Rising SIPPS and DIY learnings

SpeedSouth

Years ago I came on here, not knowing much and have read and understood some during that time. At the point in time with what was a pretty small amount of money the general consensus was Global Trackers fire & forget.

The value of my investments, built on that mantra and with continued investing have grown significantly as you'd expect with the markets over the last 10 years.

Now with total investments approaching £950k and still predominantly invested in global trackers and reading various threads I'm beginning to doubt some of that logic. Some of it noise around US AI bubbles, some of it market is due to crash tomorrow noise.

I fully accept they will go up and down, and have seen large amounts of money wiped out at points during this run, but have always gone back up pretty quickly.

In SIPPS we have £820k invested in 100% Global Equity Trackers - Single Variants in each SIPP

ISAS - £120K VLS 60%

44 yo, so still a while of drawing on those pensions, so can certainly absorb some market fluctuation between now and, but at what point should I be locking in gains an de-risking, as 10 years ago when I started I was 25 years away given the expected retirement age at the time.

Looking to retire by 55 now, so pushing ISA harder than I have previously given the significant pension weighting currently.

Whilst I have invested in global trackers I consider myself lucky as my knowledge and understanding compared to most on here is almost zero it seems. When people talk about investing in countries/sectors I fully understand all the concepts. But how are you making the decisions that UK will perform better than the US, or Oil is going to be better than Tech, Or that Venezuela is undervalued?

Seems ILG are popular currently as people look to preserve what they have.

Not sure I really have a question, but wonder how many are in a similar position, or are most with amounts this size prepared to admit they fully understand their decisions.

Way back when I did speak to IFA. At the time I felt it wouldn't add significant value, but wondering if it is time to reassess that again. I think the amounts of money involved now are pretty large to make mistakes with essentially.

kempiejon

What helps you sleep at night. Perhaps your attitude to risk changed now you've a bigger pot at risk but you would not have got a big pot without that risk. By 55 is about 10 years to retirement so still time to add to the portfolio and recovery but you're perhaps not so comfortable with that. Cash, gilts, money market, premium bonds, can offset the 100% equity but inflation can be an drag over a decade.

Whilst I have invested in global trackers I consider myself lucky as my knowledge and understanding compared to most on here is almost zero it seems. When people talk about investing in countries/sectors I fully understand all the concepts. But how are you making the decisions that UK will perform better than the US, or Oil is going to be better than Tech, Or that Venezuela is undervalued?

Are they making good decisions though? Will they beat a global tracker over the next decade

eskbanker

44 yo, so still a while of drawing on those pensions, so can certainly absorb some market fluctuation between now and, but at what point should I be locking in gains an de-risking, as 10 years ago when I started I was 25 years away given the expected retirement age at the time.

Looking to retire by 55 now, so pushing ISA harder than I have previously given the significant pension weighting currently.

But unless you plan to buy an annuity, you won't be needing access to much of your pot at 55, so will presumably need to continue with investment growth for multiple decades beyond that, rather than 'cashing out' as it were?

El_Torro

Nothing is certain when it comes to investments but I think it would be a safe bet to say that the road will be rockier and returns lower in a global tracker over the next 10 years than the last 10 years. I might be wrong of course, but I doubt it.

That's not to say that shoving what you can in a global tracker and then forgetting about it for 10 years is suddenly a bad idea. I think it will still generate a good return, just maybe not a 200% return.

I don't have as much invested as you but in my current thinking I am about 12 years from retirement. Might be more, might be less. I'm thinking that when I get to 10 years from retirement I will want to put some of my investments in a 60 / 40 fund rather than 100% equities. Then when I get to 5 years from retirement I will start thinking of safer investments, at least for some of the money. Not to say that my approach is the "right" one, we all have to consider our options based on how much growth we need vs how much growth we can get away with vs how much risk we're willing to take.

InvesterJones

I've learned not to over think it. The principles stay the same - diversified equities for growth, other assets to cover spending when/if equities are not doing well. Keep risk/volatility at a level I'm comfortable with.

If you've hit your numbers in terms of what you need to retire on there's no point taking on more risk than you need to - so maybe working out those numbers is the next step.

tacpot12

I'm with Eskbanker on this. Retiring at 55, if you plan on using drawdown until you are 75, you are still looking at a 31 year investing horizon. That's a long time!

SpeedSouth

What helps you sleep at night. Perhaps your attitude to risk changed now you've a bigger pot at risk but you would not have got a big pot without that risk.

An element of that maybe. Losing 50% of £950k is a far bigger chunk of money than £100k. Do I need to continue to take the same risks.

Not to say that my approach is the "right" one, we all have to consider our options based on how much growth we need vs how much growth we can get away with vs how much risk we're willing to take

If you've hit your numbers in terms of what you need to retire on there's no point taking on more risk than you need to - so maybe working out those numbers is the next step.

This plays into it as well. Where we stand at the moment I think would be pretty close to the number. I've roughly assumed £40k after tax at present for retirement. So assuming 2 state pensions at 60 whatever it is, that should be more than achievable with a 3-4% withdrawal rate.

The 60% ISA allocation which has not changed was with a view that the horizon for that was always less. At the point of nearing retirement and drawdown starting for sure I'd look at matching some of the pension to that or MMF.

All in maybe some over thinking!

kempiejon

Would an index linked gilt ladder starting from aged 55 be seen as a way as putting some of the pot safe and help you feel better? 'Specially if you think you've nearly won.

For example ~£20k pa index linked for 13 years starting in 2036 would use up ~£200k and give a foundation and perhaps a real return. If that feels safer perhaps run some numbers. On the other hand taking £200k out of equities for 20 years is a choice about a very unknowable future.

For a play with numbers https://lategenxer.streamlit.app/Gilt_Ladder

Like they say though, making a prediction is tricky, especially about the future and that's any awful lot of future. The rest of the pot has 20 years to do it's thing. I'm not yet sold on index linked being bomb proof but prefered to conventional ref inflation.

Piling in to the ISA for early retirement is my route and if you like 60:40 crack on and up the cash element to a year or two of spending much nearer 55.

eskbanker

Where we stand at the moment I think would be pretty close to the number. I've roughly assumed £40k after tax at present for retirement. So assuming 2 state pensions at 60 whatever it is, that should be more than achievable with a 3-4% withdrawal rate.

Perhaps food for thought: ignoring both inflation/indexation and investment growth, £47K gross annual withdrawal would deplete the pot by £564K in the 12 years between 55 and state pension age….

cloud_dog

@SpeedSouth IF this is all about the AI bubble / correction (which will happen at some point), and you feeling your investments have done well and are a significant way towards achieving your retire early number(s), e.g. protecting from sequence returns risk (even though it may be a little bit early for this ordinarily), why not switch the 100% equity investment into a lower equity / higher bond setup (mixed asset funds; like VLS60 etc, or separate equity / bond funds as you prefer), accepting the lower future returns and the likely smaller amount of loss when the next correction occurs, and then switching some of the protected mixed asset investments back into 100% equities? The scale and scope of which really would be determined by your time until retirement, how much more you may want to guard against sequence returns risk (as you will be closer again to early retirement), etc.

I know this probably read like trying to time the market but, from what the OP has written, their 'closeness' to their number, I am interpreting this course of action more as a early SOR protection activity.

kempiejon

If this is about AI bubble, Mag7, USA over concentration in cap weighted global passives there are other indices with global spread and good long term historic returns. Yes, sounds a bit like being clever, timing the market and so on. Perhaps it's possible to be lucky and/or clever.