What caught my eye this week.
Seems that even Vanguard investors can be turned into – ahem – ‘tactical asset allocators’ if they are hit by one of the worst bond slumps for several generations.
Trustnet reports that in 2023:
[…] investors withdrew £426.2m out of Vanguard LifeStrategy 60% Equity, the largest fund in the [LifeStrategy] range.
Yet, Vanguard LifeStrategy 40% Equity was the most affected fund, as it shed £1.2bn, making it the most sold portfolio in the IA Mixed Investment 20-60% Shares sector.
Investors also shunned Vanguard LifeStrategy 20% Equity, taking out £404.6m from the smallest fund in the LifeStrategy range. As a result of those outflows, it was the most sold fund in the IA Mixed Investment 0-35% Shares sector.
These are not inconsequential liquidations.
In the case of the LifeStrategy 20% Equity fund, it represents about a 25% outflow versus that fund’s size the year before.
Everybody hurts
While I believe that many of those taking money out of these funds are probably making a mistake, I do sympathise.
As I wrote when recapping the calamitous bond crash of 2022, the whole reason we own bonds is to (hopefully) make our portfolios less volatile.
Equities are where you go for thrills and spills. But bonds are meant to numb you into ignoring most of that action.
Great in theory, but at the time I posted that piece (late November 2022), the supposedly most-boring LifeStrategy 20% Equity fund had actually delivered the biggest one-year loss of all the LifeStrategy line-up.
That was not the game investors thought they were playing. So it’s not too shocking some have said “thanks but no thanks” and taken their marbles elsewhere.
Yet as both myself, The Accumulator, and many others have belaboured since the bond crash, that was then and this is now.
The sell-off in bonds made their yields reasonable again. That is key. It doesn’t rule out another bad year for bonds, but overall their expected returns over the medium-term are now much higher.
You may remember Vanguard itself gave us a forecast just before Christmas?
The fund titan said:
We expect UK bonds to deliver annualised returns of around 4.4%-5.4% over the next decade […]
That’s a huge difference compared to when quantitative tightening started in early 2022.
Indeed Vanguard was looking for just 0.8%-1.8% 10-year annualised returns as recently as the end of 2021, just before the rate-hiking cycle began
Sweetness follows
The ultra-low yields that prevailed for over a decade presented huge challenges for everyday investors – and for those who write about such things, too.
With hindsight, everyone would have liked to have sold bonds before they… repriced.
If only life were so simple.
Nevertheless, even before the sell-off somebody who was in the LifeStrategy 20% Equity fund probably didn’t have much capacity or tolerance for losses.
That was presumably why they were in that fund in the first place. And it wasn’t necessarily the wrong place for them to be.
Dreadful though a 10%-plus loss from a bond-heavy fund in a year might feel, that’s much less bad than the worst you’ll see from equities.
In fact a 15% down market is routine from shares every few years. (Try on a 30-50% crash for size.)
Shiny happy people
Presumably much of the money withdrawn from bond funds has gone into cash. That’s not the end of the world while interest rates are healthy.
A chunky holding of cash might not even be a bad long-term decision for some investors – though that money will likely underperform bonds if it stays in cash for long enough.
But if what was meant to be low-risk bond money held by low-risk investors has actually shifted into equities? That’s an accident waiting to happen.
We’ll have to wait and see. (And thus discover once again what only looks obvious with the benefit of hindsight.)
- Want more? Learn why a diversified portfolio needs more than bonds.
Have a great weekend all. Hope your side does okay in the Six Nations, which has just kicked off. But better yet that my side wins!
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The reason I got out of Vanguard bond funds and life strategy mixes and reinvested directly in UK gilts is because I was told you have bonds in your fund because not only should they move opposite to equity but you know how much you will get back and when: but bond funds a) don’t deliver certainty the how much and when and 2) you pay fees to the broker holding them which equals more uncertainty.
For those bond holders , directly and indirectly, that took heavy losses in the recent corrections it does come back to bond basics.
Duration , the lifespan of your bonds, matters and the yield that you purchase at matters…a lot.
Tips article in FT was interesting ( how did I miss that at the time ? Really appreciate Monevator’s links each weekend !)
(I have had a pleasant experience with tactical allocation to different duration US Tips ETFs over the last couple of years )
Great article as always TI, and as a massive REM fan from the Out of Time / Automatic for the People era, I have to say the song title-infused sub headings really made me smile :).
