Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • bcfclee27
    • By bcfclee27 11th Oct 18, 1:17 PM
    • 211Posts
    • 51Thanks
    bcfclee27
    Like the February Correction ?
    • #1
    • 11th Oct 18, 1:17 PM
    Like the February Correction ? 11th Oct 18 at 1:17 PM
    Or the start of a big crash ?

    What's your opinion ?

    Personally I think it's similar to what happened in February and should recover over the coming months.

    Just wondered others opinions on this and whether anyone thinks this will be the big crash that some have been predicting........
Page 6
    • seacaitch
    • By seacaitch 12th Oct 18, 5:49 PM
    • 146 Posts
    • 280 Thanks
    seacaitch
    Hardly all in if you have a large cash reserve?
    Originally posted by TBC15
    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.
    Last edited by seacaitch; 12-10-2018 at 6:10 PM.
    • Zola.
    • By Zola. 12th Oct 18, 6:12 PM
    • 1,347 Posts
    • 573 Thanks
    Zola.
    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.
    Originally posted by takesyourchances
    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..
    • takesyourchances
    • By takesyourchances 12th Oct 18, 6:18 PM
    • 719 Posts
    • 481 Thanks
    takesyourchances
    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..
    Originally posted by Zola.

    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
    • TBC15
    • By TBC15 12th Oct 18, 6:19 PM
    • 666 Posts
    • 333 Thanks
    TBC15
    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.
    Originally posted by seacaitch
    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 itís easy to become comfortable in your position.

    My position is that I am fully invested ĺ 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?
    • masonic
    • By masonic 12th Oct 18, 6:25 PM
    • 10,276 Posts
    • 7,629 Thanks
    masonic
    Dead cat bounce!
    Originally posted by 2010
    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.
    • takesyourchances
    • By takesyourchances 12th Oct 18, 6:28 PM
    • 719 Posts
    • 481 Thanks
    takesyourchances
    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.
    Originally posted by masonic



    I have some funds due on Monday, I aim to invest them too.
    • seacaitch
    • By seacaitch 12th Oct 18, 7:08 PM
    • 146 Posts
    • 280 Thanks
    seacaitch
    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.
    Originally posted by TBC15
    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.

    My position is that I am fully invested ĺ 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?
    Originally posted by TBC15
    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!
    • TBC15
    • By TBC15 12th Oct 18, 7:55 PM
    • 666 Posts
    • 333 Thanks
    TBC15
    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!
    Originally posted by seacaitch
    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?
    • AnotherJoe
    • By AnotherJoe 13th Oct 18, 10:42 AM
    • 11,793 Posts
    • 13,729 Thanks
    AnotherJoe
    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.
    Originally posted by talexuser

    Very close. Its the Fed's fault apparently.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • seacaitch
    • By seacaitch 13th Oct 18, 12:44 PM
    • 146 Posts
    • 280 Thanks
    seacaitch
    At what point do you top up the cash reserve and what do the market circumstances need to be to allow top up?
    Originally posted by TBC15
    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.
    • bostonerimus
    • By bostonerimus 13th Oct 18, 2:52 PM
    • 2,450 Posts
    • 1,760 Thanks
    bostonerimus
    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.
    Originally posted by seacaitch
    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.
    Last edited by bostonerimus; 13-10-2018 at 2:55 PM.
    Misanthrope in search of similar for mutual loathing
    • TBC15
    • By TBC15 13th Oct 18, 2:58 PM
    • 666 Posts
    • 333 Thanks
    TBC15
    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.
    Originally posted by seacaitch
    Thanks for all that, just a couple of points.

    I was planning for a regular 3 month review/sell off. Should this not be a bit aggressive to take care of the CGT allowance for the year?

    The selling off of winners has always troubled me. I generally like my winners thatís why I picked them. Some of my portfolio is there to fill in perceived gaps, why should they benefit at the expense of the good guys?

