Late 2025 low risk changes to ISA and SIPP

jimexbox

I've always been in 100% equities and the huge gains in the magnificent seven is definitely a concern. Coupled with a record price for gold and silver, usually seen as a safe haven has the lights flashing red for me. US inflation and unemployment on the rise too. 

I keep reading how this time it's different, the markets are different, you can't compare to any other time in history. It seems like an investing frenzy, everyone has a fear of missing out. Another red flag for me. 

I'm taking a lot of gains and putting them into a MM fund. I could regret it, or I might not. 

Altior

TheTelltaleChart said:

Dialing down the risk because you've made enough (or somewhere near enough — it's hard to tell what is enough) is perfectly sensible. Though that means fewer equities, not none (unless you plan to spend, or otherwise get rid of, all the capital currently in your portfolio in the short term); because the best defensive longer-term portfolio does include some equities, just not too many.

It's standard stuff to think the current crisis is unique. Some posts above seem to be arguing that this crisis is unique, and even in a similar way to how some earlier crises were unique! And of course, that's true: every crisis is unique, in some ways. That doesn't mean you shouldn't invest now, though. Or in the next crisis. They all feel uniquely worrying. If you get out of equities because things feel bad, intending to get back in when they feel better, than the chances are that, either you'll never get back in, or you'll "capitulate" i.e. admit you were wrong by getting back in when stock markets are higher still.

It's better to consider both possibilities, that bubbly stock markets (if that's what they are) keep growing, or that they deflate, and then pick a portfolio with a mix where you could live with either outcome. (Or with other outcomes, that you may not even have imagined.)

E.g. I am sticking with 75% in equities, but only about 15% in US equities. This leaves me very calm when US equities soar (I make a bit from that) and equally calm when they look like crashing (I wouldn't lose that much). Of couse, I'd have made much more if I'd had all my equities in a (US-dominated) global tracker. However, I do repeatedly get to "harvest" some of the gains from US equities, by rebalancing when US equities have grown to above my target allocation. (In fact, I'm doing that again this week.) And I don't worry at all about when to "get out" of US equities.

It's not a crisis as such, but arguably malformed markets.

The different variables (or what's unique now) in my view are the amounts and influence of index funds (trackers), and 'app' investing for the masses.

I don't feel like we've had a proper deep reckoning since the GFC. Yes covid and lockdown caused a brief fallout, but blink and you missed it and it quickly returned back to being on a tear. We had another wobble with the tariff hyperbole, the same thing happened, we were soon tearing again. 

Nobody knows what will happen, or when. It's almost sure it will break. Huge indexes are mandated to track, so it will be significant forced sales in a blow out. Akin to LDIs, there'll probably be something that the public (or experts), have little knowledge or awareness of.

I cannot get over the logical mismatch of wilful destruction of economic activity for lockdown, and what has happened to equities subsequently, especially US. On the back of which, and the underlying reason, massive national debt in multiple nations. 

InvesterJones

Altior said:

TheTelltaleChart said:

Dialing down the risk because you've made enough (or somewhere near enough — it's hard to tell what is enough) is perfectly sensible. Though that means fewer equities, not none (unless you plan to spend, or otherwise get rid of, all the capital currently in your portfolio in the short term); because the best defensive longer-term portfolio does include some equities, just not too many.

It's standard stuff to think the current crisis is unique. Some posts above seem to be arguing that this crisis is unique, and even in a similar way to how some earlier crises were unique! And of course, that's true: every crisis is unique, in some ways. That doesn't mean you shouldn't invest now, though. Or in the next crisis. They all feel uniquely worrying. If you get out of equities because things feel bad, intending to get back in when they feel better, than the chances are that, either you'll never get back in, or you'll "capitulate" i.e. admit you were wrong by getting back in when stock markets are higher still.

It's better to consider both possibilities, that bubbly stock markets (if that's what they are) keep growing, or that they deflate, and then pick a portfolio with a mix where you could live with either outcome. (Or with other outcomes, that you may not even have imagined.)