Loving the REM sub-headings – you’ve quoted 2 of my all time fav tracks from any band on that one album (AFTP). Thank you.
Am in the process of reviewing my asset allocations as I approach 55 (this time next year) so all this is timely food for thought.
Suspect I’m sat on too much cash but need to move things round as I’ll be transferring an existing DC to AJB this year (cannot do drawdown from prev company DC pension) – so will be looking to get my AA sorted as part of that move sometime this year.
As a retiree with a bond heavy portfolio I just sat tight -again !
The portfolio now seems to be back into positive territory-once again!
For Accumulators having selected their Asset Allocation riding out these stockmarket dips is “de rigieur” -for retirees like me a cash fund of 2-3 years living expenses is the “buffer” required
Bailing out at the bottom of a stockmarket cycle is usually very damaging to an amateur investor’s portfolio performance
Good times always come again
Obviously for many investors their ability to cope with volatility was overrated and their Asset Allocation was inappropriately set
Understandably taking a bond hit as well as an equity one is a tougher play than “normal” downturns but an investor must be able to “keep the faith”-remain invested at all times or suffer inferior portfolio performance
xxd09
On the topic of lifestyle funds another link https://www.ft.com/content/ab059105-b9f5-4e7e-8896-dbdede87c3af
‘Lifestyling: a hidden danger lurking in your pension pot’ Claer Barrett
Eye watering withdrawal figures.
Like the riff on REM!
I wonder how many of those Lifestrategy investors had a good understanding of duration before 2022? Probably a minority? I know I could easily have invested in something like VLS40 in the past without fully appreciating the bond risks. Strange Currencies.
Tim Hale’s approach has to be better for most people: if you only want 20% or 40% equity, keep your bond duration fairly short, i.e. bonds of up to 5 years.
@PC — I thought that was an uncharacteristically flawed article from Claer (from memory, I’ve not re-read it today) which was why I didn’t include it in last week’s links.
It’s true there’s this ‘hidden danger’ in there if somehow you didn’t look for it. And to @tetromino’s point, duration was an under-appreciated risk before 2022.
I mean @TA was warning of the risk from interest rate rises for linkers back in 2016:
https://monevator.com/why-uk-inflation-linked-funds-may-not-protect-you-against-inflation/
…and I think it’s fair to see we both still under-appreciated the real-world impact until it unfolded.
With that said, as I note above equity risk will always be the predominant risk. So you could write “the hidden danger in your X fund” for 95% of retirement funds, except those that sit in cash and money market funds.
This is especially the case going forward from here. Anything can happen with markets, we know this, but if you were a betting person (I am, or rather I’m an active investor) then I would not bet on a repeat of the 2022 experience in my lifetime. It could happen, sure, but probably not without something else happening in-between to restack the Jenga tower, so at least we’d have some warning.
That’s not to say bonds can’t disappoint of course, let alone hugely lag equities or get shivved by inflation.
I’m talking about another once every 50 year rout. Not impossible but very unlikely from here IMHO.
I consider myself to be pretty well educated and pretty well read… but bonds still confuse the hell out of me. I’m still looking for the low-cost bond index fund that will deliver inflation equalling-or-beating returns over the next 10+ years to give me the ballast I need into retirement. While I’m still looking I’ll keep my 40% in cash (at 5% currently) to join my 60% in low-cost global equity index.
@TI. The whole issue with linkers was that people seemed to only look at the “inflation protection” bit and ignored the negative real yield of -2 to -3%. Buying a zero coupon 10-year linker at a real yield of -2% guarantees an 18% loss at maturity in real terms. For a 30-year that loss is 45%. That’s what it’s saying on the tin. It might produce a positive or negative return over the next year or five but the return at the horizon is always known.
I do wish they were called ‘real yield’ bonds since that is the risk you are sensitive to. Nonetheless, nothing is being hidden by anyone. It’s there in black and white.
@tetromino. I think Hale’s argument is equally flawed. The issue is people equate think short maturity = safe and long maturity = risky. What matters is your portfolio duration. Having 50% of your portfolio in bonds with duration of 2 is the same (to first order) as having 10% in bonds with a duration of 10. Plus don’t totally ignore those second order yield curve effects. Having a substantial lump of your portfolio in 5 year bonds into a 500bp hiking cycle won’t look good. Better to have a smaller amount in 10 or 30 year bonds.
The real question is what exactly are the bonds being used for? Is it to match liabilities, so needs to have their duration? Is it to hedge against deflation or a risk-off flight to quality? By construction, bonds cannot hedge rising real or nominal yields.
