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Like the February Correction ?

edited 30 November -1 at 1:00AM in Savings & Investments
204 replies 21.6K views
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  • Zola.Zola. Forumite
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    Out of interest, what do people think of Robert Kiyosaki's opinion on the stock market?


    Just watched his latest video that came up on my youtube :)



    https://www.youtube.com/watch?v=skZZaMW4dsY


    Then on the other hand there is Warren Buffet and the stock market. I read Kiyosaki's Rich Dad book ages ago.

    Fake haha interesting title...

    Whilst I did enjoy Rich Dad, Poor Dad many years ago, this guy always came across as a bit of a scam artist to me, he's probably entirely innocent, but just the impression he leaves on me. Always selling something whether its books and games etc..
  • takesyourchancestakesyourchances Forumite
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    Zola. wrote: »
    Fake haha interesting title...

    Whilst I did enjoy Rich Dad, Poor Dad many years ago, this guy always came across as a bit of a scam artist to me, he's probably entirely innocent, but just the impression he leaves on me. Always selling something whether its books and games etc..


    He's certainly a character haha Rich Dad, Poor Dad was a great read, many good points. Yes interesting title Fake haha :) I watched the video, interesting he is releasing this chapter by chapter online asking for questions that he did not answer.



    Is this all Fake :):)
  • TBC15TBC15 Forumite
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    seacaitch wrote: »
    Nonsense.

    What I wrote was:
    ""all-in"# to a greater extent than most posting here", with the "#" symbol referring to a note at the bottom of the post.

    It's "all-in to a greater extent than most here" because, unlike those still building their investment pot via regular income from employment or business, my portfolio won't get any cash inflows from external sources, so in a sense is "complete".

    The cash/reserves I hold are to fund living expenses for an extended period, should it be necessary. It's not cash that's held by me in the hope of seeing lower equity prices, which I'd buy using that cash. The 'investments' bucket isn't likely to be getting any new money; money is likely to only ever flow out of it.

    It's a bit of a barbell investment strategy: risky long duration equities held in conjunction with very low risk short duration bonds or cash.

    The fact my asset allocation is 'sensible' - something I stated at the bottom the post referenced - (and includes asset classes uncorrelated to equities, plus the cash I live off day-to-day) is merely pragmatic investing and doesn't detract from the point I was making that most investors - including myself - need not fear volatility or price falls, but should welcome them.

    Not wishing to cause offence. Your position is one I aspire to in the very near future. But, if you have 5 yrs cash behind you it’s easy to become comfortable in your position.

    My position is that I am fully invested ¾ yr in cash pot. I could have retired a couple of weeks ago no problem. Times have changed, my investments are down a little I will shortly get an inheritance, should I put this to my cash pot or use this investment opportunity to stay all in?
  • masonicmasonic Forumite
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    2010 wrote: »
    Dead cat bounce!
    I hope you're right. It will take me until Tuesday to get funds transferred across to my S&S ISA and I don't want to miss out.
  • takesyourchancestakesyourchances Forumite
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    masonic wrote: »
    I hope you're right. It will take me until Tuesday to get funds transferred across to my S&S ISA and I don't want to miss out.




    I have some funds due on Monday, I aim to invest them too.
  • TBC15 wrote: »
    Not wishing to cause offence. Your position is one I aspire to in the very near future. But, if you have 5 yrs cash behind you it’s easy to become comfortable in your position.

    No offence! The idea of a big buffer was/is to be comfortable, so mission accomplished I guess. But there's a cost, in that the 'investments' bucket is smaller than it would otherwise have been.

    NB I've lived off investments from a much younger age than most people normally would, and my permanently high cash buffer/reserves is connected to that - my desire to avoid some really unfavourable sequence of returns in the early decade or two that might have forced me back into a workplace I would no longer have had marketable skills for.
    TBC15 wrote: »
    My position is that I am fully invested ¾ yr in cash pot. I could have retired a couple of weeks ago no problem. Times have changed, my investments are down a little I will shortly get an inheritance, should I put this to my cash pot or use this investment opportunity to stay all in?

