Yes I know, but this trigger was a jobs report in the US followed by rate hike in Japan and one wakes up to a complete mess. All out of our hands. It’s all very well saying it will blow over (which one day it will, at some point, in the future, tomorrow, next month, next year, next 10 years…) but still, us people are totally in the hands of other people, who completely screw you one day.
I’m being forced to sell a sizeable sum of funds and I was going to do it this week. Probably Monday. I couldn’t believe how much bad luck it was when I woke on Monday morning. Wages, bills and small fry money is a total drop in the ocean when you compare it to pensions, investments, etc…
Kids need to be taught very early on in life about money.
I can’t help thinking if that little bit of advice we so often see in financial blurb, “Past performance is not a reliable indicator of future results.”
There’s a good reason why most pension providers automatically move your investments to safer, less volatile funds as you approach the time when you draw them.
Ye olde saying - America sneezes and the world catches a cold.
The writing has been on the wall for many months about there being a possible market correction due to very high tech-name valuations (more ‘bloated’).
Been here before. Nothing to fret about. Japan will sort itself out. The Fed will drop rates in September. We will have volatility until the US election, the last few weeks of the year will bring cheer. Simples.
Depends what you’re looking at. Individual assets, then yes for the most part, however so many broader markets just go through the same repeated cycle i.e. growth, boom, bust, stagnation, growth, boom, bust stagnation…All that changes is magnitude and duration, which is why calling the market is so tough, yet occasionally someone dances on some shiny laurels every now and then. The patterns are there though and activity within these does influence AI based market calls.
Interestingly I’ve noticed a rise in the number of markets with ‘twin’ cycles occurring at the same time. In many global equity portfolios for instance, there seems to be a second cycle with a lesser amplitude between peaks and troughs but the cycle itself is rotating at 180 degrees to the prime one.
Yes, it can feel crappy, with the cost of living situation and volatile stock markets, it stresses me too. I try to remind myself that investments are a long game plan, keep a decent pot of cash on hand to ride through the tough times if you can.
If you had drawn a large sum a month or two ago, last Friday you would be saying you missed the gains by withdrawing too soon. Trying to time the markets is a fools game, you just have to go with the fundamentals of spreading risk over time and riding things out I think.
I must admit I’ve been a complete chicken with regards the market volatility, I’m sure some would say it’s ill judged.
I’ve recently retired and have seen my DC pensions fall and fall in recent years from the pandemic, Putin and Truss and only just bounce back in time for me to retire.
Fortunately I have 3 final salary pensions and my wife has 2 that do most of the heavy lifting but I’ve possibly foolishly put the remaining DC funds into fixed term annuities to bridge the 9 year gap before we’re receiving our state pensions which will cover us when the annuities stop. The rates were good and very comparable to drawdown forecasts which are not guaranteed.
I’m sure there will be many an IFA throw their hands up in despair at this approach but for us having that guaranteed regular income and certainty is worth it. I really didn’t want to be having to watch how the funds were performing to decide whether to book that extra cheeky holiday or not. We’re much happier knowing what we have and that we can live comfortably.
Not everyone is the same and annuities are perfect for some, not for others.
For instance, my mother should have gone for annuities imo as she’s unbelievably piss poor at managing her money. She asks me for advice and to help her plan but then does absolutely nothing I suggest, goes through her funds like water and will likely run out in her lifetime.
However if she’d gone part and part, she’d have the fixed monthly income as a floor and would not have felt so flush as to follow absolutely zero common sense on her spending the rest.
That rings a bell. My mum knows I have spent my entire career working in the investment management industry. She asks me what she should do about this and that, then does precisely nothing and we have the same conversation 6 months later (and repeat). Mind you some of the time doing nothing works out ok in the end.
That sounds like a great plan to me, and it’s probably what I’d have done if I had a DC pension. I had some savings in a stocks & shares ISA and became a bit obsessive in following it. So I took it out and put in fixed rate cash ISAs. I may get a bit less but not bothered, as I can just forget about it.
If a person can get to the point where they can cover all their costs with fixed income, then if they still have anything left in capital at that point they can consider putting it in a global share index fund and leave it there and not touch it or look at it often for a long time.
OK, hypothetical question here. Asking for a friend……
A couple both retired, pensions totalling over 80 gross, no mortgage on a 650 house, got shot of the kids, and with 300 in cash sitting in the bank. what should they do with the cash.
A ‘bit’ less! I understand why, as a worrier, you may pick cash over asset backed investment but don’t kid yourself it would be a ‘bit’ less HH, assuming a sensible term.
A cash Isa over last ten years may have compounded out at around 20% if you’re lucky, so £20K becomes £24K, bet the average is a bit lower again.
An average MSCI world tracker would have made you 206%, so £20K becomes £60K+ after charges.
Yes, I know, and it was in a global tracking fund. But I’m really not that bothered. We live happily on our work pensions, and if we live to 67 we will then get the state pension on top. If the savings are safe and vaguely keep up with inflation then that’s ok. Much of our savings is in premium bonds, and there is always the chance of a decent win to help the lads with house deposits, or an electric camper van in which we could trundle around Europe on holiday.
The cash sitting in the bank is losing money. Start by doing a budget and a forecast expenditure over an assumed life time. Think about what to do with the surplus re inheritance, change of home etc. Planning is the key.