I’d come across that article about vanguard earlier in the week also. I’m trying to remember, did they mention what happened with 80 and 100 also? Possibly net inflows for them? You’re prob right though in thinking it’s most likely now all mainly sat in cash. I’ve just sat tight on 60 and hoping the automatic rebalancing is doing good things for me that my manual rebalancing seems to be incapable of.
One prob with these LS is you can’t use them with the McClung decumulation strategies as you can’t prise apart the equity and bond components, so at some point they may have to go, but that will be a CGT nightmare.
Hi ZX, I wouldn’t disagree with any of that, and don’t claim to be a bond expert in the way that you are.
But I do think Hale gets it right for the majority of amateur investors who would benefit from transparency about what a ‘bad crash’ scenario may look like. Easier to do that if your equity percentage will be the main thing that determines your nominal loss.
Completely agree on your final points, but I imagine they are too advanced for a lot of people.
Thank you xxd09 for your insights from the trenches many years into your decumulation, they are always informative and appreciated and offer the real world examples of us earlier in our journey.
My bond stash took a pounding like others and made me reevalute what they are there for don’t need them at the moment, (took the ostrich approach head in sand and ignored) they look to be heading in the right direction again. Lessons noted for next time the economic stars align as a reference of potential risk is valid. Init good though interest rates on savings have risen to normal levels (normal for those that have lived through normal levels before) and unfortunately for some learning a new normal.
I am perplexed as to how xxd09 has done it? I am much lighter on bond allocation than him and have only just this month hit a new high water mark in portfolio value, that’s in nominal not real terms. I’m not decumulating either, it’s a mystery to me!
Perhaps investors have to remind themselves what bonds in a portfolio are actually for….
To reduce the volatility of the portfolio-they don’t fall as far as equities even in that unusual rout a year or so ago.
They therefore enable amateur investors to stick with their chosen Asset Allocation-through thick and thin-a seemingly successful investment policy for most amateur investors
To preserve wealth-you portfolio maintains its value -again enabling the investor to hang in there
To produce some growth over time -only the third most important function of the bond part of your portfolio
Investors who expect both sides of their Asset Allocation to grow equally vigorously will be disappointed
Equities are for growth-very volatile,can drop 50% but overtime grow your portfolio
Up to the investor where he then sets the dividing point
It is interesting to note in a Total Return portfolio over the last 20+ years it’s mostly equities I sell each year to top up expenses account but that’s the way it should be
xxd09
Rhino-me too! -the stockmarket is such a variable yet eventually outperforming animal that even though I have an Investment Policy that at the end of the day is as rational as I can make it the market has its own mysterious way of working which I suppose/know I will never fully understand
My plan has however got me over the line -at 78 I am becoming even more hands off !
Currently 34.61/60.03/5.36-equities /bonds/cash-2 Equity Index funds+1 Bond Index fund plus Instant Cash ISAs (3.85%) and a high interest bank account (4.75%)
xxd09
@Rhino (#15):
Re: “that’s in nominal not real terms”
I guess this means that you were able to generate your Pots inflation adjusted (a.k.a. real) journey?
OOI, would you mind sharing when your Pot hit its real high? As mentioned elsewhere; mine did this back in the middle of 2018. And even though I too am currently at a nominal high that is still some way off that previous real high. My Pot has just recently clawed its way back to the real level it was when I pulled the plug a bit over seven years ago! In summary, my Pots (CPIH) inflation adjusted story is very different to its nominals journey and rather sobering it is too!
@Alcam – apologies, it is on the to-do list . Thanks for the nudge and also those links to the inflation data (via related ermine thread). I am interested to find out what things look like in real terms, although I think a small part of me would rather not know
Could part of it be moving from Fund to Direct ownership for the tax benefits? Buying low coupon Gilts outside a pension/ISA would be much more tax efficient than holding funds with the same duration/risk profile in a taxable account.
@Chris. Think I’m correct in saying that retail Gilt holdings are now at the lowest level (even in nominal terms, never mind real terms) since the mid 90s. ONS data from end-3Q 23 shows holdings at just £3bn. That’s 0.2% of the Gilt market notional. It’s down from about £5bn or so in 2021. So there is no evidence to suggest that retail is switching, at least as of 3Q23.
