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  • FIRST POST
    • ams25
    • By ams25 5th Feb 18, 2:52 PM
    • 150Posts
    • 169Thanks
    ams25
    Bear Market/Crashes: how do Retirees Deal with it?
    • #1
    • 5th Feb 18, 2:52 PM
    Bear Market/Crashes: how do Retirees Deal with it? 5th Feb 18 at 2:52 PM
    So maybe this is the beginning of a crash, correction, bear market, buying opportunity or maybe its nothing.

    And seems to me that we are really still very early in the accelerating shift from defined benefit pensions and annuities to more and more people having to live off a pot of savings and investments.. and to be able to deal with investing that and handling market sell offs as a norm. Not sure how well equipped people are for that.

    So whatever the current market movement is, it's a good opportunity to raise this question for retirees who have stopped regular work and rely on savings and investments (not defined benefit pensions/annuities of private or state varieties) for the majority of their income - how do you (or how do you think you will) cope with seeing a 10, 20, 40% portfolio decline and knowing you are reliant on the same portfolio for your future income.

    - will you ignore it and just carry on because you know markets go up, down and eventually up again
    - will it make you grumpy and irritable with loved ones
    - will you buy more equities because you saw this coming
    - are you comfortable your portfolio is structured to ride out the more common 1-3 year downturn, or the less common 5-10 year downturn/poor returns (or even the 1966 retiree nightmare of 17 years of poor returns and high inflation )

    I've lived through several crashes and bear markets but as I was working it was not all that difficult to ignore them because at the end of the day i didn't need the money anytime soon. In 2008 I (thought) I was around 15 years from retirement, or longer.

    I have tried to structure my asset allocation to suit what I think is my risk tolerance, not to need to sell equities any time soon and even have some funds available if I am brave enough at some point to buy. I believe I can cope with a 3% withdrawal rate over the long term which according to most experts should be a safe withdrawal rate.

    I've read loads to educate me that I am well set up so I should be fairly relaxed. So far the latest global sell off has not bothered me much, but if (or when) it proves to be the next bear market, we haven't seen anything yet.

    So if you have previous experience, as a retiree, how did you cope and what advice for us newbies.
    If, as many here are I suspect, this (or whenever) is going to be the first time as a retiree dealing with a major sell off, how do you see yourself dealing with it. what suggestions do you have for this community here to help them deal with it calmly and to maintain low stress levels.

    As they say, a problem shared.....
    Last edited by ams25; 05-02-2018 at 3:05 PM.
Page 6
    • economic
    • By economic 12th Feb 18, 9:35 AM
    • 2,935 Posts
    • 1,576 Thanks
    economic
    So do none of you have a stop loss policy to bale out of equities when the market falls? or do you just sit there and watch it all go down?
    Originally posted by ProDave
    This is MSE. The policy is buy more as stocks fall. Much like a vanguard life strategy fund. A strategy that is inferior to a sell as stocks fall strategy ie stop loss.
    • chucknorris
    • By chucknorris 12th Feb 18, 9:53 AM
    • 9,525 Posts
    • 14,312 Thanks
    chucknorris
    So do none of you have a stop loss policy to bale out of equities when the market falls? or do you just sit there and watch it all go down?
    Originally posted by ProDave
    If you mean, do I sell during a correction, definitely not, in fact, I tend to invest more during a correction. But I am only 60, I may not do that when I am much older. If you do sell in a correction, then I suspect that your portfolio is not correctly balanced to your comfortable risk level.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    After running injuries I now mostly hike, gym classes and weight training (also a bit of cycling and swimming), less impact on my joints.
    • Linton
    • By Linton 12th Feb 18, 10:11 AM
    • 9,331 Posts
    • 9,455 Thanks
    Linton
    So do none of you have a stop loss policy to bale out of equities when the market falls? or do you just sit there and watch it all go down?
    Originally posted by ProDave
    A Stop Loss policy may make sense if you are investing in individual shares as any could drop to zero and disappear. If you are invested in a normal fund it is almost impossible for that to happen - the price must recover at some stage.

    The problem with a Stop Loss is that you dont know the price is going to carry on falling and you dont know when the price is really recovering. If you get it wrong you could easily be in a worse position that if you had simply waited especially as you are losing out on dividends whilst out of the market.

