Timing the market?

QrizB

TheBanker said:

Is this a rational view (or as rational as a view can be in these crazy times?).

Yes, it is.

Cobbler_tone

TheBanker said:

I am about 15 years away from retirement so not hugely concerned. 

However I am about to make a relatively large contribution through Bonus Sacrifice. By default it will be invested in a global equity tracker. Part of me says it's a good time to buy, at a discount. By the time I come to draw my pension Trump will be long gone and, hopefully, normallity will have returned. Is this a rational view (or as rational as a view can be in these crazy times?).

15 years...I wouldn't be concerned.
It's not just Trump, it is the global impact of numerous events and many people have been feeling it since Covid. The early bullish approach by him is clearly having an immediate impact now but "he does deals" and he was always going to introduce volatility.

Old article on his previous impact.
https://www.bbc.co.uk/news/world-45827430

People retiring imminently may be a little more twitchy.

AyJaydee

Worrying times indeed…
In my last 18 months of working life, I put as much of my salary as I could into the pension pot, while living off my savings. Seemed a win-win at the time as it reduced my tax bill considerably. However…..
I’m nervously looking at my sipp  and it’s losing about £1k every day, thanks to the Orange Man.  The only bright side is that I don’t need the money yet and he won’t be in office forever. 

SouthCoastBoy

I don't really understand the concern about the current market volatility, it is to be expected, there are always bumps in the road. If your portfolio can't withstand a 30% drop and not recover for at least 10 years I would argue you don't have the financial resilience to retire just yet.

kempiejon

Anyone changing strategy is smarter than me. I know I'm not clever enough to know much more than the stock markets prices change all the time and long term, investment in enterprise is more profitable than cash so I buy most month. My strategy doesn't much change if market are falling or rising. I usually do a bit of selling around this time every year for tax planning and I also have a few takeovers in hand so a bit of extra activity when that cash settles in the accounts. I was eyeing my UK holdings for variety away from global. I have some fixed interest maturing over the next few months, I'm likely to reinvest into more of the same.

Moonwolf

SouthCoastBoy said:

I don't really understand the concern about the current market volatility, it is to be expected, there are always bumps in the road. If your portfolio can't withstand a 30% drop and not recover for at least 10 years I would argue you don't have the financial resilience to retire just yet.

Personally I am more impacted as I am retiring two weeks tomorrow.

I have run multiple scenarios and I should be better off than many, even on a 1929 scale crash, although I would have to make adjustments. 

It is just that starting drawdown, particularly at a temporarily unsustainable rate, as I am bridging to my DB and state pensions, is more uncomfortable after a fall in the market.

SouthCoastBoy

Moonwolf said:

SouthCoastBoy said:

I don't really understand the concern about the current market volatility, it is to be expected, there are always bumps in the road. If your portfolio can't withstand a 30% drop and not recover for at least 10 years I would argue you don't have the financial resilience to retire just yet.

Personally I am more impacted as I am retiring two weeks tomorrow.

I have run multiple scenarios and I should be better off than many, even on a 1929 scale crash, although I would have to make adjustments. 

It is just that starting drawdown, particularly at a temporarily unsustainable rate, as I am bridging to my DB and state pensions, is more uncomfortable after a fall in the market.

The point I tried to make was, imo, you are only ready to retire tmrw, if a 30% reduction in your portfolio today will not impact your retirement plans. 

kempiejon

SouthCoastBoy said:

Moonwolf said:

Personally I am more impacted as I am retiring two weeks tomorrow.

I have run multiple scenarios and I should be better off than many, even on a 1929 scale crash, although I would have to make adjustments. 

It is just that starting drawdown, particularly at a temporarily unsustainable rate, as I am bridging to my DB and state pensions, is more uncomfortable after a fall in the market.

The point I tried to make was, imo, you are only ready to retire tmrw, if a 30% reduction in your portfolio today will not impact your retirement plans. 

I've picked some numbers worked on the idea that my income could halve and take 5 years to recover. The financial to-do in 2007/8/9 was of that order I think, 2020 lockdown my income fell by 50% but recovered in 3 years. With belt tightening and spending cash and maturing fixed interest I can survived. If you're worried about those first years a bond/gilt/cash equivalent to a year or two prevents being a forced seller in a downturn. This sequence of returns risk mitigation was a redirection to my planning, assets and portfolio construction once my employment started to annoy me.

SouthCoastBoy

kempiejon said:

SouthCoastBoy said:

Moonwolf said:

Personally I am more impacted as I am retiring two weeks tomorrow.

I have run multiple scenarios and I should be better off than many, even on a 1929 scale crash, although I would have to make adjustments. 

It is just that starting drawdown, particularly at a temporarily unsustainable rate, as I am bridging to my DB and state pensions, is more uncomfortable after a fall in the market.

The point I tried to make was, imo, you are only ready to retire tmrw, if a 30% reduction in your portfolio today will not impact your retirement plans. 

I've picked some numbers worked on the idea that my income could halve and take 5 years to recover. The financial to-do in 2007/8/9 was of that order I think, 2020 lockdown my income fell by 50% but recovered in 3 years. With belt tightening and spending cash and maturing fixed interest I can survived. If you're worried about those first years a bond/gilt/cash equivalent to a year or two prevents being a forced seller in a downturn. This sequence of returns risk mitigation was a redirection to my planning, assets and portfolio construction once my employment started to annoy me.

Yes,I have modelled something similar, and used scenarios of 30 to 80% reduction with no recovery other than annual growth of 3.5% per annum. As I am close to retirement (maybe) I also hold substantial cash so can live off that for a number of years, actually I'm not planning to use my company pension until I reach 80. Inflation is the key for me, see how that goes when compared to interest rates over the net few years

MK62

SouthCoastBoy said:

Moonwolf said:

SouthCoastBoy said:

I don't really understand the concern about the current market volatility, it is to be expected, there are always bumps in the road. If your portfolio can't withstand a 30% drop and not recover for at least 10 years I would argue you don't have the financial resilience to retire just yet.

Personally I am more impacted as I am retiring two weeks tomorrow.

I have run multiple scenarios and I should be better off than many, even on a 1929 scale crash, although I would have to make adjustments. 

It is just that starting drawdown, particularly at a temporarily unsustainable rate, as I am bridging to my DB and state pensions, is more uncomfortable after a fall in the market.

The point I tried to make was, imo, you are only ready to retire tmrw, if a 30% reduction in your portfolio today will not impact your retirement plans. 

I would argue that there are few whose retirement plans would not be impacted by a 30% reduction in their portfolio.......the key is whether they can tolerate any drop in income that such a portfolio reduction might well entail.

Of course, there are also ways to mitigate such an impact as well, if the fear of such a portfolio reduction is a real concern.........