E.g. I am sticking with 75% in equities, but only about 15% in US equities. This leaves me very calm when US equities soar (I make a bit from that) and equally calm when they look like crashing (I wouldn't lose that much). Of couse, I'd have made much more if I'd had all my equities in a (US-dominated) global tracker. However, I do repeatedly get to "harvest" some of the gains from US equities, by rebalancing when US equities have grown to above my target allocation. (In fact, I'm doing that again this week.) And I don't worry at all about when to "get out" of US equities.

It's not a crisis as such, but arguably malformed markets.

The different variables (or what's unique now) in my view are the amounts and influence of index funds (trackers), and 'app' investing for the masses.

I don't feel like we've had a proper deep reckoning since the GFC. Yes covid and lockdown caused a brief fallout, but blink and you missed it and it quickly returned back to being on a tear. We had another wobble with the tariff hyperbole, the same thing happened, we were soon tearing again. 

Nobody knows what will happen, or when. It's almost sure it will break. Huge indexes are mandated to track, so it will be significant forced sales in a blow out. Akin to LDIs, there'll probably be something that the public (or experts), have little knowledge or awareness of.

I cannot get over the logical mismatch of wilful destruction of economic activity for lockdown, and what has happened to equities subsequently, especially US. On the back of which, and the underlying reason, massive national debt in multiple nations. 

I'd have thought most of the money in index trackers was in market cap weighted indexes so there is no selling involved if the market goes down. 

Altior

InvesterJones said:

Altior said:

TheTelltaleChart said:

Dialing down the risk because you've made enough (or somewhere near enough — it's hard to tell what is enough) is perfectly sensible. Though that means fewer equities, not none (unless you plan to spend, or otherwise get rid of, all the capital currently in your portfolio in the short term); because the best defensive longer-term portfolio does include some equities, just not too many.

It's standard stuff to think the current crisis is unique. Some posts above seem to be arguing that this crisis is unique, and even in a similar way to how some earlier crises were unique! And of course, that's true: every crisis is unique, in some ways. That doesn't mean you shouldn't invest now, though. Or in the next crisis. They all feel uniquely worrying. If you get out of equities because things feel bad, intending to get back in when they feel better, than the chances are that, either you'll never get back in, or you'll "capitulate" i.e. admit you were wrong by getting back in when stock markets are higher still.

It's better to consider both possibilities, that bubbly stock markets (if that's what they are) keep growing, or that they deflate, and then pick a portfolio with a mix where you could live with either outcome. (Or with other outcomes, that you may not even have imagined.)

E.g. I am sticking with 75% in equities, but only about 15% in US equities. This leaves me very calm when US equities soar (I make a bit from that) and equally calm when they look like crashing (I wouldn't lose that much). Of couse, I'd have made much more if I'd had all my equities in a (US-dominated) global tracker. However, I do repeatedly get to "harvest" some of the gains from US equities, by rebalancing when US equities have grown to above my target allocation. (In fact, I'm doing that again this week.) And I don't worry at all about when to "get out" of US equities.

It's not a crisis as such, but arguably malformed markets.

The different variables (or what's unique now) in my view are the amounts and influence of index funds (trackers), and 'app' investing for the masses.

I don't feel like we've had a proper deep reckoning since the GFC. Yes covid and lockdown caused a brief fallout, but blink and you missed it and it quickly returned back to being on a tear. We had another wobble with the tariff hyperbole, the same thing happened, we were soon tearing again. 

Nobody knows what will happen, or when. It's almost sure it will break. Huge indexes are mandated to track, so it will be significant forced sales in a blow out. Akin to LDIs, there'll probably be something that the public (or experts), have little knowledge or awareness of.

I cannot get over the logical mismatch of wilful destruction of economic activity for lockdown, and what has happened to equities subsequently, especially US. On the back of which, and the underlying reason, massive national debt in multiple nations. 

I'd have thought most of the money in index trackers was in market cap weighted indexes so there is no selling involved if the market goes down. 