    A better policy for funds is occasional rebalancing. Sell the excess profits from a well performing fund A to buy more of a poorly performing fund B to keep the % allocations the same. At some stage the performances may well reverse and so you buy back A at a low price using the proceeds from selling B at a high price. Selling high and buying low makes much more sense than the reverse.
    • economic
    • By economic 12th Feb 18, 10:17 AM
    • 2,935 Posts
    • 1,576 Thanks
    economic
    A Stop Loss policy may make sense if you are investing in individual shares as any could drop to zero and disappear. If you are invested in a normal fund it is almost impossible for that to happen - the price must recover at some stage.

    The problem with a Stop Loss is that you dont know the price is going to carry on falling and you dont know when the price is really recovering. If you get it wrong you could easily be in a worse position that if you had simply waited especially as you are losing out on dividends whilst out of the market.

    A better policy for funds is occasional rebalancing. Sell the excess profits from a well performing fund A to buy more of a poorly performing fund B to keep the % allocations the same. At some stage the performances may well reverse and so you buy back A at a low price using the proceeds from selling B at a high price. Selling high and buying low makes much more sense than the reverse.
    Originally posted by Linton
    i think you miss the point. in simple terms what the best traders do is buy as stocks break out to the upside (above consolidation ranges or key resistance levels). And sell as they break down key supports. this is not the same as buy high sell low.
    • OldMusicGuy
    • By OldMusicGuy 12th Feb 18, 10:27 AM
    • 333 Posts
    • 662 Thanks
    OldMusicGuy
    So do none of you have a stop loss policy to bale out of equities when the market falls? or do you just sit there and watch it all go down?
    Originally posted by ProDave
    I have a sequence of returns strategy so that I have way more cash than most people here would hold. My stock-based investments are for 10 to 15 years, so if they go down they should have time to recover. So I have already stopped a chunk of losses and locked in some of my gains from the last 5 years. However........

    Looking at the summary of market movements last week. There was no where for investors to hide. Equities, Property, Corporate Bonds , Gold, Oil, Gilts were all red for UK investors. Only black was in US Treasuries that was down to exchange rate movement. With a high correlation between asset classes (thanks to QE and other financial stimulus). May well be a period of history that rewrites the books.
    Originally posted by Thrugelmir
    This is what concerns me. I see a lot of optimism based on what has happened. I took a degree in economics in the 1970s and many of the things I studied then (like prices and incomes policy) just became irrelevant as the economic conditions changed. No one has any idea what the economic conditions will look like over the next 30 years and we could be in for significant changes in accepted norms.
    • Linton
    • By Linton 12th Feb 18, 10:45 AM
    • 9,331 Posts
    • 9,455 Thanks
    Linton
    i think you miss the point. in simple terms what the best traders do is buy as stocks break out to the upside (above consolidation ranges or key resistance levels). And sell as they break down key supports. this is not the same as buy high sell low.
    Originally posted by economic
    1) Trading funds doesnt make sense to me - if nothing else a buy and sell could well take the best part of a week. Price information may be 24 hours out of date, if not more in some cases.

    2) As OEIC/UT funds typically contain hundreds of individual shares possibly being traded over a dozen separate markets it is difficult to see what concepts like consolidation ranges and resistance levels, key supports etc may mean for them. The fund price is an average, the fund isnt a directly traded entity and so has no clear market driven price subject to the hour by hour psychology of the market. For a share the market could decide that around say 5 is a reasonable price. The market has no means of determining that 5 is a reasonable value for a unit in say Marlborough UK Special Situations Fund nor of influencing it. For a start it doesnt know at that time what the fund is invested in.
    • gadgetmind
    • By gadgetmind 12th Feb 18, 10:50 AM
    • 10,778 Posts
    • 8,655 Thanks
    gadgetmind
    So do none of you have a stop loss policy to bale out of equities when the market falls? or do you just sit there and watch it all go down?
    Originally posted by ProDave
    I set one on my house. As soon as the purchase completed, I told the agent to put it back on the market and take the 1st offer that was at 10% less than I paid for it.

