Increased Markets Volatility

tigerspill

Background
I am close to 60.  Stopped work at 53.  OH stopped work at 54 and is also approaching 60.  I took my BD pension at 55 and my wife will take hers at 60.  We have been topping my my DB pension from savings.

Earlier in the year I took stock (no pun intended) of my finances and that my equities were well up at that point.  I chose to sell some to give me around 7 years in cash.  This cash is to top up my occupational pension for the next year.  Then my wife's occupational pension kicks in so will need less  savings top up.  In seven years time, both our state pensions kick in and very significantly reduce our risk at that time.
While I appreciate that equities are well up from when I sold, I do still have significant investments that have taken advantage of this.  
All in all, I am comfortable with my decisions.  I have actually become increasingly comfortable; with the blip in early Spring, and now what is happening again, I find that they don't really fizz on me at all (and i am a worrier).

I see that some are putting their cash in money market funds rather than into savings accounts.  What funds are you using and are you getting better rates than savings accounts and premium bonds?

chiang_mai

Eco_Miser said:

I'm over 70. I haven't changed a thing (about 80% equity in invested pot), but I have state pension and annuity and 8+ years spending in cash. The cash is a little high, but it keeps accumulating faster than I spend it.

In addition to my 5 years cash in my investment pot, I also have many years cash here in Asia where there is no sensible and good investment for it. In addition, I'm in the process of selling my UK flat which will bring yet more cash. My pensions income takes care of my living expenses. My sence is this is a common problem today, too much cash swilling around, looking for a home. It may sound like a nice problem tyo have but really it isn't. I am 75. At one time I might have considered stashing it in gold, but not today.

tigerspill

Albermarle said:

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.

While this is absolutely true, people are human and don't really understand investing and regardless of the facts, they sill see the drop and the scaremongering news and this creates fear.  Human nature isnt always logical.

eskbanker

chiang_mai said:
My sence is this is a common problem today, too much cash swilling around, looking for a home. It may sound like a nice problem tyo have but really it isn't.

Why isn't it a nice problem to have?  It sounds like an extraordinarily fortunate position to be in (without any knowledge of how you got there) and not at all common - it's one that most would dream of, even though there may be a disproportionately high number in the same boat on a site like this....

tigerspill

chiang_mai said:

Eco_Miser said:

I'm over 70. I haven't changed a thing (about 80% equity in invested pot), but I have state pension and annuity and 8+ years spending in cash. The cash is a little high, but it keeps accumulating faster than I spend it.

In addition to my 5 years cash in my investment pot, I also have many years cash here in Asia where there is no sensible and good investment for it. In addition, I'm in the process of selling my UK flat which will bring yet more cash. My pensions income takes care of my living expenses. My sence is this is a common problem today, too much cash swilling around, looking for a home. It may sound like a nice problem tyo have but really it isn't. I am 75. At one time I might have considered stashing it in gold, but not today.

I think how much cash we each hold is totally dependent on our personal circumstances.
I have 7 years cash (based on more spending that will likely happen).  Yes, it has inflationary risk, but I am totally OK with this.
So I am guessing that you might say I have a load of cash "swilling around", but it allows me sleep at night and am happy that I may lose out a bit on inflation (though currently savings rates and inflation are pretty close).

Bostonerimus1

I couldn't care less. The OP's first two paragraphs sound like a piece from anyone of hundreds of investing news letters and so are of no interest to me at all.

InvesterJones

tigerspill said:

I see that some are putting their cash in money market funds rather than into savings accounts.  What funds are you using and are you getting better rates than savings accounts and premium bonds?

Better than premium bonds certainly. Savings accounts depends on the tax situation - MMF can be held in stocks and shares ISAs so interest is tax free - if you don't need to pay any tax on savings interest then you could probably just about beat the return of MMF. Cash ISAs are good competition however - but I like the flexibility of being able to rebalance to different assets without needing to wait for a transfer.

Vitor

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

Nope, they're all sown into the hem of my overcoat

Linton

chiang_mai said:

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.

Well over 50 and retired…

Market volatility does not worry me at all. It interests me, and I follow the data daily,  but it won’t lead to sleepless nights nor to my making major changes to my portfolio. The strategy is easy: Firstly, ensure meeting essential liabilities in the next 10 years is not dependent on equity prices.  Secondly ensure that your investments are well diversified across all factors. 

If circumstances occur which are not mitigated by this strategy, it would seem likely that no other strategy would have done better. Furthermore  you and every one else would probably have far more to worry about than the state of their investments.

A good way of looking at investment management in my view is to always work on the assumption that a market crash could happen tomorrow. Any panic reaction when one really does happen is evidence that you got it wrong in the first place.

chiang_mai

eskbanker said:

chiang_mai said:
My sence is this is a common problem today, too much cash swilling around, looking for a home. It may sound like a nice problem tyo have but really it isn't.

Why isn't it a nice problem to have?  It sounds like an extraordinarily fortunate position to be in (without any knowledge of how you got there) and not at all common - it's one that most would dream of, even though there may be a disproportionately high number in the same boat on a site like this....

I have cash in the bank in Asia where I live that supports my existence here, I don't need the funds for daily cash flow but living here does require a larger than usual ermergency fund for things such as visa, medical etc. For example, my health insurer cancelled my health insurance two years ago, not for any other reason than I had reached an age that represented higher risk (the rules are different here) which means I must now self fund. That money earns less than 1% (less tax) and there are no other low risk investment options. Fortunately inflation is under 2%, or so says the BOT, but that cash is still a reducing asset. I was brought up to make monmey work for me and it's frustrating that I can't do that here. And my Western options are limited, especially since I am now selling my UK address because I don't have the same access to low risk high street investments that residents do.