The fall. indeed any fall across the market won't be uniform. It's that imbalance that will be critical in part. My personal approach is not to try and work out what will be hit the most, but I will be selective with regard to what to go in on. The other aspect is the ensuing panic, lots of people potentially running for the hills at the same time, then those trackers will eventually need to sell underlying assets in a rapidly declining market. The craziness of the tariff hyperbole was a window into what might happen. However, I'm not claiming to know exactly what will happen, I don't know.

masonic

Altior said:

InvesterJones said:

Altior said:

TheTelltaleChart said:

Dialing down the risk because you've made enough (or somewhere near enough — it's hard to tell what is enough) is perfectly sensible. Though that means fewer equities, not none (unless you plan to spend, or otherwise get rid of, all the capital currently in your portfolio in the short term); because the best defensive longer-term portfolio does include some equities, just not too many.

It's standard stuff to think the current crisis is unique. Some posts above seem to be arguing that this crisis is unique, and even in a similar way to how some earlier crises were unique! And of course, that's true: every crisis is unique, in some ways. That doesn't mean you shouldn't invest now, though. Or in the next crisis. They all feel uniquely worrying. If you get out of equities because things feel bad, intending to get back in when they feel better, than the chances are that, either you'll never get back in, or you'll "capitulate" i.e. admit you were wrong by getting back in when stock markets are higher still.

It's better to consider both possibilities, that bubbly stock markets (if that's what they are) keep growing, or that they deflate, and then pick a portfolio with a mix where you could live with either outcome. (Or with other outcomes, that you may not even have imagined.)

E.g. I am sticking with 75% in equities, but only about 15% in US equities. This leaves me very calm when US equities soar (I make a bit from that) and equally calm when they look like crashing (I wouldn't lose that much). Of couse, I'd have made much more if I'd had all my equities in a (US-dominated) global tracker. However, I do repeatedly get to "harvest" some of the gains from US equities, by rebalancing when US equities have grown to above my target allocation. (In fact, I'm doing that again this week.) And I don't worry at all about when to "get out" of US equities.

It's not a crisis as such, but arguably malformed markets.

The different variables (or what's unique now) in my view are the amounts and influence of index funds (trackers), and 'app' investing for the masses.

I don't feel like we've had a proper deep reckoning since the GFC. Yes covid and lockdown caused a brief fallout, but blink and you missed it and it quickly returned back to being on a tear. We had another wobble with the tariff hyperbole, the same thing happened, we were soon tearing again. 

Nobody knows what will happen, or when. It's almost sure it will break. Huge indexes are mandated to track, so it will be significant forced sales in a blow out. Akin to LDIs, there'll probably be something that the public (or experts), have little knowledge or awareness of.

I cannot get over the logical mismatch of wilful destruction of economic activity for lockdown, and what has happened to equities subsequently, especially US. On the back of which, and the underlying reason, massive national debt in multiple nations. 

I'd have thought most of the money in index trackers was in market cap weighted indexes so there is no selling involved if the market goes down. 

The fall. indeed any fall across the market won't be uniform. It's that imbalance that will be critical in part. My personal approach is not to try and work out what will be hit the most, but I will be selective with regard to what to go in on. The other aspect is the ensuing panic, lots of people potentially running for the hills at the same time, then those trackers will eventually need to sell underlying assets in a rapidly declining market. The craziness of the tariff hyperbole was a window into what might happen. However, I'm not claiming to know exactly what will happen, I don't know.

That's true, but it will be the exiting investors that will pay the price of their units being redeemed at fire-sale prices.

InvesterJones

Altior said:

InvesterJones said:

Altior said:

TheTelltaleChart said:

Dialing down the risk because you've made enough (or somewhere near enough — it's hard to tell what is enough) is perfectly sensible. Though that means fewer equities, not none (unless you plan to spend, or otherwise get rid of, all the capital currently in your portfolio in the short term); because the best defensive longer-term portfolio does include some equities, just not too many.

