Timing the market

Duggo

I know in theory you shouldn’t try timing the market,  however I have just completed a transfer to A J Bell, and it’s now held in cash. I had planned to immediately move it to the cautious fund, and then the investment pathway 4.  

As I’m going to start withdrawing in April I’m vaguely tempted to leave it in cash for the short term, well probably until April when I go into drawdown.   Seems to be a lot going on in the markets at the moment. Any flaws with my plan?

barnstar2077

It really depends how much of the money you plan on withdrawing in April?  Most people, with a bit of luck, won't need most of the pot for decades, so it would be better if that portion were invested.

Duggo

This pension is a small part of my overall plan. It’s £20k and I hope to be able to withdraw £500 a month until it runs out.

dont_use_vistaprint

My understanding of not timing the market is related to long-term investments and regular investing 

If was me I would stick it in an etf style short-term money market at the moment and wait for a good entry point into a cautious fund, but it's only £20,000....

michaels

I guess there is a trade off between any dealing costs and the difference between the platform cash interest rate and the mmf rate.

Most would want any funds to be drawn in the short term to be in low volatility funds like MMF or cash but the question is what does short term mean....

Kryten_the_Titan

Does the £500 a month from April 2026 take in to account having accessed the tax free lump sum of this £20,000 transfer?  I.e. you would crystallise £20,000 which would give you a one off £5,000 tax free lump sum, leaving £15,000 to drawdown from (i.e. provide a regular taxable element of income).  If this regular income remained at £500 a month this may last you to the end of 2028.  In such a short period caution might be advisable and keeping the funds in a cash like or money market fund may be the more sensible option.

Albermarle

 Seems to be a lot going on in the markets at the momen

By historical standards, stock markets are pretty quiet at present following big rises in 2025.

In the last month -
The S&P 500 is up 0.5%
The FTSE 100 is up 2.5%
The German Dax is up 1 %
Asian markets are up a bit more.

People often assume global events will affect global markets negatively, but often they do not.
The markets are more concerned about AI development and how many Iphones have been sold, than what Trump is banging on about.

Duggo

Kryten_the_Titan said:

Does the £500 a month from April 2026 take in to account having accessed the tax free lump sum of this £20,000 transfer?  I.e. you would crystallise £20,000 which would give you a one off £5,000 tax free lump sum, leaving £15,000 to drawdown from (i.e. provide a regular taxable element of income).  If this regular income remained at £500 a month this may last you to the end of 2028.  In such a short period caution might be advisable and keeping the funds in a cash like or money market fund may be the more sensible option.

I don’t actually need a tax free lump sum. This will be my only income. I’d assumed I could take a tax free amount every month and a ‘taxable’ amount? Is this possible?

LHW99

Duggo said:

Kryten_the_Titan said:

Does the £500 a month from April 2026 take in to account having accessed the tax free lump sum of this £20,000 transfer?  I.e. you would crystallise £20,000 which would give you a one off £5,000 tax free lump sum, leaving £15,000 to drawdown from (i.e. provide a regular taxable element of income).  If this regular income remained at £500 a month this may last you to the end of 2028.  In such a short period caution might be advisable and keeping the funds in a cash like or money market fund may be the more sensible option.

I don’t actually need a tax free lump sum. This will be my only income. I’d assumed I could take a tax free amount every month and a ‘taxable’ amount? Is this possible?

That's UFPLS where 25% of each payment is tax-free and the remaining 75% is taxed at your particular income tax rate.

Most DIY platforms would want you to arrange each withdrawal separately online / by phone as they tend not to allow arrangement of a regular monthly UFPLS. People seem to get around it either by taking a single larger payment annually and using an easy access account to transfer funds from when needed, or they crystallise a certain amount, take the relevant TFLS and arrange a monthly payment from the taxable part.

ppp123

If the money is likely to be fully drawn within 2–3 years, keeping it in cash or a money market fund is usually more about capital preservation than chasing yield. The investment return matters far less than avoiding volatility over that timeframe.