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Just to echo this sage advice
<£100 of investment costs you £80, £60, or £55 depending on your marginal tax rate?
Seems cheap to me.>
When your looking at investments this is very hard to beat. House prices don't beat this return. And remember to include all you costs in your investment like council tax on the huge house, maintenance, heating it suddenly dosent look like a sound investment choice.
Retired 55, advice? Plan and it will happen.
Plan it [i]early enough[/i] and it will happen
mattsccm- how do you know that this thread isn't really a sting monitored by the tax man who stalks these pages, looking for slips made by the unwary..?
Retirement. Seems so far away. At least 24 years (60) to get my full 40 years in on our final salary scheme, plus my AVC’s.
I don’t plan to do full time till then however. We can job share so (as it stands) I’d do 2 days a week. Couple that with pension I’d be on pretty much the same as fulltime but with a greatly reduced work load and a much reduced physical and mental impact on me as I age.
Thinking 55 for that move (still another 19years, so possible it’ll no longer be an option of course). A lot can change between now and then obviously that’ll make that no longer an option but if I do need to work full time till I’m 60+ then my pension estimates should allow me a comfortable life if they come off.
I will add however that the thought of doing my job till I’m 60+ doesn’t appeal. Even now as I’ve aged I find the shifts are draining me more than they did and occasionally I need a ‘wasted’ day to recharge whereas I used to be fine.
I fully expect to never recieve state pension.
Just to cheer you all up,
A gent at my place (did well for himself) retired a couple of years ago to go twitching in his Ferrari (not a joke) ... stone cold dead sunday morning aged 51.
I was rather upset by this news ... not only was he a nice guy but he played "it" (work/life/etc) brilliantly but still, it seems, ended up a loser?
You cant win ??
And I'm left worrying, whats the point?
In the process of properly getting my "exit" plan together and now left thinking even at 55 it might be too late.
Oh well
We had the good fortune to buy a house in 2000, aged 23, so we've got a relatively small mortgage and a relatively large amount of equity. There's about 15 years left on the current house/mortgage, at which point I'll be 55. When we next remortgage, we're going to work to reduce the term, so it'll be paid off earlier.
We also had kids relatively young. This has had the double benefit of us being relatively young (5) when they finish uni (theoretically, that's nine years away for the youngest) and that we've never got used to a Double Income No Kids lifestyle.
My Teachers' Pension isn't as good as it was, but it's still pretty good. We should be able to go part-time in our fifties and/or find something that brings in enough income, then retire relatively comfortably.
I only need enough to buy the 2037 equivalent of a Dawes Galaxy (probably a Dawes Galaxy) and then the food to fuel riding it all day every day.
I'm just trying to decide what to do.
As a contractor, and a Ltd company, I hear all kinds of conflicting advice.
But, as I'm 43 next birthday, and still got 20 yrs on a small (£180k) mortgage. I think it might just be a case of putting £1k a month into a pot, and taking it from there..
[i]I think it might just be a case of putting £1k a month into a pot, and taking it from there..[/i]
Pretty much. Pay it from your Ltd company as an Employer contribution, and it reduces the corporation tax liability. And do more than £1000 if you can (I did £1500 FWIW, same situation).
This is significantly on my mind.
41 and well paid but savings aren't much and pensions are scrappy from too many job changes. Recent remortgage means a 25 year term to 65....
I don't want to be like my father and still working as he heads towards his 70th birthday, but neither will I be like my FIL who's on an amazing final salary pension and is continually surprised when I tell him these things don't exist any more.
So in the last few days I've set myself a retirement date of 61 (i.e. 20 years from now). I now need to (1) determine what my income expectations are (a lot lower than today!) (2) decide how best to achieve that (i.e. pension/investments/cash mix) (3) up the mortgage payments to significantly shorten the term.
Question is, where to start..!
My part-time working plan involves private tutoring for maths/science. I'm qualified as a primary teacher, but teach A-level physics, so could tutor maths from SATS up to GCSE easily enough. That'll easily keep me in beer money for a few hours a week.
