Vanguard LifeStrategy
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hstewie said:
hstewie said:NickXX said:
Is anyone able to explain this graph to me - I don't understand the concept, particularly without time involved.
As above.I like to think of it as my "Duh" moment when everything I thought I believed about my attitude to risk hit home
Tresco said:
A very sobering graph!
Quite.The bit I hadn't fully grasped was the "multiple" that seems to occur as the loss increases.
I'm sure there's a proper investing/mathematical term for it but if someone told me the gains required to claw back from say a 40% loss v a 20% loss it just doesn't sound right until you work it out and see it.
NickXX said:
bhstewie said:
hstewie said: Also remember that the more you lose the more it takes to claw it back i.e. a 10% loss needs an 11% gain just to get even.
Is anyone able to explain this graph to me - I don't understand the concept, particularly without time involved.https://www.ukvalueinvestor.com/wp-content/uploads...
The very worst time to cash out is just after a big fall I.e. after the .com bubble. Or financial crash. Just stick with a sound investment for the long term: time is a great healer.
sas62 said:
Say you have £100.
You lose 25% so you now have £75.
If you want to get back to £100 you have to gain 33.3% on your £75.
If you're retired and depending on your investments for your income and you have a bad year then surely your losses amplify further by having to part liquidate your investment to get some income ?You lose 25% so you now have £75.
If you want to get back to £100 you have to gain 33.3% on your £75.
What a nightmare!
selmahoose said:
sas62 said:
Say you have £100.
You lose 25% so you now have £75.
If you want to get back to £100 you have to gain 33.3% on your £75.
If you're retired and depending on your investments for your income and you have a bad year then surely your losses amplify further by having to part liquidate your investment to get some income ?You lose 25% so you now have £75.
If you want to get back to £100 you have to gain 33.3% on your £75.
What a nightmare!
You have fallen into the trap of assuming a fall in asset value mean a fall in income for said assets.
With BTL, for example, a fall in property values may lead to a fall in income, but it may not.
With shares, for example, a fall in share price does not mean a fall in income, as dividends are paid per share, and you are still holding the same number of shares (albeit at a reduced value).
If you are depending on capital growth to supplement your income then this would impact, but it would impact more on a BTL portfolio than a share/bond portfolio as it is obviously difficult to sell down part of a property!
Aren't there share investors who sell off a bit of the growth for income?
With btl, at my end of the swamp capital growth/reduction have zero impact on rent levels. And if money's wanted out of a portfolio refinancing is at least as easy as selling - often easier - and retains the asset as an earner, including to service any refinancing.
With btl, at my end of the swamp capital growth/reduction have zero impact on rent levels. And if money's wanted out of a portfolio refinancing is at least as easy as selling - often easier - and retains the asset as an earner, including to service any refinancing.
Edited by selmahoose on Wednesday 17th July 17:44
bhstewie said:
hstewie said:selmahoose said:
Aren't there share investors who sell off a bit of the growth for income?
Terry Smith of Fundsmith is a big advocate of not "investing for income" and his view is grow and take what you need from the pot.selmahoose said:
Call me stupid, but isn't investing, growing, and taking some of the growth for 'what you need' somehow not 'investing for income'?
Smith's take is that too many people invest in dogs that pay a dividend rather than in good companies that reinvest and grow.https://citywire.co.uk/funds-insider/news/terry-sm...
Of course I don't know whether he's right or not, but I wouldn't mind him running my pension fund.
JulianPH said:
Hi Nick, it is simply showing (in blue) how much growth you would need to recover from the fall next to it (in red).
So if £100 falls 50% to £50, that £50 would need to grow by 100% to get back to the original £100 (i.e. 50% growth will not cover a 50% loss).
Ahh of course.. - thank you Julian!So if £100 falls 50% to £50, that £50 would need to grow by 100% to get back to the original £100 (i.e. 50% growth will not cover a 50% loss).
JulianPH said:
Investing is all about generating returns, be that from capital gains or dividends/coupons/interest.
If you take some of these returns out you have income, if you leave them invested you have growth. Simples!
And if the returns are shyte then you have to liquidate some of your capital further to get some income which leaves you even less capital and therefore a bigger mountain to climb to replace the depletion in the shyte year(s). If you take some of these returns out you have income, if you leave them invested you have growth. Simples!
selmahoose said:
JulianPH said:
Investing is all about generating returns, be that from capital gains or dividends/coupons/interest.
If you take some of these returns out you have income, if you leave them invested you have growth. Simples!
And if the returns are shyte then you have to liquidate some of your capital further to get some income which leaves you even less capital and therefore a bigger mountain to climb to replace the depletion in the shyte year(s). If you take some of these returns out you have income, if you leave them invested you have growth. Simples!
Therefore the remaining capital is still working for you.
Also, no CGT (within a pension wrapper).
Simples!
I don’t recall the last time I had to replace the boiler of any of my shares, or carpet one, or repair damage to one, or have people sell drugs in one, or maintain the roof of one, or had an unoccupied one, or deal with the council about one, or replace the appliances in one, or pay people to work on one.
Incidentally, the shares I put up for sale today sold within 5 seconds. The transaction cost me about 3 pounds (0.035%).
Incidentally, the shares I put up for sale today sold within 5 seconds. The transaction cost me about 3 pounds (0.035%).
Edited by Testaburger on Friday 19th July 18:07
JulianPH said:
selmahoose said:
JulianPH said:
Investing is all about generating returns, be that from capital gains or dividends/coupons/interest.
If you take some of these returns out you have income, if you leave them invested you have growth. Simples!
And if the returns are shyte then you have to liquidate some of your capital further to get some income which leaves you even less capital and therefore a bigger mountain to climb to replace the depletion in the shyte year(s). If you take some of these returns out you have income, if you leave them invested you have growth. Simples!
Therefore the remaining capital is still working for you.
Also, no CGT (within a pension wrapper).
Simples!
No need to sell anything anyway given the number of places that will give you a loan just for owning them if you want even more money.
'pension' and 'simples' don't really fit in the same sentence given that no-one in the world appears to know just exactly how they work (when they DO work which seems a gatheringly rare event).
Edited by selmahoose on Friday 19th July 20:02
Testaburger said:
I don’t recall the last time I had to replace the boiler of any of my shares, or carpet one, or repair damage to one, or have people sell drugs in one, or maintain the roof of one, or had an unoccupied one, or deal with the council about one, or replace the appliances in one, or pay people to work on one.
So 100% definitely no need to spend an hour organising a letting agency to do all that stuff and take in another huge raft of fees and commissions for doing all that management crap for 100's or 1000's of other people too! Edited by Testaburger on Friday 19th July 18:07
selmahoose said:
JulianPH said:
Investing is all about generating returns, be that from capital gains or dividends/coupons/interest.
If you take some of these returns out you have income, if you leave them invested you have growth. Simples!
And if the returns are shyte then you have to liquidate some of your capital further to get some income which leaves you even less capital and therefore a bigger mountain to climb to replace the depletion in the shyte year(s). If you take some of these returns out you have income, if you leave them invested you have growth. Simples!
) we have a reasonable starting point for building a retirement portfolio.For Mrs BTL Miggins that has 3 flats in the same town for her pension, I just don't know how you could construct a robust retirement portfolio that you could rely on.
Trying hard not to be biased on this but struggling to see how it would work.
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