    No, I hang onto my equities, keep reinvesting the dividends (or in future taking them to Oddbins) and wait for the rebound.
    Last edited by gadgetmind; 12-02-2018 at 5:24 PM.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • atush
    • By atush 12th Feb 18, 12:42 PM
    • 16,637 Posts
    • 10,338 Thanks
    atush
    Some brisket that worked very well, some lamb leg steaks that weren't very good at all, and some brulee. The brulee tasted great but I made a mess of the caramel on top as I'd had too much wine.
    Originally posted by gadgetmind
    I didnt know you could SV brulee? I made dome the reg way this WE only to find out on Sunday (when shops are closed) I had run out of gas with my blow torch lol
    • gadgetmind
    • By gadgetmind 12th Feb 18, 5:22 PM
    • 10,778 Posts
    • 8,655 Thanks
    gadgetmind
    SV is great for brulees and custards as you mix everything cold and then either "cook" in a ziploc or a container with lid/film.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • cloud_dog
    • By cloud_dog 12th Feb 18, 6:53 PM
    • 3,648 Posts
    • 2,169 Thanks
    cloud_dog
    I dip in to this thread and sometimes feel like I'm in the twilight zone...
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • atush
    • By atush 13th Feb 18, 12:59 PM
    • 16,637 Posts
    • 10,338 Thanks
    atush
    Sorry lol.
    • ProDave
    • By ProDave 2nd Mar 18, 11:37 AM
    • 789 Posts
    • 855 Thanks
    ProDave
    FTSE 100 down 1% again so far today.

    I mentioned before I moved a pension into cash as I am in the process of transfering it to drawdown. I am satisfied that I actually sold out close to the peak of the market and it's value now had it still been invested would be less.

    I really can't see me putting it back into equities for a while yet, the outlook does not look very bright in the short term.
    • Thrugelmir
    • By Thrugelmir 2nd Mar 18, 11:45 AM
    • 58,196 Posts
    • 51,567 Thanks
    Thrugelmir
    FTSE 100 down 1% again so far today.
    Originally posted by ProDave
    FTSE rises and falls on a daily basis. Unless one is committed a 100% then the impact shouldn't be material.

    Is reporting season, so a large number of companies have declared dividends and will be going ex-div at the same time.
    Last edited by Thrugelmir; 02-03-2018 at 11:54 AM.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • gadgetmind
    • By gadgetmind 2nd Mar 18, 12:02 PM
    • 10,778 Posts
    • 8,655 Thanks
    gadgetmind
    FTSE 100 down 1% again so far today.
    Originally posted by ProDave
    Good, and if it could manage another 10% down, that would be delightful.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • dunstonh
    • By dunstonh 2nd Mar 18, 12:05 PM
    • 92,172 Posts
    • 59,338 Thanks
    dunstonh
    FTSE 100 down 1% again so far today.
    Minor movement well within typical range.

    I havent done my annual pension contribution yet. I'm hoping for a 20% drop in the next few weeks. Might get lucky. Probably won't though.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • gadgetmind
    • By gadgetmind 2nd Mar 18, 12:40 PM
    • 10,778 Posts
    • 8,655 Thanks
    gadgetmind
    I'm hoping for a drop to keep my LTA excess charge down as much as possible.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • Thrugelmir
    • By Thrugelmir 2nd Mar 18, 12:41 PM
    • 58,196 Posts
    • 51,567 Thanks
    Thrugelmir
    I havent done my annual pension contribution yet. I'm hoping for a 20% drop in the next few weeks. Might get lucky. Probably won't though.
    Originally posted by dunstonh
    Thought that you of all people would be a drip feeder rather than a once a year lump sum.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • gadgetmind
    • By gadgetmind 2nd Mar 18, 12:48 PM
    • 10,778 Posts
    • 8,655 Thanks
    gadgetmind
    Yeah, pound cost averaging and all that. And I bet you're investing beyond your risk profile. :-)
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • dunstonh
    • By dunstonh 2nd Mar 18, 2:50 PM
    • 92,172 Posts
    • 59,338 Thanks
    dunstonh
    Thought that you of all people would be a drip feeder rather than a once a year lump sum.
    Originally posted by Thrugelmir
    Back in the day I was but as a company director, I tend to to wait to see how much money is surplus in the company before deciding how much to pay in. Much the same as many other company directors.

    March is a very busy month for single premium pension contributions from directors.

    Now excuse me whilst I go and pick my funds from the adverts in the Telegraph
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • gadgetmind
    • By gadgetmind 2nd Mar 18, 2:52 PM
    • 10,778 Posts
    • 8,655 Thanks
    gadgetmind
    Yeah, look for something that's done really well lately and that's run by someone you've heard of. :-)
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
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