It's standard stuff to think the current crisis is unique. Some posts above seem to be arguing that this crisis is unique, and even in a similar way to how some earlier crises were unique! And of course, that's true: every crisis is unique, in some ways. That doesn't mean you shouldn't invest now, though. Or in the next crisis. They all feel uniquely worrying. If you get out of equities because things feel bad, intending to get back in when they feel better, than the chances are that, either you'll never get back in, or you'll "capitulate" i.e. admit you were wrong by getting back in when stock markets are higher still.

It's better to consider both possibilities, that bubbly stock markets (if that's what they are) keep growing, or that they deflate, and then pick a portfolio with a mix where you could live with either outcome. (Or with other outcomes, that you may not even have imagined.)

E.g. I am sticking with 75% in equities, but only about 15% in US equities. This leaves me very calm when US equities soar (I make a bit from that) and equally calm when they look like crashing (I wouldn't lose that much). Of couse, I'd have made much more if I'd had all my equities in a (US-dominated) global tracker. However, I do repeatedly get to "harvest" some of the gains from US equities, by rebalancing when US equities have grown to above my target allocation. (In fact, I'm doing that again this week.) And I don't worry at all about when to "get out" of US equities.

It's not a crisis as such, but arguably malformed markets.

The different variables (or what's unique now) in my view are the amounts and influence of index funds (trackers), and 'app' investing for the masses.

I don't feel like we've had a proper deep reckoning since the GFC. Yes covid and lockdown caused a brief fallout, but blink and you missed it and it quickly returned back to being on a tear. We had another wobble with the tariff hyperbole, the same thing happened, we were soon tearing again. 

Nobody knows what will happen, or when. It's almost sure it will break. Huge indexes are mandated to track, so it will be significant forced sales in a blow out. Akin to LDIs, there'll probably be something that the public (or experts), have little knowledge or awareness of.

I cannot get over the logical mismatch of wilful destruction of economic activity for lockdown, and what has happened to equities subsequently, especially US. On the back of which, and the underlying reason, massive national debt in multiple nations. 

I'd have thought most of the money in index trackers was in market cap weighted indexes so there is no selling involved if the market goes down. 

The fall. indeed any fall across the market won't be uniform. It's that imbalance that will be critical in part. My personal approach is not to try and work out what will be hit the most, but I will be selective with regard to what to go in on. The other aspect is the ensuing panic, lots of people potentially running for the hills at the same time, then those trackers will eventually need to sell underlying assets in a rapidly declining market. The craziness of the tariff hyperbole was a window into what might happen. However, I'm not claiming to know exactly what will happen, I don't know.

Sorry, but that's simply not how such trackers work. It doesn't matter if the fall is uniform or not - market cap weighting means your units just adjust in value automatically, no need for the fund to buy or sell. The only inflow/outflow is determined by people buying more or selling more of the index tracker, in which case they buy or sell the whole thing at once - i.e. driven by the buyers/sellers of the fund, not the market.

Altior

InvesterJones said:

Altior said:

InvesterJones said:

Altior said:

TheTelltaleChart said:

Dialing down the risk because you've made enough (or somewhere near enough — it's hard to tell what is enough) is perfectly sensible. Though that means fewer equities, not none (unless you plan to spend, or otherwise get rid of, all the capital currently in your portfolio in the short term); because the best defensive longer-term portfolio does include some equities, just not too many.

It's standard stuff to think the current crisis is unique. Some posts above seem to be arguing that this crisis is unique, and even in a similar way to how some earlier crises were unique! And of course, that's true: every crisis is unique, in some ways. That doesn't mean you shouldn't invest now, though. Or in the next crisis. They all feel uniquely worrying. If you get out of equities because things feel bad, intending to get back in when they feel better, than the chances are that, either you'll never get back in, or you'll "capitulate" i.e. admit you were wrong by getting back in when stock markets are higher still.

