Sick sense anyone?

zagfles

billy2shots said:

For those retiring soon. 


You are still in a strong position if your withdrawal plans continue to make sense. In fact you are in a very strong position if you are still ok. 


The ones to feel sorry for are the ones that retired last year. 
Hopefully their safe withdraw rate was set realistically and or they have cash pots for these type of events. 

Why? Bog standard index trackers are up 50% over the last 5 years, or 25% over the last 3. The vast majority of their pension will have made big gains if invested sensibly. Unless they only started their pension a couple of years before retirement!

zagfles

1980ds said:

My pension, as most likely many others, has had more down than ups over the last 12 months.  Does anyone else have somewhat of a sick sense seeing the downs knowing each month you’re purchasing more units than if it was increasing? 

I’m approx 15 years away from a sniff of the TFLS so the way I look at it is there’s plenty of time for this to recover, am I right in thinking this? Naturally there is no mystic Meg of the pension world. 

I check my pension too regularly I know (mostly daily) but that’s just my OCD more than the desire to make any knee jerk reactions.  Is it best to leave well alone as still a fair chunk of time before I can access it?  

Appreciate your views!!!

Just look at a chart like this one to put into context how tiny the blip of the last year or so is:

https://backtest.curvo.eu/market-index/msci-world

It's worrying how so many people seem to go into panic mode over a slight downturn.

Albermarle

zagfles said:

billy2shots said:

For those retiring soon. 


You are still in a strong position if your withdrawal plans continue to make sense. In fact you are in a very strong position if you are still ok. 


The ones to feel sorry for are the ones that retired last year. 
Hopefully their safe withdraw rate was set realistically and or they have cash pots for these type of events. 

Why? Bog standard index trackers are up 50% over the last 5 years, or 25% over the last 3. The vast majority of their pension will have made big gains if invested sensibly. Unless they only started their pension a couple of years before retirement!

Yes, one of the reasons (not the only one) that I retired last year was because my pension pots had increased so much over the last few years. Partly down to me adding quite a lot, but also significant investments gains. Obviously a downward correction is not ideal, and taking into account inflation, quite a big drop in real terms, but in the long run of 30 years of accumulation and hopefully many years of decumulation, nothing to panic about.

LV_426

zagfles said:

1980ds said:

My pension, as most likely many others, has had more down than ups over the last 12 months.  Does anyone else have somewhat of a sick sense seeing the downs knowing each month you’re purchasing more units than if it was increasing? 

I’m approx 15 years away from a sniff of the TFLS so the way I look at it is there’s plenty of time for this to recover, am I right in thinking this? Naturally there is no mystic Meg of the pension world. 

I check my pension too regularly I know (mostly daily) but that’s just my OCD more than the desire to make any knee jerk reactions.  Is it best to leave well alone as still a fair chunk of time before I can access it?  

Appreciate your views!!!

Just look at a chart like this one to put into context how tiny the blip of the last year or so is:

https://backtest.curvo.eu/market-index/msci-world

It's worrying how so many people seem to go into panic mode over a slight downturn.

Crikey, what happened at the turn of the century? That's one hell of a downturn.

zagfles

LV_426 said:

zagfles said:

1980ds said:

My pension, as most likely many others, has had more down than ups over the last 12 months.  Does anyone else have somewhat of a sick sense seeing the downs knowing each month you’re purchasing more units than if it was increasing? 

I’m approx 15 years away from a sniff of the TFLS so the way I look at it is there’s plenty of time for this to recover, am I right in thinking this? Naturally there is no mystic Meg of the pension world. 

I check my pension too regularly I know (mostly daily) but that’s just my OCD more than the desire to make any knee jerk reactions.  Is it best to leave well alone as still a fair chunk of time before I can access it?  

Appreciate your views!!!

Just look at a chart like this one to put into context how tiny the blip of the last year or so is:

https://backtest.curvo.eu/market-index/msci-world

It's worrying how so many people seem to go into panic mode over a slight downturn.

Crikey, what happened at the turn of the century? That's one hell of a downturn.

Dot com bubble, deflated till about 2003, then a bit of a recovery, then the financial crisis. Just shows how insignificant the downturn of the last year or so is, market is well up over 3-5 despite COVID, Ukraine etc. Of course the worst might be yet to come. I think equities are quite high at the moment, but I'm comparing to 5 years ago not last November. I worry when people think they should be using emergency cash buffers because they think equities are low, they're not unless you have a very short memory.

LV_426

zagfles said:

LV_426 said:

zagfles said:

1980ds said:

My pension, as most likely many others, has had more down than ups over the last 12 months.  Does anyone else have somewhat of a sick sense seeing the downs knowing each month you’re purchasing more units than if it was increasing? 

