Financial planning for and during retirement
Discussion
PM3 said:
About cash buffer what does one plan for the "recovery" phase. Problem with this seems that even if it takes 2 or 3 years to get back to market normals, you dont just need to get back to the point where you can draw ( for example 4% ) ...you need to be able to draw that AND build back up the 2 to 3 year buffer again
What might that look like ? Its not back until you are at 4% plus another 4% for the same amount of time one went into cash draw from contingency fund?
Fair points although the recovery and then the replacement buffer could be dealt with separately and one after the other" completed"on the basis of NOT having 2 crashes in quick succession.What might that look like ? Its not back until you are at 4% plus another 4% for the same amount of time one went into cash draw from contingency fund?
I guess to answer the question you need to know your annual expenditure.
We downsized a couple of years ago.
We did the usual ISA thing, massively overspent on the doing the new place up (and still haven't finished) and I stopped taking my full income with a view to either doing an MVL or a trade sale.
Now there isn't a lifetime allowance for pensions I might revisit the last bit.
We did the usual ISA thing, massively overspent on the doing the new place up (and still haven't finished) and I stopped taking my full income with a view to either doing an MVL or a trade sale.
Now there isn't a lifetime allowance for pensions I might revisit the last bit.
alscar said:
PM3 said:
About cash buffer what does one plan for the "recovery" phase. Problem with this seems that even if it takes 2 or 3 years to get back to market normals, you dont just need to get back to the point where you can draw ( for example 4% ) ...you need to be able to draw that AND build back up the 2 to 3 year buffer again
What might that look like ? Its not back until you are at 4% plus another 4% for the same amount of time one went into cash draw from contingency fund?
Fair points although the recovery and then the replacement buffer could be dealt with separately and one after the other" completed"on the basis of NOT having 2 crashes in quick succession.What might that look like ? Its not back until you are at 4% plus another 4% for the same amount of time one went into cash draw from contingency fund?
I guess to answer the question you need to know your annual expenditure.
I suppose you could say the IFA has an obvious motive for this but he did seem over-miffed about it - he mentioned it in our review this week, but in the context of me suggesting pulling more out of our SIPPs due to the IHT changes. I flippantly suggested buying gold bars - he said by all means spend more, but don't take it out just to pile it up under the bed.
I'm following This thread with interest, due in part to my age.
I don't have an IFA, don't really think I require one.
However, I see many statements here saying my IFA says do this, but no questions as to; why should I do this, can I take it as given this happens, or is it taken for gospel the IFA knows best
I don't have an IFA, don't really think I require one.
However, I see many statements here saying my IFA says do this, but no questions as to; why should I do this, can I take it as given this happens, or is it taken for gospel the IFA knows best
Sheepshanks said:
alscar said:
PM3 said:
About cash buffer what does one plan for the "recovery" phase. Problem with this seems that even if it takes 2 or 3 years to get back to market normals, you dont just need to get back to the point where you can draw ( for example 4% ) ...you need to be able to draw that AND build back up the 2 to 3 year buffer again
What might that look like ? Its not back until you are at 4% plus another 4% for the same amount of time one went into cash draw from contingency fund?
Fair points although the recovery and then the replacement buffer could be dealt with separately and one after the other" completed"on the basis of NOT having 2 crashes in quick succession.What might that look like ? Its not back until you are at 4% plus another 4% for the same amount of time one went into cash draw from contingency fund?
I guess to answer the question you need to know your annual expenditure.
I suppose you could say the IFA has an obvious motive for this but he did seem over-miffed about it - he mentioned it in our review this week, but in the context of me suggesting pulling more out of our SIPPs due to the IHT changes. I flippantly suggested buying gold bars - he said by all means spend more, but don't take it out just to pile it up under the bed.
I'm probably badly paraphrasing, but if you have a good diversified portfolio you shouldn't need it. He also makes the point that no amount of cash will see you through a s
t storm of many years drawdown, and so you should just better diversify in the first place.supersport said:
Sheepshanks said:
alscar said:
PM3 said:
About cash buffer what does one plan for the "recovery" phase. Problem with this seems that even if it takes 2 or 3 years to get back to market normals, you dont just need to get back to the point where you can draw ( for example 4% ) ...you need to be able to draw that AND build back up the 2 to 3 year buffer again
What might that look like ? Its not back until you are at 4% plus another 4% for the same amount of time one went into cash draw from contingency fund?
Fair points although the recovery and then the replacement buffer could be dealt with separately and one after the other" completed"on the basis of NOT having 2 crashes in quick succession.What might that look like ? Its not back until you are at 4% plus another 4% for the same amount of time one went into cash draw from contingency fund?