Frankly, it’s all a bit odd. Low coupon Gilts as an alternative to fixed term deposits are attractive. The 4% yield on a 2-year is equivalent to 6.67% and 7.27% for HR and AR taxpayers. Plus they are totally liquid and don’t suffer from the low FSCS protection limit at £85k. I’d have expected retail to be buying them in droves over the past 12 months.
Perhaps an impact of the genius timing of Truss and Kamikwasi?
As I age (currently 43) I definitely need to do more research into bonds and gilts.
I totally get bonds in drawdown for the sequence of returns risk and to reduce volatility while drawing down. Its when to do it for me. Plan currently is to simply switch into a 60 40 fund a couple of years before pulling the trigger
At the moment I’m 100% equities in both isas and pensions . I do keep thinking though as my isa is higher than my mortgage now that I should reduce volatility on this in the next 12 months or so as my mortgage is up in Jan 2027. (Fixed at 0.99%).269k mostly io mortgage and 300k in cash and 100% shares
But I may not (probably wont) want to clear it then . I’m currently planning on simply switching back to a repayment basis from interest only and have the isa in the background ready to clear or simply take 3 or 4% to pay it down aggressively leaving the capital largely intact. Comments welcome on my thinking ? Especially ti I know you have gone the io route yourself . You’re a bit ahead of me age wise what’s your thinking on this?
Gilts I am a total admitted novice on. Why have these rather than cash?
Any links to further reading would be welcome
Ps I’ve seen articles about cash ladders using cash gilts, bonds and leaving the rest in equities to grow and shuffling money between them but everything I’ve read seems to indicate its more a psychological buffer to prevent panic. I’ve always been comfortable with the equity risk though admittedly may well be less sanguine when I’m drawing down without a salary!
I was one of those that sold out of LS60. However, that was only to buy VWRP and VAGS in the same 60/40 proportions. Same strategy, but with lower fees and the removal of the very heavy UK bias (i.e. 6 times what it should be for a globally-weighted fund) of LS60.
In other words, we didn’t all “panic sell”. 🙂
Fatbritabroad-when to do it?-great question
The retirees possible nightmare is a 50% drop in equities in the first year of retirement
This is not a problem if you have massive equities savings pot and/or don’t depend much on your equity portfolio for bulk of retirement income…..
But if you do…….
Can be handled in a number of ways
Holding bonds reduces portfolio volatility
Holding cash means you have income in place
Most downturns only last 2-3 years
Personally I saved quite a lot-went to a conservative asset allocation a few years before retirement-lived off the tax free lump sum at retirement for a few years while finding my retirement feet
Luckily for me retiring in 2003 meant that by the time 2008 came along I was able to sit tight inadvertently as it happens right through it
Inadvertently-I was in the Egyptian desert for 3 weeks – no communication-the initial immediate panic of the 2008 crash was all over by the time I returned home!
Luck of the d……!
xxd09
Yep will def hold 2 to 3 years cash but what then with the rest? 100% equities feels punchy. Cash flow ladder feels needlessly complicated to me at least . Like you say depends on where I am at the time .
While I’m drawing a salary I have lived through several 20 or 30% drawdown (investing since 2011 outside of a pension) with equanimity (actually when covid hit I increased what I was investing – the times before that I held steady) so feel confident in my risk profile. Less so when I don’t have a salary I think
Same as Burnie above no matter how many articles I read about bonds I still don’t quite *get it*. I’ve been in Life Strategy 100 since I discovered it ( on here about 6-7 years ago I think, thanks! ) because I can tolerate the risk (bit easier when your pot is small) and it felt like adding bonds would take away any chance of early retirement. I’d rather have a chance of making it to FIRE than gauranteeing failure, that’s how I saw it anyway. If it blows up I’ll keep working. I crossed the 6 figure line a few years ago and monthly swings up and down more than double my monthly salary are common, I honestly still don’t flinch. Also like the simplicity of it and how little time / effort it takes. Now I know the swings could (will) get bigger, but in the words of Dolly Parton if you want the rainbow…etc.etc.
I found Monevator many years ago as I needed help with my pensions and savings. I’m not clever like many here, but I knew a little more than my work colleagues. Most people trust the company pension schemes.
Vanguard LS 60 seemed like a good idea, as I would rather be out walking the hills…. but sometimes things disappoint.
Mind you, I got out of my company pension “Lifestyle strategy choices” back in 2009 when I received a letter saying “We’ve sold some of your pension at the bottom of the market and put it into index linked/cash to protect you!!!” Yeah, right!!!
And then some people reaching retirement a year or so ago really suffered when the bonds crashed. Fortunately I suffered only a little bit in comparison.
