Convincing myself to go 100% equities

adindas

barnstar2077 said:

My ISA and pension are both 100% equities.  I want to retire earlier than state pension age, but I also have some flexibility as to when I do so, so I can always delay a few years (or do less hours) if things are not going so well at the time.

Another option IMO is that you could always sell a fraction of it if you need cash as long as it is still in green and you have not paid additional tax for doing that.

Some investment, stocks could work like cash alike instrument to be used instead of holding too much cash.

If you are using near zero fee platform it is dead easy and it will cost people almost nothing to do that.

bostonerimus

barnstar2077 said:

My ISA and pension are both 100% equities.  I want to retire earlier than state pension age, but I also have some flexibility as to when I do so, so I can always delay a few years (or do less hours) if things are not going so well at the time.

Do you have a plan for the size of pot you need and the income you need to generate? ie why are you taking the risk of 100% equities. What other things have you done as part of your income plan? Have you eliminated debt including the mortgage or looked into sources of income other than drawdown and SP?

NoviceInvestor1

EthicsGradient said:

No, I don't think it would be valid to say "MOST retail investors would have generated far more wealth using the 60/40 portfolio".

JP Morgan data has a view on this

older_and_no_wiser

Interesting in the chart that @NoviceInvestor1 posts that small caps and emerging markets are so successful. These are very volatile sectors and certainly have suffered this year more so than the usual large cap big boys. It shows the benefit of holding tight though and riding the storm.....or so I'm telling myself as I have a global small cap index tracker, UK managed small cap and BG Emerging Markets funds in my portfolio and waiting for the market upturn.

Happy_planner

Historical data on equity/bond portfolios is often used to illustrate the calming effect of bonds on cyclical volatility. However we’ve been through several decades of falling interest rates, which has meant rising bond prices. 

Although I haven’t done the maths, I suspect bond-heavy portfolios may be less stable through equity downturns than they have been in the past. 

I’m 100% equities, not because I want the risk, but because I’m not confident enough that bonds will reduce volatility over the next 10-20 years. 

older_and_no_wiser

Happy_planner said:

I’m 100% equities, not because I want the risk, but because I’m not confident enough that bonds will reduce volatility over the next 10-20 years. 

I'm around 95% equities for similar reasons. My portfolio is probably way too fragmented. I do have the more "risky" multi asset funds from HSBC (Global Strategy Dynamic) and BlackRock MyMap (6). I also have a fair bit in Fidelity Index World P and some smaller managed active funds as I said above.

I will probably reallocate once things pick up and I get back out of the red in those highly volatile managed funds. However, although I retire in 4-5 years, I will remain invested for the rest of my life, so I see no need to up the bond allocation too much. I plan to keep at least 2 years of living expenses in cash/savings at all times so that I don't need to sell too much during market downturns. I also (luckily) have a portfolio valued at an amount that I will never spend even if I live to 100. Maybe that's a good reason to ramp up the bond level!

Linton

NoviceInvestor1 said:

EthicsGradient said:

No, I don't think it would be valid to say "MOST retail investors would have generated far more wealth using the 60/40 portfolio".

JP Morgan data has a view on this

I think that this is another example of where you can get a wide range of results depending on your start date. Jan 2001 was near the start of the .com crash when equity fell by more than 50% and did not fully recover until 2006/7 just in time for the next crash.  A 2003 or 1998 start would show very different results.

MK62

I took it to be more of an illustration of "average" investor behaviour........

bostonerimus

Some info on returns, but absent anything about investor behaviour or volatility it's really just another marketing tool. Interesting to note that 2021 and 2022 are not included.

EthicsGradient

NoviceInvestor1 said:

EthicsGradient said:

No, I don't think it would be valid to say "MOST retail investors would have generated far more wealth using the 60/40 portfolio".

JP Morgan data has a view on this

I stand corrected - though, since they list 'Cash' and 'Commodity' as well, it would be interesting to know if they calculated the "average investor"'s return including their holdings in those, or just from "stock", "stock and bond", or "stock, bond and home" holdings.