<span style="color: #444444; font-size: 12.8px;">determine what my income expectations are (a lot lower than today!)</span>
This is double scary .... I only know because doing it myself.... 🙁
You mentioned not much saving ... So presumably all your wages are being spent....So total take home with inflation at 2%, compounded for 20 years to retirement year..... (national average £25kish = over £33k in twenty years) and then compound that for hopefully a further 20 years of retirement ... you'll need over £55,000 a year in those last years if you earn the national average wage today.
Work out your own "well paid" salary for forty years time at your own peril .
Good luck
I suppose the only advice I would give is to start when you are in your 20's.
If your employer is contributing the same amount as you, then that helps.
I was lucky really in the early days, was told that I had to pay in the company pension as a term of employment. I was 22, and thought that retirement and pensions were a long way off.
Needless to say, as I got older I was grateful for being made to pay into a pension. Subsequently, in my mid 40's, I started contributing more into AVC's.
As I got nearer my planned date at 60, I was putting alot in each month for about the last 5 years.
Finding a good IFA is a must. I bulked at the charge at first, and almost considered going it alone with the investments.
One of the best decisions I made was to pay my IFA. No stress, and a healthy return.
Start contributing early, even if it is a small amount.
It’s worth remembering ISAs too, as any income is tax free, whereas pension income is taxed. By combining income from pensions and ISAs then you can still receive a healthy amount and pay minimal income tax. And of course you can start taking cash out of the ISA at any age.
Pensions should be first port of call, but ISAs can be useful too.
haven't a ****ing clue. (Just testing the swearfilter.)
But I'll tell you what annoys me: acquaintances a few years older who can't say hi without asking if you're still working and preemptively commiserating. I actually like what I do and am in no great hurry to stop, thanks, so I can join you pissing about in the garden/with your student bloody lets/whatever it is you do all day.
That's all. Hang on, no it's not.
Sorry to break it to everyone who's looking forward to paying off the mortgage. We did this ages ago, and I thought that meant I'd be able to buy a bike a month, pretty much. Apparently not. It all goes ****ing somewhere and not AVCs.
[i]Question is, where to start..![/i]
At 1)
I suppose I could sell my bikes. Does that count as a pension?
Pretty much resigned to working till I drop as I can't see much scope for putting money aside in the next 15-20 years.
I'm having serious thoughts re planning. I'm not convinced by the saving up and then stopping work completely idea. Both mine and my wife's fathers died of cancer within 12 months of retirement. Made me think that waiting too long may not be the best plan. We have discussed dropping to 4 day weeks in the near future. More bike riding, horse riding, walking and doing the things we enjoy while we are young. We've both got pensions etc. but need to do some calculations to work out what point it might be sensible.
52 years old and (presumably) lucky to be in my only second full time permanent job, pension plan as follows:-
1, annuity starting at 60
2, annuity starting at 65
3, tracker pension fund, no longer paying in to, but accumulating
4, state pension starting at 67
5, current job paying in to 'nest' pension plus minimum employers contribution
6, parents well off and in late seventies
7, house, 49k in 1993, now fully paid for and worth 220k
1, & 2, Aviva, used to be a final salary scheme, but employer did not like rule change to compulsory indexed link, employer went bust, still have annuity, partly split to start at 65 due to being contracted out of SERPS, not enough to retire on
3, Aviva, employer contributed, started when 1 & 2 stopped, still contracted out of SERPS, no longer contributed to as left employment, but increasing about 12 percent per annum, still not enough to retire on
4, only getting full state pension if NI contributions continue for another five years (I intend to), due to previously contracted out of SERPS
5, only just started, but every little helps
6, Father on second ICD, Mother's side of family lived in to 90's, two younger siblings with whom I share enduring POA
7, House prices crashed in the early 90's which is when I bought mine, I could still afford my pension contributions. Now may use for equity release.
Paper round did not pay NI, part time jobs as student did, I was told whilst unemployed to add to NI contributions if I wanted the previous years NI contributions to count towards pension (early 80's). Ignored letter, but claimed dole.
In three years time I can take 25 percent tax free from 3 & 5, but they are investments and doing well, so will probably leave alone.
Gave myself a gap year (and a bit) when 40, no dependants, it made me realise that I need a structure in my life. I did not know or care what day of the week it was. The upshot of this is that I think I will need to work until I drop (even if it is at Homebase, taking about HSS drill bits to anyone who will listen). My Mother said she would have killed my Father when he retired at 60, but he had a shed to hide in.