So who do us ordinary people trust? Perhaps I put too much faith in Vanguard, though I did keep cash elsewhere – not putting all my eggs in one basket!
Best advice ever from Monevator was to keep fees low – sorted that out a long time ago! I saw that in 2009 when markets fall, they still take a big slice of your savings.
We have several company pensions in payment now and the index linking is a joke in these times of high inflation. Most modern schemes will only give a max of 2.5% lift no matter how high inflation goes. But my husband has one from the 1990s that increases with inflation up to 12%! He’s so pleased he kept it despite the company wanting everybody to convert to Equitable Life! Remember what happened to pension savings in Equitable Life? A nightmare!
So I’m glad that I paid some attention to pension/savings, – although I’d still rather be outdoors…..
My view is that bond/LS funds have a structural problem in that under market stress, when people panic and start taking money out of the fund, the fund managers are forced to sell the underlying bonds at unfavourable prices. There is a PensionCraft video https://www.youtube.com/watch?v=UqrO9Wi6rSY that explains this quite nicely (about 12 mins in). This loss to the fund (and ultimately you) is crystallised when they are forced to sell the bonds to maintain the cashflows out of the fund. For me, I prefer the stability of my own Gilt Ladder (creating one is explained in the same video) and holding bonds to maturity. At least then, you can guarantee your return (assuming you hold the bond to maturity), and so offers a less volatile solution than bond funds/LS funds. I appreciate that not all brokers offer Gilts, but I’ve found (with my broker) maintaining a Gilt Ladder is just as easy as buying funds/etfs.
Nun
Religion? After a fund does badly investors disinvest, after a fund does well investors pour money in. I would say that was normal investor behaviour, nothing to do with religion. The sort of behaviour that results in investors, on average, achieving worst long term returns than the funds they invest in.
I try to avoid active decisions as much as possible but with the benefit of hindsight, one of the best I have made for years was coming out of bonds at the beginning of the pandemic, going from 60/40 equity/bonds to 90/10 equities/cash. There was no great insight involved, just the realisation that the return on bonds was worse than that of cash unless you were prepared to bet on yields going negative.
Now we have largely flipped back the other way, with a ladder of index linked gilts going out to 2036, designed to cover half our income requirements. Hopefully though dividends will continue to grow and we will not need to tap the bonds for income. If so we will just roll the bonds over as they mature, or hold as cash if bond yields plummet again.
We were seriously considering annuities, but have shelved that for now. Will revisit next year.
With 56% LS 60/40 and 44% Equity Indexed, I’m down 3.85% overall since 31/12/21. The “Santa Rally” certainly helped, and I’m hoping for a similar response to the bond allocation by year end.
Unlike @Tricky 24, I hadn’t realised the 60/40 heavy UK bias, so I may well go the same route.
@Naeclue:
An interesting update, thanks.
Some Q’s about it, if I may, please:
a) roughly what is your new allocation
b) how confident are you that you can predict your income needs out to 2036 and what drove the selection of 50%
c) have you changed your approach re total returns (and selling units as necessary) vs dividend harvesting
d) what made you decide against annuities
@Al Cam, asset allocation is expressed in terms of number of years of spending. Spending means the amount we expect to spend over the next year, plus allowances for irregular one-offs, such as a new car, which we don’t anticipate spending over the coming year, and regular charitable donations. After this year’s review our expected spending has reduced slightly. Our current asset allocation, based on start of year valuations is roughly 4.5 years of spending in bonds, 1 years spending in tied up cash (deposit accounts), 6 months spending in cash, although some of that cash is sitting in our SIPPs, tied up until the end of March. Equity allocation is 61 years. That will come down to 60 years soon as we intend to give the excess away. In summary then, and treating the longer term deposits as bonds, about 60/5.5/0.5 equities/bonds/cash.
We are not very confident in our ability to predict spending up to 2036, so we just estimate each year to be the inflation adjusted amount over the coming year. The longer dated Index linked gilts give more certainty at least over the real amount of cash that should be available for spending.
Nothing much has changed regarding drawdown strategy. Dividends get added to cash for spending, if we have more than 60 years of spending in equities at the start of the year, the excess is added to cash/bonds and if we have more than 6 years in cash/bonds, the excess is given away.
The only wrinkle is that charitable donations are now mostly done by giving shares away instead of cash and Gift Aid and those shares get bought back in our ISAs/SIPPs. This is more tax efficient as we save on CGT on the disposal of shares. Essentially the charity gets the CGT instead of HMRC.
