Should I hedge stock investment because it's "overheated"?

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82053242#Comment_82053242

I have a friend who says that the conditional tense is financially irrelevant. should, could, would etc must never be used.

LL_USS

The issue is the OP may still need the money in 5 years - and that time frame for me is not long enough to put all in investments (even indexes and DCA method) - so a healthy in inflation linked gilts sounds good to me. I am keeping in cash ISAs about similar amount (a bit less) and may need to buy in the next 3-5 years and I still do not feel comfortable to put those in S&S. I only put my lifetime ISAs into S&S and even that I am still cutting back into cash position now.

aroominyork

I ... may need to buy in the next 3-5 years and I still do not feel comfortable to put those in S&S. I only put my lifetime ISAs into S&S and even that I am still cutting back into cash position now.

That's counter-logical. If you might buy in 3-5 years, the LISA - the one asset you pretty much have to sell to buy a property - is the one that should be in the safest asset. That cutting back into cash/bonds should maybe be turbocharged. (I'm not taking into account your diary thread which gives a confusing picture of your overall asset allocation.)

masonic

https://forums.moneysavingexpert.com/discussion/comment/82058791#Comment_82058791

Even a global 100% equity portfolio has around a 1 in 10 chance of falling more than 10% over a 5-year holding period based on historical data, and that is something a HNW individual might consider acceptable for 5% of their total worth. Having a backup plan (such as the proposal to seek out a mortgage rather than buying outright) is a good idea if taking on such a risk.

LL_USS

https://forums.moneysavingexpert.com/discussion/comment/82058801#Comment_82058801

@aroominyork sorry I did clarify that my LISAs is an extra pot for retirement. I already have a house. The cash is to help my children buy in the next few years. My LISA pot still have about 14 years till I can access it. It is a long time so I have little choice but to consider S&S for it.

LL_USS

@masonic yes my S&S (outside of pension) only forms a very small percentage of my total asset. I am more a brick and mortar person (keeping doing up and moving up the housing ladder and now going to help kids to buy soon), and I also spread well into pension, cash savings and some further types of investments.

I would also consider getting a (bigger) mortgage rather than selling investments at low to finance a house purchase - yet if i think I'd need to money within 3-5 years I'd try not to put the money in S&S