    Not sure I understand the first sentence: are you saying three-quarters of a year's (9 months) income requirements held as cash?

    There's no right or wrong answer for this sort of thing. It depends on what you're comfortable with, what your overall plan is, and what the the exact job of your cash holding is. And it depends on what's in the rest of your portfolio, what your withdrawal rate is, etc. Lots of variables. But for me personally, that would be insufficient.

    I've always tried to be fairly conservative in my assumptions, and I'm quite happy for that to mean I forego income/spending in the earlier years to minimise the chances of my plan being derailed by unfavourable events/markets.

    One thing I like to do is roughly match future cash outflows (annual spending requirements over a number of years) to the specific holdings that will fund them. So, cash/reserves can do X years, then some lower risk multi-asset funds could do Y years, with pure equity handling the longer term, etc. Sort of 'duration matching'. This provides some confidence that I can live OK even if risky assets (equities) performed poorly for a fairly lengthy period, without me needing to resort to selling equities prices are low.

    But what's right for me may be totally wrong for someone else - we're all different, our circumstances are different, our goals are different.

    Was your inheritance expected, and part of your plan, or is it out of the blue?

    If your current retirement plan is threatened by relatively modest falls in markets [you wrote: "I could have retired a couple of weeks ago no problem. Times have changed,"], then it sounds like your plan maybe wasn't so robust and needs looking at afresh. Maybe these current market setbacks are beneficial to you by giving you an early heads-up that the plan needs tweaking a bit more to ensure it can handle the stresses, within reason, that the future may have in store.

    Without knowing more details, cannot really contribute too much more.

    And if I've entirely got the wrong end of the stick, apologies!
  • TBC15TBC15 Forumite
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    seacaitch wrote: »
    No offence! The idea of a big buffer was/is to be comfortable, so mission accomplished I guess. But there's a cost, in that the 'investments' bucket is smaller than it would otherwise have been.

    NB I've lived off investments from a much younger age than most people normally would, and my permanently high cash buffer/reserves is connected to that - my desire to avoid some really unfavourable sequence of returns in the early decade or two that might have forced me back into a workplace I would no longer have had marketable skills for.



    Not sure I understand the first sentence: are you saying three-quarters of a year's (9 months) income requirements held as cash?

    There's no right or wrong answer for this sort of thing. It depends on what you're comfortable with, what your overall plan is, and what the the exact job of your cash holding is. And it depends on what's in the rest of your portfolio, what your withdrawal rate is, etc. Lots of variables. But for me personally, that would be insufficient.

    I've always tried to be fairly conservative in my assumptions, and I'm quite happy for that to mean I forego income/spending in the earlier years to minimise the chances of my plan being derailed by unfavourable events/markets.

    One thing I like to do is roughly match future cash outflows (annual spending requirements over a number of years) to the specific holdings that will fund them. So, cash/reserves can do X years, then some lower risk multi-asset funds could do Y years, with pure equity handling the longer term, etc. Sort of 'duration matching'. This provides some confidence that I can live OK even if risky assets (equities) performed poorly for a fairly lengthy period, without me needing to resort to selling equities prices are low.

    But what's right for me may be totally wrong for someone else - we're all different, our circumstances are different, our goals are different.

    Was your inheritance expected, and part of your plan, or is it out of the blue?

    If your current retirement plan is threatened by relatively modest falls in markets [you wrote: "I could have retired a couple of weeks ago no problem. Times have changed,"], then it sounds like your plan maybe wasn't so robust and needs looking at afresh. Maybe these current market setbacks are beneficial to you by giving you an early heads-up that the plan needs tweaking a bit more to ensure it can handle the stresses, within reason, that the future may have in store.

    Without knowing more details, cannot really contribute too much more.

    And if I've entirely got the wrong end of the stick, apologies!
    No you are totally on script.

