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Increased Markets Volatility

Markets will almost certainly open down on Monday, on the back of the latest trade and tariff spat between the US and China. Meanwhile, Dimon has expressed concern at the increased ptential for market falls and the likes of Jeremy Warner have recently dedicated long columns to the subject. For the average retail investor this will mean anything from mild concern to abject fear, based on your age and financial circumstances. 

Following April’s markets correction, I took steps to behave more sensibly and show more restraint, which in an exciting and action packed up market, isn’t always that easy to do. Last month I went one step further and took on board Buffets advice to be fearful when others are being greedy.  I set aside five years income in cash, money markets and bonds and capped my equities investment at 50%, today I’m feeling very comfortable with whatever the markets may throw at us and no longer feel the need to peek at the indices each day to see the extent of the action.

My question is, where are each of you with these things, are you taking a potential correction or crash in your stride or have you taken special steps to reign in your enthusiasm. Under 50’s behavior will no doubt be different from the older set hence it may help if you say which group you are in.....I'm very very much in the over 50's group! It’s interesting to note that one of the bestselling funds by the high street brokers in recent months has been RL Short Term Money Markets. If that is true, quite a few investors are shoring up the defenses.


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Comments

  • Eyeful
    Eyeful Posts: 1,064 Forumite
    Fifth Anniversary 1,000 Posts Name Dropper
    Whatever age you are:
    Your investments should never cause you worry or loss of sleep.
    If they do, you have set your risk level too high!
    Just reduce your risk to a level that you are comfortable with and lets you sleep at night.
  • GazzaBloom
    GazzaBloom Posts: 834 Forumite
    Sixth Anniversary 500 Posts Photogenic Name Dropper
    edited 12 October at 11:10AM
    Age 59 and I too moved a chunk of equities funds to cash at the start of the year, 8 years worth of inflated living expenses plus known one off expenses during that time, as I started retirement in January. The cash is earning BOE base rate inside pension wrapper. This is part of a "rising equity glide path" plan. We will consume the cash over the remainder of this year and a further 7 which is when our state pensions start paying out. During that time the portfolio will shift from a starting 55% equity / 45% cash ending back at 100% equities in that 8 years. This covers the early retirement sequence of returns risk (by avoiding the need to draw from equities when they are down at the start of retirement) and by the time the SPs kick in our annual drawdown requirements from the invested portfolio will be much reduced, should be well below 1% of portfolio value (hopefully!).

    Depending on how things look around 6-7 years from now I may carve off another chunk to cash to cover another 8-10 years after that, we'll see.

    Cash flow modelling shows 100% success rate even in a prolonged downturn or extended period of low returns. My own spreadsheet shows a minimum annual return of 0.75% required to avoid running out of money to age 100 so I feel reasonably confident in being able to hang tough and ride out any crashes or further Trump toilet tweet tantrums at present. 

    Obviously, all retirement plans make assumptions and can't plan for unknown unknowns but I will adjust as and if required as we go along.
  • Albermarle
    Albermarle Posts: 28,950 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    For the average retail investor this will mean anything from mild concern to abject fear, based on your age and financial circumstances. 

    The average retail investor is significantly up this year, so hopefully that will dull any pain.
  • InvesterJones
    InvesterJones Posts: 1,336 Forumite
    1,000 Posts Third Anniversary Name Dropper

    where are each of you with these things, are you taking a potential correction or crash in your stride or have you taken special steps to reign in your enthusiasm. Under 50’s behavior will no doubt be different from the older set hence it may help if you say which group you are in.....I'm very very much in the over 50's group! It’s interesting to note that one of the bestselling funds by the high street brokers in recent months has been RL Short Term Money Markets. If that is true, quite a few investors are shoring up the defenses.


    For me I've been buying more STMMF simply because the equities portion of my portfolio was doing so well I needed to rebalance. Global passive index trackers have also been selling well according to platforms, so I think it's not been too unusual. I've got a roughly 10 year timeline before drawdown so aside from that rebalancing I've not changed anything. 
  • hallmark
    hallmark Posts: 1,476 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    I was 100% cash about 4 years ago. Since then I've been able to contribute to SIPPs & ISAs and I've gradually moved more and more into shares/bonds/gilts.  It's taken me a fair while because I was learning as I went and also I didn't want to just shove the lot into non-cash investments in one go.

    I've invested about 85% of what I intended to with about 15% remaining dry powder, all of which is in an ISA waiting to topup a basket of ITs that I hold there.

    Any further contributions to pension or dividends I've been immediately investing in VHYL which is my go to fairly boring, valueish, yieldish fund. It currently yields just under 3% with a P/E of around 14 so it's not crazy by historic standards.  The kind of fund that might fall more like 20-30% if the tech stuff at the top fell 50%.

    IMO there is nowhere safe at the moment. Even cash carries substantial risks of it's own. So might as well keep dripping.  If we do hit a bear market of some reasonable description I'll invest the rest of the ISA dry powder.
  • Vitor
    Vitor Posts: 925 Forumite
    500 Posts First Anniversary Photogenic Name Dropper
    edited 12 October at 1:25PM
    My BTC exposure is house money after taking 300% gains
    Sold my exposure to India and 'green'/ecology sectors
    Lightened my exposure to Europe and Technology
    Holding gold sovereigns for now
    Thinking of selling M&S

    Taking practical 'prepping' steps, have petrol generator to ride out power cuts etc. Good luck everone
  • SloughSally
    SloughSally Posts: 12 Forumite
    10 Posts
    60 years old retired .
    Over the last 6 months  gone from 70% equities to 20% all held within a S&S ISA.
    The remaining 80% is held  25%  2, 3, 5 year fixed cash ISA . 35% STMMF  acc within ISA. 15% Various fixed term bonds and regular savers. 5% Easy Access cash @ 4.2%.
    Since peace of mind is more important to me than long term capital gain I am happy  with this, although I know the lower risk normally brings lower returns, but that is only when the bull is running, sooner or later it will,like always run out or breath.
    When  the markets eventually correct themselves by around 25% I’ll  use the STMMF to buy back in, if not happy to just take the modest , safer gains.
  • DRS1
    DRS1 Posts: 1,709 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Vitor said:
    My BTC exposure is house money after taking 300% gains
    Sold my exposure to India and 'green'/ecology sectors
    Lightened my exposure to Europe and Technology
    Holding gold sovereigns for now
    Thinking of selling M&S

    Taking practical 'prepping' steps, have petrol generator to ride out power cuts etc. Good luck everone
    You left out the nuclear bunker at the bottom of the garden and your stock of guns and ammo.

    BTW I hope you're not leaving any fingerprints on those gold sovereigns.
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