Your correction strategy?

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  • cjv wrote: »
    Is it an ok strategy for an inexperienced investor with long term outlook to just ignore everything the market does? I have a SIPP in which i hold 50/50 VLS 80 and HSBC 80.

    My current plan is to just set and forget for 20'ish years, then reduce some risk.

    Also now have a NEST pension for employer contributions (zero balance currently) which I have set to the Higher Risk Fund. with the same plan to just set and forget.

    Yes that is what I do. We have an income portfolio and ironically the income is holding up but the value of the portfolio is down. Same goes for S and S ISAs and SIPPs which are invested in Vanguard LS60. Overall the value is down. We are holding off on investing more as we are early retirees and need to keep a lot of cash back until all our pensions are paying out. We are just sitting tight and going to ride it out.

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  • pip895
    pip895 Posts: 1,173
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    Malthusian wrote: »
    Because that is the exact opposite of how markets work. When markets are 40% off that peak nobody feels happy about buying, they feel bloody miserable about buying, they'd rather gouge their eyes out with a rusty spoon than buy. That is why markets are 40% off the peak in the first place.

    If that were really the case markets would never recover but they do - the smart money starts to pour in - often well before the bottom - the rest call them fools but the rest are still sitting on the sidelines when shares bounce and the real money gets made.

    If there ever was a global crash that went on for many years Japan style do you really think your defined benefit pension or even your gold plated government pension would survive the financial meltdown?
  • talexuser
    talexuser Posts: 3,492
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    I can't see why you need a correction strategy. It is just timing the market which is just a question of luck. Study after study shows time in the market counts. If you are in the market it should be for the long term, so a correction does not matter, you should be allocating less to volatile stuff the closer you get to needing the cash, or drawing the income. The rest is luck, you could just as well get a big jump from buying at the bottom as missing a burst of growth (mitigating the next drop) waiting.

    My ISA is about 4% down since September and unwrapped around 5% down. If you are already worried about these drops maybe you are beyond your risk tolerance.
  • Audaxer
    Audaxer Posts: 3,505
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    Yes that is what I do. We have an income portfolio and ironically the income is holding up but the value of the portfolio is down. Same goes for S and S ISAs and SIPPs which are invested in Vanguard LS60. Overall the value is down. We are holding off on investing more as we are early retirees and need to keep a lot of cash back until all our pensions are paying out. We are just sitting tight and going to ride it out.
    Hi enthusiasticsaver, I'm in a similar position to you in that I have VLS60 and an income portfolio that includes the Artemis Monthly Distribution fund which I recall that you also hold. I'd like to think funds like the Artemis fund would continue to pay dividends of around 4% of my original investment throughout crashes and eventually recover it's capital value, so it keeps up with inflation, but as it's fairly low to medium risk with 44% equities, I'm not sure whether that is possible. Although the fund has had good total returns in the past, do you think we can expect 4% income rising with inflation, with the capital value also rising with inflation over a period of say, 20 years?
  • pip895
    pip895 Posts: 1,173
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    talexuser wrote: »
    I can't see why you need a correction strategy. It is just timing the market which is just a question of luck. Study after study shows time in the market counts. If you are in the market it should be for the long term, so a correction does not matter, you should be allocating less to volatile stuff the closer you get to needing the cash, or drawing the income. The rest is luck, you could just as well get a big jump from buying at the bottom as missing a burst of growth (mitigating the next drop) waiting.

    My ISA is about 4% down since September and unwrapped around 5% down. If you are already worried about these drops maybe you are beyond your risk tolerance.

    Who is panicking? The OP doesn't seem to be panicking and I'm certainly not - planning what to do in the case of a downturn is entirely sensible.

    For many the answer is to do nothing, some will chose to rebalance some may chose to move to a more aggressive position. The choice will vary depending on factors such as appetite for risk and personal circumstances. It is always better to have a plan - and a plan made well before any sense of panic dawns is all the better.
  • TBC15
    TBC15 Posts: 1,443
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    Correction strategy.

    Take a sharp intake of breath.

    Buy a cat, kick cat.

    Imagine potential super cars disappearing of the drive.

    Vow only to look at portfolio on a weekly basis until normal service resumes.

    Open fridge.
  • talexuser
    talexuser Posts: 3,492
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    pip895 wrote: »
    Who is panicking?.

    Your word, I made no mention of panicking. Your second paragraph is all common sense and I agree. Just pointing out that any strategy has an element of luck, and most seem not to do as well as a tracker. And that from someone who has more active funds than trackers. But that is the punt I'm willing to make hoping to outperform, which comes back to your timescale and tolerance to risk.
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