    At what point do you top up the cash reserve and what do the market circumstances need to be to allow top up?
  • AnotherJoeAnotherJoe Forumite
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    talexuser wrote: »
    I had well over £500 of dividends arrived yesterday and just decided to reinvest in the fund that had fallen the most. More interesting is going to be Trumps' excuse since has taken credit for the boom so far, presumably the fall will be the democrats fault.


    Very close. Its the Fed's fault apparently. :D
  • TBC15 wrote: »
    At what point do you top up the cash reserve and what do the market circumstances need to be to allow top up?

    In simple terms: replenish when you're able to by top-slicing the better performing investments (NB all withdrawals from the investment bucket follow this approach).

    --

    I'll describe my partner's plan - won't be retiring for several years yet - but this is roughly how it will operate:

    - in the latter stages of work, build up a cash buffer comprising anticipated living expenses to cover a sufficiently long period that it provides some peace of mind. She'll have around 2+yrs worth of cash by the retirement day.

    - in "normal" markets, top-up this cash buffer periodically, perhaps quarterly, via asset sales so the buffer balance is roughly maintained. The frequency of sales may be guided by what costs, if any, are involved. Pound-cost averaging in reverse.

    - What to sell? This depends on the portfolio construction. If you've everything in a single multi-asset fund, there's no decisions, just sell a small slither of that. My partner's portfolio has a number of components: eg. equity funds/trusts, multi-asset funds/trusts, each component having a % target allocation. Sales will be made to roughly bring these components back to their % target levels. This means that holdings that have performed more strongly will generally be top-sliced a little, leaving those holdings that have performed less well alone. NB this is not a hard rebalancing of everything back to % targets, just a way of focusing the sales on the better performing holdings. The targets are guidelines to help ensure the portfolio retains a balance, but they're not set in stone: during a prolonged bull market in equities, for example, the approach described will allow the best performing (equity) holdings to form a slowly growing % of the portfolio, despite the regular top-slicing, as part of an intentional "let your winners run (up to a point)" plan.

    - In times of market stress, the cash buffer provides a (limited) window where spending requirements can be met without requiring any asset sales, providing peace of mind by keeping the market's noise at a distance.

    - If components of the portfolio (eg gov bonds) happen to have performed strongly while equities have fallen sharply, then these can be top-sliced, in the same manner as strongly performing equities would have been top-sliced in the normal or good times described above.

    - If/once the cash buffer is depleted to ~6 months spending power, asset sales will occur regardless. Again, the holdings that are top-sliced are the better (least worst) performing ones, so as to bring these holdings back towards their % target allocations.

    - There is no rush to replenish the cash buffer if doing so would entail selling assets whose price is judged to be low. Just continue with periodic modest sales by top-slicing holdings that are most overweight their % targets. If you have a sensible withdrawal rate (and perhaps the ability to reign in spending 'somewhat' if necessary), a suitable asset allocation at the outset and a reasonable cash buffer at the beginning, I see few reasons why this approach won't see someone through a prolonged period of low asset prices, without derailing the plan. But there are no certainties! The more robust you want your plan to be, the longer you'll have to work before retiring, or the lower the income you'll be able to 'safely' withdraw. Personal choices.

    - As markets recover, asset sales can made (following the same MO of top-slicing the better performing components) at a higher rate than the normal spending rate in order to slowly replenish the cash buffer over years. Again, no point in forcing this, as there's no advantage to rebuilding the buffer from forced sales of assets at depressed prices.
  • edited 13 October 2018 at 2:55PM
    bostonerimusbostonerimus Forumite
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    edited 13 October 2018 at 2:55PM
    seacaitch wrote: »
    The idea of a big buffer was/is to be comfortable, so mission accomplished I guess. But there's a cost, in that the 'investments' bucket is smaller than it would otherwise have been.

    If you can afford to have a large cash allocation then I think you've done well and basically "won the war". Many people simply can't do that as they need to keep as much invested as possible to have a good chance of funding retirement.....sleeping well at night on a mattress of cash is nice.
    Misanthrope in search of similar for mutual loathing
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