Doom scrolling and the next financial crash!

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82133678#Comment_82133678

I agree that there are many things to worry about. I try to do what I can by behaving responsibly, donating money to causes I think will help and always voting. After that I try to enjoy life to control my blood pressure.

As a US based investor my domestic equity market is 40% tech. I've been retired for a while so I don't need the froth of the current markets and believe that tech is highly over valued so now is a good time to sell. I'm not fully out of tech though as it's still around 15% of my portfolio. If or when the tech/AI bubble bursts it will ripple out through financials to the wider economy. I'll be ok as my income streams are diversified, I can afford to keep cash around and I own my home. It's the low and middle wage earners and people depending on drawdown for retirement who will suffer if war and trade battles combine with a crash so that inflation goes up and portfolio values fall.

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/82133761#Comment_82133761

In the UK, we have index linked annuities. They are the sensible option for income that you need in retirement. You get 100% compensation without limit if the Life Assurance company goes bust.

Drawdown is inherently risky. If there is the major financial crash that many fear, there will be no hiding place.

I read recently that TIPS are yielding 3% real. If you can get 3% real guaranteed by your government, why are you risking your neck with equities?

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82133839#Comment_82133839

Yes 10 year TiIPS are at 2.5% and the 10 year T-bill is 4%. You might stay in equities if you want to leave a legacy or if drawdown isn't necessary for retirement income. I also like the approach of guaranteeing a baseline of income with annuities, DB pensions or SP and then using equities for some growth and to pay for your luxuries. I'm just about to convert some funds I have with a US insurance company into a fixed annuity and I've been quoted a 10% payout rate that includes a bonus for being a long term customer ie since 1987, 😱. I treat my annuities etc as the fixed income part of my portfolio and so have very little invested in bonds and was until recently around 85% equities. That's slipped to 69% as I've defensively increased my cash allocation and moved away from tech.

kempiejon

I'm accumulating a bit of extra cash by not reinvesting all my dividends building an income buffer. I hold and add to fixed interest maturing out to about 4 or 5 years. I do look at UK gov linkers for a bit further but so far I'm riding an equity wave not considering a big rebalance just yet but it's on the cards. Quick calc and I'm around 75% equity, a bit of commodity, gold/precious metals physical and ETF. Historically I can see 60 70 in stocks the rest in safer instruments reduces risk, volatility without too much performance reduction. I might get down to 60 70 but who can say. I guess it depends on ones time frame, with 30 odd years post retirement the money has to last a long time. As I get older with perhaps a more realistic longer term bond yields and the read to annuities I think an index linked annuity will become more attractive. I wonder about annuities up to the personal allowance to fill the years between 57 and state pension age to be supplemented with ISAs. Taking the rest of the 20% allowance from the SIPP should see me with more income at 67 than I would usually be able to spend.

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82134239#Comment_82134239

My retirement income strategy has been to avoid relying on drawdown by using annuities, DB pensions and SP. So now I find myself in the position of having income streams that I can't turn off that will put me in the UK's 40% tax bracket if/when I return. I'm moving money in the USA from DC retirement accounts to the US equivalent of the ISA as fast as I can so I pay 24% tax on it now rather than 40% or 45% if I move to the UK. Of course things could change and I worry about having cross-border finances in such an unstable world.