I guess to answer the question you need to know your annual expenditure.
I suppose you could say the IFA has an obvious motive for this but he did seem over-miffed about it - he mentioned it in our review this week, but in the context of me suggesting pulling more out of our SIPPs due to the IHT changes. I flippantly suggested buying gold bars - he said by all means spend more, but don't take it out just to pile it up under the bed.
I'm probably badly paraphrasing, but if you have a good diversified portfolio you shouldn't need it. He also makes the point that no amount of cash will see you through a s
t storm of many years drawdown, and so you should just better diversify in the first place.Burrow01 said:
Surely cash is a part of a diversified portfolio?
Yes but not 3 years worth, IMO. Everyones circumstance is different and whilst today cash earning 5% is very much a welcomed 'safe' place, you have to remember that interest on cash is very much at the short end of the curve so can easily go from 5% to 4 to 3 to 2... etc. A diversified portfolio (and I still have much to learn on this myself!) is a better proposition. Grey_Area said:
I'm following This thread with interest, due in part to my age.
I don't have an IFA, don't really think I require one.
However, I see many statements here saying my IFA says do this, but no questions as to; why should I do this, can I take it as given this happens, or is it taken for gospel the IFA knows best
I'm new this year to using an IFA and there's, to my mind, almost too much explanation of pros and cons of doing anything, and explanations of how much it will cost vs what the current situation is. I guess this is due to compliance and arse covering etc.I don't have an IFA, don't really think I require one.
However, I see many statements here saying my IFA says do this, but no questions as to; why should I do this, can I take it as given this happens, or is it taken for gospel the IFA knows best
But they're not suggesting anything whacky so there's not much to disagree with. I mentioned in the thread we wanted to keep all the cash we had - that was more because I thought it would be cleaner to just let the DFM handle our SIPPs and ISAs so there'd be no tax concern to deal with. He recommended we dump the premium bonds, which makes sense, but we kept them.
If you don't overall think that they know best, or at least, have better knowledge than you, then you should probably find another IFA, or DIY.
Sheepshanks said:
alscar said:
PM3 said:
About cash buffer what does one plan for the "recovery" phase. Problem with this seems that even if it takes 2 or 3 years to get back to market normals, you dont just need to get back to the point where you can draw ( for example 4% ) ...you need to be able to draw that AND build back up the 2 to 3 year buffer again
What might that look like ? Its not back until you are at 4% plus another 4% for the same amount of time one went into cash draw from contingency fund?
Fair points although the recovery and then the replacement buffer could be dealt with separately and one after the other" completed"on the basis of NOT having 2 crashes in quick succession.What might that look like ? Its not back until you are at 4% plus another 4% for the same amount of time one went into cash draw from contingency fund?
I guess to answer the question you need to know your annual expenditure.
I suppose you could say the IFA has an obvious motive for this but he did seem over-miffed about it - he mentioned it in our review this week, but in the context of me suggesting pulling more out of our SIPPs due to the IHT changes. I flippantly suggested buying gold bars - he said by all means spend more, but don't take it out just to pile it up under the bed.
Not sure why yours should be over miffed.
When I first stated using mine we definitely discussed holding too much cash but at the time I did not want to put everything into equities - I still don’t.
I too mentioned gold but he was pretty dismissive of that mainly because of the obvious storage etc issues.
supersport said:
Derek (DC) has said this about cash many times in this thread.
I'm probably badly paraphrasing, but if you have a good diversified portfolio you shouldn't need it. He also makes the point that no amount of cash will see you through a st storm of many years drawdown, and so you should just better diversify in the first place.
With cash being part of it. I'm probably badly paraphrasing, but if you have a good diversified portfolio you shouldn't need it. He also makes the point that no amount of cash will see you through a s
t storm of many years drawdown, and so you should just better diversify in the first place.I also find it quite useful for anything not in my budgetary spreadsheet and indeed drawdown requirements ie cars , holidays and whatever.
Phooey said:
Burrow01 said:
Surely cash is a part of a diversified portfolio?
Yes but not 3 years worth, IMO. Everyones circumstance is different and whilst today cash earning 5% is very much a welcomed 'safe' place, you have to remember that interest on cash is very much at the short end of the curve so can easily go from 5% to 4 to 3 to 2... etc. A diversified portfolio (and I still have much to learn on this myself!) is a better proposition. To me, 2-3 years in low-interest “cash” (savings a/c, PBs) makes sense. We used ours to ride out a dip. If you had equity and bonds in the last dip, they both went down: where is the diversified money for you to draw on there? Maybe cashing those gold bars in!