I’m approx 15 years away from a sniff of the TFLS so the way I look at it is there’s plenty of time for this to recover, am I right in thinking this? Naturally there is no mystic Meg of the pension world. 

I check my pension too regularly I know (mostly daily) but that’s just my OCD more than the desire to make any knee jerk reactions.  Is it best to leave well alone as still a fair chunk of time before I can access it?  

Appreciate your views!!!

Just look at a chart like this one to put into context how tiny the blip of the last year or so is:

https://backtest.curvo.eu/market-index/msci-world

It's worrying how so many people seem to go into panic mode over a slight downturn.

Crikey, what happened at the turn of the century? That's one hell of a downturn.

Dot com bubble, deflated till about 2003, then a bit of a recovery, then the financial crisis. Just shows how insignificant the downturn of the last year or so is, market is well up over 3-5 despite COVID, Ukraine etc. Of course the worst might be yet to come. I think equities are quite high at the moment, but I'm comparing to 5 years ago not last November. I worry when people think they should be using emergency cash buffers because they think equities are low, they're not unless you have a very short memory.

By 'cash buffer' do you means assets such as ISAs? 

kinger101

LV_426 said:

zagfles said:

LV_426 said:

zagfles said:

1980ds said:

My pension, as most likely many others, has had more down than ups over the last 12 months.  Does anyone else have somewhat of a sick sense seeing the downs knowing each month you’re purchasing more units than if it was increasing? 

I’m approx 15 years away from a sniff of the TFLS so the way I look at it is there’s plenty of time for this to recover, am I right in thinking this? Naturally there is no mystic Meg of the pension world. 

I check my pension too regularly I know (mostly daily) but that’s just my OCD more than the desire to make any knee jerk reactions.  Is it best to leave well alone as still a fair chunk of time before I can access it?  

Appreciate your views!!!

Just look at a chart like this one to put into context how tiny the blip of the last year or so is:

https://backtest.curvo.eu/market-index/msci-world

It's worrying how so many people seem to go into panic mode over a slight downturn.

Crikey, what happened at the turn of the century? That's one hell of a downturn.

Dot com bubble, deflated till about 2003, then a bit of a recovery, then the financial crisis. Just shows how insignificant the downturn of the last year or so is, market is well up over 3-5 despite COVID, Ukraine etc. Of course the worst might be yet to come. I think equities are quite high at the moment, but I'm comparing to 5 years ago not last November. I worry when people think they should be using emergency cash buffers because they think equities are low, they're not unless you have a very short memory.

By 'cash buffer' do you means assets such as ISAs? 

Cash is cash.  It could be kept in an ISA, pension, bank or a mattress.  

zagfles

kinger101 said:

LV_426 said:

zagfles said:

LV_426 said:

zagfles said:

1980ds said:

My pension, as most likely many others, has had more down than ups over the last 12 months.  Does anyone else have somewhat of a sick sense seeing the downs knowing each month you’re purchasing more units than if it was increasing? 

I’m approx 15 years away from a sniff of the TFLS so the way I look at it is there’s plenty of time for this to recover, am I right in thinking this? Naturally there is no mystic Meg of the pension world. 

I check my pension too regularly I know (mostly daily) but that’s just my OCD more than the desire to make any knee jerk reactions.  Is it best to leave well alone as still a fair chunk of time before I can access it?  

Appreciate your views!!!

Just look at a chart like this one to put into context how tiny the blip of the last year or so is:

https://backtest.curvo.eu/market-index/msci-world

It's worrying how so many people seem to go into panic mode over a slight downturn.

Crikey, what happened at the turn of the century? That's one hell of a downturn.

Dot com bubble, deflated till about 2003, then a bit of a recovery, then the financial crisis. Just shows how insignificant the downturn of the last year or so is, market is well up over 3-5 despite COVID, Ukraine etc. Of course the worst might be yet to come. I think equities are quite high at the moment, but I'm comparing to 5 years ago not last November. I worry when people think they should be using emergency cash buffers because they think equities are low, they're not unless you have a very short memory.

By 'cash buffer' do you means assets such as ISAs? 

Cash is cash.  It could be kept in an ISA, pension, bank or a mattress.  

Yes could be anywhere - for the PP what I was referring to was the idea some people in drawdown have, of having an emergency stash of cash which they can use to live on when they feel the stockmarket is "low", rather than selling equities. Then when the market is "high", they can replenish the cash buffer by selling equities.

Personally I think this strategy is flawed as it relies on the ability to time the market short term. If anyone can really do that successfully, they should be a billionaire already. Plus it seems most don't have an objective criteria to measure when when the market is high or low, rather a "finger in air", or "gut feeling".  The market is low relative to last November, it's high relative to 3 years ago. So is it low or high now?

