing undeclared whatsoever about the fact I am almost 70 years of age. Even using the ONS tables my life expectancy may be as little as no more than three more years because those are average figures, where is the common sense in this debate for goodness sake. The ONS tables do not agree with the actuarial tables I have seen this year, albeit I have already said I have lived in Asia and abroad for many many years where life expectancy is different from the UK. Since you're all happy to work on the basis of averages, my medical diagnosis is also based on an average which means I may drop dead tomorrow, or, I may live for a further 10 years. A logical next step is that somebody will open a thread on the accuracy of diagnosis and life expectancy estimates in Asia, just to make the inputs to the debate more accurate! Regardless of the state of their health, if anyone of my age can pinpoint their life expectancy with more precision, their crystal ball must be the extra deluxe model.

Averages have their uses but clearly aren't the be all and end all, so my point was that if you have more specific information that means that your investment horizon is below the average then obviously that's more relevant for planning purposes and is therefore pertinent to the discussion, worthy of a more prominent upfront mention rather than a passing remark four pages in.

In terms of your multiple but vague references to the significance of being in 'Asia', that's obviously a vast continent, with huge variations in life expectancies (>20 years top to bottom), so whether you're in Tokyo or Kabul probably does influence things:

https://www.worldlifeexpectancy.com/life-expectancy-asia

However, if you'd simply highlighted at the start that your investment planning is for a term of five years (without age being a factor at all), you could have avoided the debate about life expectancy if you didn't want it to go down that route....