Phooey said:
Yes but not 3 years worth, IMO. Everyones circumstance is different and whilst today cash earning 5% is very much a welcomed 'safe' place, you have to remember that interest on cash is very much at the short end of the curve so can easily go from 5% to 4 to 3 to 2... etc. A diversified portfolio (and I still have much to learn on this myself!) is a better proposition.
“Technically “you ( and Derek ) are of course quite correct but there are also previously boring things like savings certificates which at the height of inflationary factors were paying nearly 10%. In addition worth saying that in my case my wife owns most of our other cash investments which currently provides a nice additional income whether at 5% or even when back to smaller numbers.
Furthermore cash stored can also be used for further future investment into other vehicles such as tax relief schemes.
Sometimes it is also not just about the simple maths but more so about the comfort value ( perceived or otherwise ) that holding cash also brings.
Whenever I have been cold called by various Gold investment “brokers” they all seem to suggest that holding 5% of your total liquid asset base is the answer.
I certainly struggle with this concept but I wonder if as with the whole diversification conversation whether ultimately the various sector percentages change as your wealth reaches certain trigger points ?
I certainly struggle with this concept but I wonder if as with the whole diversification conversation whether ultimately the various sector percentages change as your wealth reaches certain trigger points ?
alscar said:
Whenever I have been cold called by various Gold investment “brokers” they all seem to suggest that holding 5% of your total liquid asset base is the answer.
I certainly struggle with this concept but I wonder if as with the whole diversification conversation whether ultimately the various sector percentages change as your wealth reaches certain trigger points ?
Ahhh, the different worlds we inhabit.I certainly struggle with this concept but I wonder if as with the whole diversification conversation whether ultimately the various sector percentages change as your wealth reaches certain trigger points ?
You get called by gold investment brokers, last call we had was will-writers
alscar said:
Sometimes it is also not just about the simple maths but more so about the comfort value ( perceived or otherwise ) that holding cash also brings.
I'd suggest an approach that gives a perceived comfort value (but won't be of much use when times are tough) is worse than no comfort value. mikeiow said:
Phooey said:
Burrow01 said:
Surely cash is a part of a diversified portfolio?
Yes but not 3 years worth, IMO. Everyones circumstance is different and whilst today cash earning 5% is very much a welcomed 'safe' place, you have to remember that interest on cash is very much at the short end of the curve so can easily go from 5% to 4 to 3 to 2... etc. A diversified portfolio (and I still have much to learn on this myself!) is a better proposition. To me, 2-3 years in low-interest “cash” (savings a/c, PBs) makes sense. We used ours to ride out a dip. If you had equity and bonds in the last dip, they both went down: where is the diversified money for you to draw on there? Maybe cashing those gold bars in!
It's certainly a mystery.
In terms of diversification, I'd consider beginning with a "no brainer" and adding adjustments to suit, as Tim Hale explains in his book.
You may prefer shorter duration bonds (vs global agg).
You may prefer to include factors in the equity content of your portfolio.
You may take a slight tilt to emerging markets inn the equity content of your portfolio.
Really depends on your interpretation of the historical data and what you are comfortable with.
Derek Chevalier said:
alscar said:
Sometimes it is also not just about the simple maths but more so about the comfort value ( perceived or otherwise ) that holding cash also brings.
I'd suggest an approach that gives a perceived comfort value (but won't be of much use when times are tough) is worse than no comfort value. I simply don’t understand why holding cash - surplus to whatever the usual wisdom says or otherwise can ever not be of much use in tough times ?
mikeiow said:
alscar said:
Whenever I have been cold called by various Gold investment “brokers” they all seem to suggest that holding 5% of your total liquid asset base is the answer.
I certainly struggle with this concept but I wonder if as with the whole diversification conversation whether ultimately the various sector percentages change as your wealth reaches certain trigger points ?
Ahhh, the different worlds we inhabit.I certainly struggle with this concept but I wonder if as with the whole diversification conversation whether ultimately the various sector percentages change as your wealth reaches certain trigger points ?
You get called by gold investment brokers, last call we had was will-writers
alscar said:
Whenever I have been cold called by various Gold investment “brokers” they all seem to suggest that holding 5% of your total liquid asset base is the answer.
I often see gold argued as something that improves the sustainability of a retirement portfolio, but this is often when using just the S&P 500. When compared to a more diversified approach, the outcomes are often very different. Gassing Station | Finance | Top of Page | What's New | My Stuff