It's better to consider both possibilities, that bubbly stock markets (if that's what they are) keep growing, or that they deflate, and then pick a portfolio with a mix where you could live with either outcome. (Or with other outcomes, that you may not even have imagined.)

E.g. I am sticking with 75% in equities, but only about 15% in US equities. This leaves me very calm when US equities soar (I make a bit from that) and equally calm when they look like crashing (I wouldn't lose that much). Of couse, I'd have made much more if I'd had all my equities in a (US-dominated) global tracker. However, I do repeatedly get to "harvest" some of the gains from US equities, by rebalancing when US equities have grown to above my target allocation. (In fact, I'm doing that again this week.) And I don't worry at all about when to "get out" of US equities.

It's not a crisis as such, but arguably malformed markets.

The different variables (or what's unique now) in my view are the amounts and influence of index funds (trackers), and 'app' investing for the masses.

I don't feel like we've had a proper deep reckoning since the GFC. Yes covid and lockdown caused a brief fallout, but blink and you missed it and it quickly returned back to being on a tear. We had another wobble with the tariff hyperbole, the same thing happened, we were soon tearing again. 

Nobody knows what will happen, or when. It's almost sure it will break. Huge indexes are mandated to track, so it will be significant forced sales in a blow out. Akin to LDIs, there'll probably be something that the public (or experts), have little knowledge or awareness of.

I cannot get over the logical mismatch of wilful destruction of economic activity for lockdown, and what has happened to equities subsequently, especially US. On the back of which, and the underlying reason, massive national debt in multiple nations. 

I'd have thought most of the money in index trackers was in market cap weighted indexes so there is no selling involved if the market goes down. 

The fall. indeed any fall across the market won't be uniform. It's that imbalance that will be critical in part. My personal approach is not to try and work out what will be hit the most, but I will be selective with regard to what to go in on. The other aspect is the ensuing panic, lots of people potentially running for the hills at the same time, then those trackers will eventually need to sell underlying assets in a rapidly declining market. The craziness of the tariff hyperbole was a window into what might happen. However, I'm not claiming to know exactly what will happen, I don't know.

Sorry, but that's simply not how such trackers work. It doesn't matter if the fall is uniform or not - market cap weighting means your units just adjust in value automatically, no need for the fund to buy or sell. The only inflow/outflow is determined by people buying more or selling more of the index tracker, in which case they buy or sell the whole thing at once - i.e. driven by the buyers/sellers of the fund, not the market.

It won't happen like this obviously, but are you saying if the S&P 500 fell by 25% in a week, and AAPL itself fell by 50% in that very same week, those trackers wouldn't need to dump any AAPL holdings to reflect the new make up of the S&P, ie AAPL is a smaller portion of the index than it was before the movements? (disregarding outflows due to holders of the tracker exiting the fund). 

masonic

Altior said:

InvesterJones said:

Altior said:

InvesterJones said:

Altior said:

TheTelltaleChart said:

Dialing down the risk because you've made enough (or somewhere near enough — it's hard to tell what is enough) is perfectly sensible. Though that means fewer equities, not none (unless you plan to spend, or otherwise get rid of, all the capital currently in your portfolio in the short term); because the best defensive longer-term portfolio does include some equities, just not too many.

It's standard stuff to think the current crisis is unique. Some posts above seem to be arguing that this crisis is unique, and even in a similar way to how some earlier crises were unique! And of course, that's true: every crisis is unique, in some ways. That doesn't mean you shouldn't invest now, though. Or in the next crisis. They all feel uniquely worrying. If you get out of equities because things feel bad, intending to get back in when they feel better, than the chances are that, either you'll never get back in, or you'll "capitulate" i.e. admit you were wrong by getting back in when stock markets are higher still.

It's better to consider both possibilities, that bubbly stock markets (if that's what they are) keep growing, or that they deflate, and then pick a portfolio with a mix where you could live with either outcome. (Or with other outcomes, that you may not even have imagined.)