Notepad_Phil

zagfles said:

kinger101 said:

LV_426 said:

zagfles said:

LV_426 said:

zagfles said:

1980ds said:

My pension, as most likely many others, has had more down than ups over the last 12 months.  Does anyone else have somewhat of a sick sense seeing the downs knowing each month you’re purchasing more units than if it was increasing? 

I’m approx 15 years away from a sniff of the TFLS so the way I look at it is there’s plenty of time for this to recover, am I right in thinking this? Naturally there is no mystic Meg of the pension world. 

I check my pension too regularly I know (mostly daily) but that’s just my OCD more than the desire to make any knee jerk reactions.  Is it best to leave well alone as still a fair chunk of time before I can access it?  

Appreciate your views!!!

Just look at a chart like this one to put into context how tiny the blip of the last year or so is:

https://backtest.curvo.eu/market-index/msci-world

It's worrying how so many people seem to go into panic mode over a slight downturn.

Crikey, what happened at the turn of the century? That's one hell of a downturn.

Dot com bubble, deflated till about 2003, then a bit of a recovery, then the financial crisis. Just shows how insignificant the downturn of the last year or so is, market is well up over 3-5 despite COVID, Ukraine etc. Of course the worst might be yet to come. I think equities are quite high at the moment, but I'm comparing to 5 years ago not last November. I worry when people think they should be using emergency cash buffers because they think equities are low, they're not unless you have a very short memory.

By 'cash buffer' do you means assets such as ISAs? 

Cash is cash.  It could be kept in an ISA, pension, bank or a mattress.  

Yes could be anywhere - for the PP what I was referring to was the idea some people in drawdown have, of having an emergency stash of cash which they can use to live on when they feel the stockmarket is "low", rather than selling equities. Then when the market is "high", they can replenish the cash buffer by selling equities.

Personally I think this strategy is flawed as it relies on the ability to time the market short term. If anyone can really do that successfully, they should be a billionaire already. Plus it seems most don't have an objective criteria to measure when when the market is high or low, rather a "finger in air", or "gut feeling".  The market is low relative to last November, it's high relative to 3 years ago. So is it low or high now?

For me, who uses natural income, if dividend income is not enough then I take from cash pot, but if there is a surplus then I add that to cash.

But if I was selling funds then for the first few years at least I think I'd use something along the lines of using the current portfolio value to decide on how much (if any) I needed to supplement from cash. E.g. if it's 20% down from when I set the initial drawdown amount then reduce the drawdown from funds and use cash to make up 20% of the drawdown, if it's 20% up and cash balance needs to get back to original value then increase drawdown amount and add to cash. Or something like that... 

Obviously there'd be much greater complexity and much more you'd need to account for such things as how much cash you could afford to have etc,  and it's probably not something that you'want to do every month, but it would take out gut feeling and could tide you over the first years of retirement when several years of bad returns can really derail your long term retirement plans.

Malthusian

zagfles said:

Personally I think this strategy is flawed as it relies on the ability to time the market short term. If anyone can really do that successfully, they should be a billionaire already. Plus it seems most don't have an objective criteria to measure when when the market is high or low, rather a "finger in air", or "gut feeling".  The market is low relative to last November, it's high relative to 3 years ago. So is it low or high now?

Guessing correctly when to turn off withdrawals (so that you don't exhaust your emergency fund) technically is market timing, but it has a much lower level of difficulty than what we traditionally think of as market timing (i.e. hokey-cokeying an entire investment fund in and out of the market attempting to guess the tops and bottoms) and lower consequences for failure.
If you get the timing of pausing/restarting withdrawals wrong, then for each year's worth of error, a small slice of your fund - say about 4% - either misses out on a year's growth or gets cashed in a year too late. If the rise in the market you missed out on or the fall in the market that you could have dodged is say 10%, that means you lose 0.4%. If it's a 20% plummet you lose 0.8%. Whoop de do. Break out the tins of cat food and take an axe to the fusebox.
As you say it is about gut feel, like pretty much every retirement planning decision you ever make (including how much of your earnings to pay into a pension, how long to carry on working and how much of your retirement fund to hold in equities). One way to inform the gut feel decision is to look at how much you are now withdrawing from the fund per annum following the market crash. If you started off with þe olde 4% withdrawal and the markets are down 5%, the withdrawal is now 4.2%pa, i.e. if it was sustainable before it's probably sustainable now. If you went all-in on equities and are down 40%, the withdrawal is now 6.7%pa, which for most of us would cause a re-think. 
If someone cancelled withdrawals from invested assets now I would personally be worried about depleting the cash too early and losing the cushion against a prolonged 2000-2003 style downturn. To me it would make more sense to leave investment withdrawals as they are and dip into the cash savings for cost-of-living increases.