Timing the market?

cfw1994

SouthCoastBoy said:

Julezy101 said:

SouthCoastBoy said:

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

Hi,
I'm surprised to see that you are not taking your company pension until aged 80, can I ask what your reasoning is behind this?

Just because, based on my projections I won't need it until then. I have a sipp and investments outside my company pension that I will be using. Prior to the iht proposed changes this also worked quite well from a tax perspective, obviously it looks as if that will change.

As I have no db pension I feel I need a safety net so I am using the pension for that as well

How much do you think you will be spending at 80? 😳

Having seen the decline & demise of several elderly relatives, I feel it is highly unlikely to be huge sums, for us at least.  

Maybe 12 months on cruise ships could do it, but that fills me with horror - I’d rather be around seeing what our offspring are up to.
There is, of course, a small chance of expensive healthcare requirements that could demand £££, but it is rare: pretty sure it is single digit % of UK population who end up in a care home, & then the “normal” stay is under 2 years.  If it comes to that, the house can help pay (either sale or equity release somehow).

You really ought to consider retiring early & making the most of your time.  Turn lunchtime walks and cycles into full day adventures!

QrizB

cfw1994 said:

You really ought to consider retiring early & making the most of your time.  Turn lunchtime walks and cycles into full day adventures!

I think this forum has been suggesting to SCB that he can afford to retire immediately for the past five years or so.

SCB is happy to carry on working.

bjorn_toby_wilde

Lots of people with more than enough money to retire don’t, for different reasons.

If Musk took early retirement, that would be great.

Cobbler_tone

bjorn_toby_wilde said:

Lots of people with more than enough money to retire don’t, for different reasons.

If Musk took early retirement, that would be great.

 

I think the majority of people (certainly where I work) are programmed to retire at state pension age. I am sure most could actually retire long before that. The amount of people who don't know how to access their company pension details, or have never tried (people in their late 50's+) is frightening here. They clearly love their jobs! 

MetaPhysical

I am not an IFA, I'm an engineer so take what I say with a large pinch of salt.  However, in my view you shouldn't change strategy just because of a slight downturn, even a larger downturn.  Emotion has zero place in investing.  This downturn is not even in the top thirty of "bad periods" in the markets.  All the big companies - with the possible exception of Tesla and its future with Elon - are minting it still and their businesses are sound.  A few downturns are not a bad thing,  The only "bad" thing about a downturn is if you need to crystallise into cash - so don't if you can avoid it.

I de-risked £100k into cash Money Markets inside my pension just before all of this because of the very real and tangible reason that I am retiring next March and so do not want to sell into cash at the bottom of the market.  However, the rest of my DC fund - £500k - I am still continuing to heavily invest in, infact, I have moved more into equities because I do not think there is a fundamental problem.  I get more for the contributions in a downturn.  Sure it may go down more. But it could all explode back up as well when the markets have adjusted to the orange man.

Keep calm and carry on is my mantra - this is a long term game.  You can be a goal down and still win,  Where there is risk there is opportunity.

As I say, just my opinion FWIW.

Baldytyke88

bjorn_toby_wilde said:

Lots of people with more than enough money to retire don’t, for different reasons.
If Musk took early retirement, that would be great.

If they spent more of their money to benefit society, we might live happier lives, or make a will that does the same.

michaels

SO my pot should have been about 25% in index linked gilts according to my plan but I hadn't got round to it...

Net impact is that my 'SWR' net retirement income is now 3k (5%) pa less than it was when I handed in my notice 3 months ago whereas it should have been 2.2k less had the money been when my model says it should have been.

[Edit: Having said that, in the model I use (https://earlyretirementnow.com/2018/08/29/google-sheet-updates-swr-series-part-28) they give SWR with S&P all time high, S&P up to 10% of high, 10-20% off high etc - currently it is about 9% off the high, if it goes to 10% the suddenly the SWR increases back to what it was before....]

MSE_JC

A polite reminder, all:

2nd_time_buyer

I made the decision to move my DC pension from a global tracker into a cash fund back in mid-November (£220k). The SIPP cash fund offers around 4.5% with a 0.1% fee with II. At the time, I felt that I was on track for my retirement without needing to rely on growth beyond inflation, so I didn't want to take on additional risk. I also had concerns about US tech valuations, particularly with the market reaction after the election.

Since making the change, global markets initially rose by about 3% before experiencing a downturn. While I believe the markets could be higher a year from now, I’m more focused on the security of my retirement. While a larger balance would be ideal, ensuring I have enough to retire comfortably is my main priority.

MetaPhysical

2nd_time_buyer said:

I made the decision to move my DC pension from a global tracker into a cash fund back in mid-November (£220k). The SIPP cash fund offers around 4.5% with a 0.1% fee with II. At the time, I felt that I was on track for my retirement without needing to rely on growth beyond inflation, so I didn't want to take on additional risk. I also had concerns about US tech valuations, particularly with the market reaction after the election.

Since making the change, global markets initially rose by about 3% before experiencing a downturn. While I believe the markets could be higher a year from now, I’m more focused on the security of my retirement. While a larger balance would be ideal, ensuring I have enough to retire comfortably is my main priority.

4.4% is still very respectable and your pot is moving forward wrt inflation.  You have to keep your eye on that though.  If it creeps higher and higher you may need to rethink.