Deciding against annuities was a finely balanced decision and we will consider them again next year. Part of the decision was that beyond about 15 years, equities are increasingly likely to give better returns than the cost of the annuity. We could have gone for fixed term annuities instead, but there seemed little point when a ladder of tax efficient index linked gilts could be put together quite cheaply and provides much more flexibility. Another aspect is that we think we will probably downsize in 10-15 years time, which should free up additional cash.
I think it likely that we will buy annuities at some point for the longevity insurance and estate planning. This might turn into a One More Year type of thing though!
@Naeclue (#33):
Re annuities: does the state pension play a part in your planning?
Like some others asking questions on here about bonds, I’d rather be doing other things than reading up on and getting my head around all different types of bonds – like having some life for example before death – and they are by their nature excruciatingly mind numbingly boring anyway and not something I look forward to a lesson in.
If like me as a less experienced investor, you can’t be bothered with individual bonds (or setting up linker ladders/steps/scaffold towers or whatevs – like it’s some favourite hobby (just don’t bother discussing it at any parties – you’ll kill the conversation stone dead) and whilst you can still get positive savings account rates even after inflation – at least 5.15% – even on easy access cash accounts at present whilst last time I heard, inflation was around 4% ish – then as even TI has pointed out in this article, why not hold a few years spending in cash as still a small real return and no real risk, whereas bonds, well there is more risk as we found out in 2022.
Okay so you may do a bit better return over time with bonds but there are no guarantees of it or of the ballast protection it provides as we have seen lately but if all you want to do is protect your pot/capital in real terms due to inflation, which is mainly the reason I originally started investing, then why not keep hold of cash at the minute without the possible risks – very little risk with cash if you keep below the FSCS limit in your accounts. I can see the point and attractions of equities in taking risk for achieving quite a significantly better return than inflation, hopefully, over time.
You could at least do this until this isn’t the case anymore and interest rates available on cash accounts are negative after inflation. It saves the faff for now and with some economists saying we may be in an era of higher interest rates anyway – as it used to be before low inflation/interest rates became the norm.
Maybe revisit it if and when it goes the other way – then maybe even I might have to consider just a boring “bond fund,” as can’t be bothered with faff of anything else. I don’t believe though in just some arbitrary percentage – like 60/40 or anything – that doesn’t mean anything to me really. Would rather just keep a rational number of approximated years spending in bonds – like 9/10 years if you have a reasonable pot so can manage that and then still hold enough equities to make a difference.
Younger investors with smaller pots and earning have nothing much to fear anyway so why bonds anyway?? If you are so scared of a drawdown when young and not even needing the portfolio – it’s years away and you know it’ll eventually bounce back again (it always has if you diversify globally as far as I know, even though individual markets like Japan have had long term problems in the past – that’s a good reason to diversify globally then) then why would you invest at all if you’re gonna panic sell at that early stage of the game when you don’t even need it?
If I were them I would just be 100% equities for the best return over time without the big drag of bonds. In fact for myself, I would not even consider bonds unless I was at least 5/6 years from not earning and then living off the portfolio anyway – and certainly not whilst cash accounts are paying decent rates that outpace inflation.
Some people just want to keep it simple and not turn investing into another full time job they don’t want, don’t really like or need. Newer investors see it all as too complicated and time consuming and can put them off investing altogether I believe. Just another point of view from the often nowadays widely held one that’s all ………..
InvVest &Pants
Everything you say is true especially amongst the more inexperienced investors among us
However predicating one asset class ahead of others generates the possibility of a classical market timing error -another common fault of inexperienced investors
When do you go out of cash and start buying expensive bonds (or equities)?
Investors taking the long view -is there any other way?- possibly restrain themselves to 2-3 years living expenses in cash and ride the storm re their chosen Asset Allocation in bonds and equities -an especially true scenario for retirees
Seems to be a more successful Investment Plan
xxd09
@Al Cam, yes we have included state pensions. I have handled it using a declining notional cash amount to bridge the gap until pension payments kick in.
@Naeclue (#37):
Got it. I wasn’t sure if your state pension(s) were due in the period to 2036, but thought they might be.
Thanks also for all the additional information at #33 too.
Your equities heavy approach remains very interesting.
A R.E.M.arkable piece! 🙂 (and as captions go by no means the first one either!)
Yet, skimming through the comments I get a feeling hardly anybody appreciates These Days 🙁