    With ref to the original thread Iím not selling a thing, new cash unfortunately will probably form my cash bucket. This feels very strange as itís a buying opportunity after totally investing for the last 28yrs.
    • TBC15
    • By TBC15 13th Oct 18, 3:18 PM
    • 666 Posts
    • 333 Thanks
    TBC15
    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.
    Originally posted by bostonerimus
    But it is what we should aspire to.
    • ariarnia
    • By ariarnia 13th Oct 18, 3:52 PM
    • 1,774 Posts
    • 5,134 Thanks
    ariarnia
    The selling off of winners has always troubled me. I generally like my winners thatís why I picked them. Some of my portfolio is there to fill in perceived gaps, why should they benefit at the expense of the good guys?
    Originally posted by TBC15
    You don't have to sell all your winners, but sometimes it's sensible to sell some of them just to bring your portfolio back into the balance you originally intended. You picked your winners because you liked them but you also planned your portfolio because you saw a benefit to the original ratio (I assume).
    Almost everything will work again if you unplug it for a few minutes, including you. Anne Lamott

    It's amazing how those with a can-do attitude and willingness to 'pitch in and work' get all the luck, isn't it?
    • seacaitch
    • By seacaitch 13th Oct 18, 3:59 PM
    • 146 Posts
    • 280 Thanks
    seacaitch
    I was planning for a regular 3 month review/sell off. Should this not be a bit aggressive to take care of the CGT allowance for the year?

    The selling off of winners has always troubled me. I generally like my winners that’s why I picked them. Some of my portfolio is there to fill in perceived gaps, why should they benefit at the expense of the good guys?
    Originally posted by TBC15
    Not sure I follow CGT question.

    Regarding winners, I partly agree (up to a point).

    My partner's portfolio will be run more conservatively than mine because it'll be smaller and so have less margin of safety (initially, at least). Strongly performing equities wouldn't be rebalanced back to target %, just sold sufficiently to replenish the cash buffer. If they performed very strongly, they'd still grow as a % of the portfolio, steadily moving beyond their supposed % targets. So, a limited version of "letting your winners run".

    Also, the more conservative multi-assets components of the portfolio only need to be so big - they're present to do a job, which is largely to provide some insurance against a poor sequence of returns in the earlier years and also to dampen volatility when the safety margin is narrow. Over time, and if the portfolio performed well, these more conservative components could be transitioned from having "% of portfolio" targets to absolute monetary amount targets. So, the quarterly top-slicing sales for replenishing the cash buffer could come from these sources even if the other equity components were performing strongly.

    That's a bit more akin to how I do things.

    A further point: I don't see the purpose of my/our investment strategies to be to make as much money as possible. We only need to make enough money to support our chosen lifestyles. So, there's not huge incentive to take on more risk in the hope of making much better returns, if I/we think that extra money wouldn't make us any happier (and if the additional risk-taking might jeopardize our plans).

    Having said that, for me, running an investment portfolio isn't just a tool to get a job done; it's also a vocation that I've pursued for years and that I'm interested in doing well at, purely for the personal satisfaction of it. So I'll continue to do things at the margins (including taking more risk in order to seek greater returns) that I'd consider out-of-bounds for my partner's more utilitarian pot.
    Last edited by seacaitch; 13-10-2018 at 4:03 PM.
    • bostonerimus
    • By bostonerimus 13th Oct 18, 4:10 PM
    • 2,450 Posts
    • 1,760 Thanks
    bostonerimus
    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.
    Originally posted by seacaitch
    The mechanics of drawdown, particularly if you start to implement some of the variable withdrawal rate strategies, can get complicated.......what, when and how much to sell becomes a large decision space if you think about it too much.

    I think the UK's recent flirtation with drawdown will cool a bit as interest rates rise and annuities become attractive once again. People always go on about diversity in a portfolio and I think that should extend to having cash/equites/bonds and annuities or DB pensions in the mix. A foundation of SP and using some of the DC pension pot to buy an annuity is something to consider if you can afford it. Then any remaining DC pot can be aggressively invested to either pay for luxuries or to build up an inheritance.
    Misanthrope in search of similar for mutual loathing
    • TBC15
    • By TBC15 13th Oct 18, 4:36 PM
    • 666 Posts
    • 333 Thanks
    TBC15
    Not sure I follow CGT question.

    Regarding winners, I partly agree (up to a point).