E.g. I am sticking with 75% in equities, but only about 15% in US equities. This leaves me very calm when US equities soar (I make a bit from that) and equally calm when they look like crashing (I wouldn't lose that much). Of couse, I'd have made much more if I'd had all my equities in a (US-dominated) global tracker. However, I do repeatedly get to "harvest" some of the gains from US equities, by rebalancing when US equities have grown to above my target allocation. (In fact, I'm doing that again this week.) And I don't worry at all about when to "get out" of US equities.

It's not a crisis as such, but arguably malformed markets.

The different variables (or what's unique now) in my view are the amounts and influence of index funds (trackers), and 'app' investing for the masses.

I don't feel like we've had a proper deep reckoning since the GFC. Yes covid and lockdown caused a brief fallout, but blink and you missed it and it quickly returned back to being on a tear. We had another wobble with the tariff hyperbole, the same thing happened, we were soon tearing again. 

Nobody knows what will happen, or when. It's almost sure it will break. Huge indexes are mandated to track, so it will be significant forced sales in a blow out. Akin to LDIs, there'll probably be something that the public (or experts), have little knowledge or awareness of.

I cannot get over the logical mismatch of wilful destruction of economic activity for lockdown, and what has happened to equities subsequently, especially US. On the back of which, and the underlying reason, massive national debt in multiple nations. 

I'd have thought most of the money in index trackers was in market cap weighted indexes so there is no selling involved if the market goes down. 

The fall. indeed any fall across the market won't be uniform. It's that imbalance that will be critical in part. My personal approach is not to try and work out what will be hit the most, but I will be selective with regard to what to go in on. The other aspect is the ensuing panic, lots of people potentially running for the hills at the same time, then those trackers will eventually need to sell underlying assets in a rapidly declining market. The craziness of the tariff hyperbole was a window into what might happen. However, I'm not claiming to know exactly what will happen, I don't know.

Sorry, but that's simply not how such trackers work. It doesn't matter if the fall is uniform or not - market cap weighting means your units just adjust in value automatically, no need for the fund to buy or sell. The only inflow/outflow is determined by people buying more or selling more of the index tracker, in which case they buy or sell the whole thing at once - i.e. driven by the buyers/sellers of the fund, not the market.

It won't happen like this obviously, but are you saying if the S&P 500 fell by 25% in a week, and AAPL itself fell by 50% in that very same week, those trackers wouldn't need to dump any AAPL holdings to reflect the new make up of the S&P, ie AAPL is a smaller portion of the index than in was before the movements? (disregarding outflows due to holders of the tracker exiting the fund). 

No they would not, because the market cap of AAPL would reduce and therefore the weighting in the index. Only when a share falls out of the index would a rebalance be needed.

Altior

Interesting, in my mind's eye I always had the assumption that trackers had to buy and sell stocks to shadow the index, proportionately. I presumed that's where tracking error came in. I can however now see the logic of what is being said. 

TheTelltaleChart

So, apart from the trackers thing, which has been covered, expecting "a proper deep reckoning" seems a bit picky to me. Markets have gone up and down, but not in the kind of shape you were expecting? They don't have to.

In economic terms, there is no public debt crisis for countries who borrow in the same currency they issue. I'm going to pass over the question of why so many people say otherwise as being a question of politics, not economics.

Debt and savings are 2 sides of the same coin. When a currency-issuing government is the debtor, what you have is a safe form of savings, which is something very useful. And because the currency-issuing government controls interest rates in its own currency, the debt does not grow at unsustainable rates, as other debts can easily do.

Currency simply works better when it is fiat currency, i.e. not backed by gold or anything else. It may feel wrong — shouldn't money be something real? — but money of any kind isn't something that has value independently of society. Money is a social relation. Get used to that idea, and fiat money makes more sense than other kinds.

OTOH, there are real economic issues with excessive private debt, which tends to depress the economy, because people can't buy things they need/want with money that is going to service debt. However, that debt service can be profitable to their creditors, who include listed companies. So it is not all bad for shareholders (just for most of the population).