Recession, Inflation, War, Energy Crisis, Rising Interest Rates - should I stop or reduce drawdown?

BritishInvestor

Deleted_User said:

thriftytracey said:

When you sorted things out with your IFA what sort of "drop" levels did you tell them you were comfortable with?

Have you looked at your overall situation, is your OHs pot in the same investments and therefore the same volatility? As I said I have a similar RL portfolio in one pot but I tend to look at where we are across investments / savings as that is how much "cake" we have in total. 

Personally I would be utilising my personal tax allowance at least, even if I then reinvested it inside an ISA as it is a Use It or Lose It allowance.

There sin't a China / Taiwan conflict at the moment - there are tensions and lots of rhetoric I agree, and who knows where it might end up.

A couple of years ago those fears were focused on North Korea kicking things off, a few years before that it was Iran etc. etc.

In a couple of years time it will be someone else, and being blunt, if China / Taiwan really kicks off and the US / Nato get dragged in then the value of your RL pot will probably not be at the top of your concerns list.

Makes sense to ditch the IFA for a managed portfolio like the RL one but if they were still there you could be asking them these questions. One of the biggest benefits of an IFA from what I have seen and heard from friends and family who use them is the reassurance they provide when things are bumpy.

Pension - As a non-earner you can contribute £2880 net / £3600 gross not £4k. Worth doing.

IFA never asked me what percentage fall I would be comfortable with.  He contacted me just after Covid started when everything started falling and advised me to stop taking income until markets had recovered.  I was pretty hacked off as I thought that was unreasonable and thought I had bought a fairly stable product....  I posted on here at that time and nobody else was doing this (or wouldn't say).

IFAs are there to hold peoples’ hands and to stop people panicking. An IFA who panics in response to short term market movements is particularly useless.  When markets do crazy things and I feel like making changes to my investment and withdrawal strategy, I sleep on it.  The urge always passes after a good snooze. 

Having said this, your funds are in the market and the market is by definition unstable.  So you need to plan for things moving up and down. Some reduction in withdrawals and expenditure could be sensible as long as its part of a plan rather than a knee jerk reaction.  I wouldn’t focus too much on the growth/loss over a few months.

"Some reduction in withdrawals and expenditure could be sensible as long as its part of a plan"

Agreed, but how often would such a scenario occur for a diversified portfolio? Off the top of my head

2022: Drop not severe/long enough
COVID: Drop not long enough, bonds did OK
GFC: Bonds did OK
Dot.com bust: Bonds did OK

Probably looking at 50 years ago during the 1970s. 

"An IFA who panics in response to short term market movements is particularly useless"

Not great.

[Deleted User]

BritishInvestor said:

Deleted_User said:

thriftytracey said:

When you sorted things out with your IFA what sort of "drop" levels did you tell them you were comfortable with?

Have you looked at your overall situation, is your OHs pot in the same investments and therefore the same volatility? As I said I have a similar RL portfolio in one pot but I tend to look at where we are across investments / savings as that is how much "cake" we have in total. 

Personally I would be utilising my personal tax allowance at least, even if I then reinvested it inside an ISA as it is a Use It or Lose It allowance.

There sin't a China / Taiwan conflict at the moment - there are tensions and lots of rhetoric I agree, and who knows where it might end up.

A couple of years ago those fears were focused on North Korea kicking things off, a few years before that it was Iran etc. etc.

In a couple of years time it will be someone else, and being blunt, if China / Taiwan really kicks off and the US / Nato get dragged in then the value of your RL pot will probably not be at the top of your concerns list.

Makes sense to ditch the IFA for a managed portfolio like the RL one but if they were still there you could be asking them these questions. One of the biggest benefits of an IFA from what I have seen and heard from friends and family who use them is the reassurance they provide when things are bumpy.

Pension - As a non-earner you can contribute £2880 net / £3600 gross not £4k. Worth doing.

IFA never asked me what percentage fall I would be comfortable with.  He contacted me just after Covid started when everything started falling and advised me to stop taking income until markets had recovered.  I was pretty hacked off as I thought that was unreasonable and thought I had bought a fairly stable product....  I posted on here at that time and nobody else was doing this (or wouldn't say).

IFAs are there to hold peoples’ hands and to stop people panicking. An IFA who panics in response to short term market movements is particularly useless.  When markets do crazy things and I feel like making changes to my investment and withdrawal strategy, I sleep on it.  The urge always passes after a good snooze. 

Having said this, your funds are in the market and the market is by definition unstable.  So you need to plan for things moving up and down. Some reduction in withdrawals and expenditure could be sensible as long as its part of a plan rather than a knee jerk reaction.  I wouldn’t focus too much on the growth/loss over a few months.

"Some reduction in withdrawals and expenditure could be sensible as long as its part of a plan"

Agreed, but how often would such a scenario occur for a diversified portfolio? Off the top of my head

2022: Drop not severe/long enough
COVID: Drop not long enough, bonds did OK
GFC: Bonds did OK
Dot.com bust: Bonds did OK

Probably looking at 50 years ago during the 1970s. 

Well, I am a fan of VPW, so some adjustment in the withdrawal amount would be happening annually. For most portfolios, most of the time the adjustment would be upwards but not always.  Bonds did have a great 40-year run from 1980 (ish) but they incurred significant real term losses for long periods during the 20th century.  

The mid-action “stop withdrawals NOW” phone calls seem seem extremely dodgy. 

dunstonh

The mid-action “stop withdrawals NOW” phone calls seem seem extremely dodgy. 

Maybe the adviser knew that the OP didn't really need the income and could pull pack, especially with lockdowns reducing the outgoings that year.    

However, this could have been avoided by maintaining a cash float to cover short term withdrawals.  Therefore avoiding the need to sell units whilst cheaper.