    My partner's portfolio will be run more conservatively than mine because it'll be smaller and so have less margin of safety (initially, at least). Strongly performing equities wouldn't be rebalanced back to target %, just sold sufficiently to replenish the cash buffer. If they performed very strongly, they'd still grow as a % of the portfolio, steadily moving beyond their supposed % targets. So, a limited version of "letting your winners run".

    Also, the more conservative multi-assets components of the portfolio only need to be so big - they're present to do a job, which is largely to provide some insurance against a poor sequence of returns in the earlier years and also to dampen volatility when the safety margin is narrow. Over time, and if the portfolio performed well, these more conservative components could be transitioned from having "% of portfolio" targets to absolute monetary amount targets. So, the quarterly top-slicing sales for replenishing the cash buffer could come from these sources even if the other equity components were performing strongly.

    That's a bit more akin to how I do things.

    A further point: I don't see the purpose of my/our investment strategies to be to make as much money as possible. We only need to make enough money to support our chosen lifestyles. So, there's not huge incentive to take on more risk in the hope of making much better returns, if I/we think that extra money wouldn't make us any happier (and if the additional risk-taking might jeopardize our plans).

    Having said that, for me, running an investment portfolio isn't just a tool to get a job done; it's also a vocation that I've pursued for years and that I'm interested in doing well at, purely for the personal satisfaction of it. So I'll continue to do things at the margins (including taking more risk in order to seek greater returns) that I'd consider out-of-bounds for my partner's more utilitarian pot.
    Originally posted by seacaitch
    Once again thanks for the insights.

    With ref to CGT if your portfolio doubles every 5 or so years you will reach a point where CGT is payable on your gains once you have harvested the gains. So my intention is to cash in over the years at ľ yr intervals to make use of the CGT allowance and rebase.

    Over the many years Iíve chased returns, not to the point of investing in obviously mental funds/strategies.

    Burnt my bridges on the pension DB front, now all in SIPP with Fundsmith no regrets.

    I canít help think I would miss the thrill of the chase if I went passive/mainstream.

    With ref to the OP keep calm and carry on.
    • Thrugelmir
    • By Thrugelmir 13th Oct 18, 4:56 PM
    • 61,269 Posts
    • 54,505 Thanks
    Thrugelmir
    I think the UK's recent flirtation with drawdown will cool a bit as interest rates rise and annuities become attractive once again.
    Originally posted by bostonerimus
    Likewise an extended period of poor stock market returns. Reversal of QE globally has yet to be determined consequences. Making money may not be as easy as it seemed.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • seacaitch
    • By seacaitch 13th Oct 18, 5:14 PM
    • 146 Posts
    • 280 Thanks
    seacaitch
    The mechanics of drawdown, particularly if you start to implement some of the variable withdrawal rate strategies, can get complicated.......what, when and how much to sell becomes a large decision space if you think about it too much.

    I think the UK's recent flirtation with drawdown will cool a bit as interest rates rise and annuities become attractive once again. People always go on about diversity in a portfolio and I think that should extend to having cash/equites/bonds and annuities or DB pensions in the mix. A foundation of SP and using some of the DC pension pot to buy an annuity is something to consider if you can afford it. Then any remaining DC pot can be aggressively invested to either pay for luxuries or to build up an inheritance.
    Originally posted by bostonerimus
    I agree with all of that.

    Re diversifying income streams, I have a small DC pot in my investments bucket, which I'd certainly consider eventually annuitising, to add some base-load income, to be joined later by state pension.
    • bostonerimus
    • By bostonerimus 13th Oct 18, 5:52 PM
    • 2,450 Posts
    • 1,760 Thanks
    bostonerimus
    Likewise an extended period of poor stock market returns. Reversal of QE globally has yet to be determined consequences. Making money may not be as easy as it seemed.
    Originally posted by Thrugelmir
    Amen to that. When volatility returns to the markets I always think of Bette Davis in "All About Eve"

    https://www.youtube.com/watch?v=yKHUGvde7KU
    Last edited by bostonerimus; 13-10-2018 at 5:59 PM.
    Misanthrope in search of similar for mutual loathing
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,464Posts Today

7,719Users online

Martin's Twitter