Best of advice I could give is start ASAP, when I started contributing it was easy, I had given up hope of owing a home so had money to spare, see 7,
I’ll have built up my 35 yrs of NI contributions (according to gov’t website), thanks to various part time jobs in my youth, by the time I’m 55. That might persuade me to stop working then though I’m now working for a top Uni which I’m enjoying and their pension scheme is good. I’ve always invested in the stock market which has done me well though if it crashes badly that’ll upset my retirement options....
Despite my flippant comments earlier about never stopping working, I do actually have a plan.
35 now and part of a non contributory pension scheme. Apparently, at 65 I'll get £21k payout plus £7k pa until 68. At 69 I'll get £14k pa plus £8k pa state pension, so £22k pa. However, I've still got 30 odd years to earn more pension. The wife should get £8k pa state around the same time too though her private pension is pretty much non existent. So approx £30k pa between us both as of today with 30 years left to earn more.
By retirement we should be mortgage free and at 31 by then, I'm hoping my son will be financially independent too!
No idea how that stacks up against the norm but I think it's pretty good (feel free to correct me and explain why I'll actually be destitute!)
As an expat, currently in the Middle East but likely to be generally international for quite some time, I'm approaching things from a slightly different angle.
Many things do, however, translate back to the UK, especially with SIPPS and ISAs.
I contribute every quarter to an offshore broker where I'm investing my money in low cost index tracker funds for shares and bonds. I'm not bothered about year to year performance - I'm looking at 25 years+ performance. Over this period of time the market has always won, with typical gains of 9%+. Then you just have to decide your asset allocation of stocks:bonds. That's up to you.
As an example:
Annual addition: £5k
Years to grow: 35
Average growth per year: 8.3%
Investment costs: 0.1%
Return: £1,010,866.43
Then on the way back out, just stick to the 4% rule each year, and that's 40k per year.
The fact that you can do it in the UK totally tax free, to mirror "offshore", by placing things in an ISA is a massive help by the government. However, every time I hear of someone investing long term in a "cash" ISA I die a little inside.
It's quite interesting considering the depth of knowledge about many things on here (coffee, etc) that there seems to be a bit of a gap when it comes to investing.
ps. Those returns look crazily high, but long term in the markets it's always worked. Companies grow. Just ask Mr Buffett!
"I’m looking at 25 years+ performance. Over this period of time the market has always won, with typical gains of 9%+."
A poor second to Scottish Mortgage whose 50 year+ average is 18%...
I'm sure there are others....
Annual addition: £5k
Years to grow: 35
Average growth per year: 8.3%
Investment costs: 0.1%
Return: £1,010,866.43
Then on the way back out, just stick to the 4% rule each year, and that’s 40k per year.
Well I'd say that you've overestimate the returns, underestimated costs and not taken inflation into account. £1,000,000 in 35 years time will not be worth the same as it is today.
Well I’d say that you’ve overestimate the returns
Average stock market return 1966-2015 is 9.69% and we've been on a massive bull run for the last few years as well. I've underestimated.
underestimated costs
I've not, that's what my low cost broker charges me. If I were in the UK then I'd go with Vanguard at a 0.15% account fee which is capped at £375.
and not taken inflation into account
Nor has anyone else in this thread. I fully understand that £40k isn't £40k in 35 years, and it's certainly not a figure I'm aiming for. I kept it simple.
Go and have a look at the Bogleheads website, Andrew Hallam's blog, or read a book like A Random Walk Down Wall Street or Millionaire Teacher.
My plan in my late 30's as someone who doesn't have any meaningful pension & a big change in life circumstances in the fairly recent past is as follows.
Selling existing property, equity split between myself and ex. Which is a reasonable sum of money.
Plan is my relationship is in a place with new partner that I'll be living with her & contributing to her house which she owns - It may be that we sort this out legally so what we put in we get out again.
Use the equity to buy a couple of houses to rent out - the mortgages will be a decent LTV and should be paid for in 12-15 years.
Slightly morbid side is I have a couple of reasonably wealthy elderly parents & as an only child there are plans in motion in terms of minimising tax/exposure with property & other assets. Decisions can be made as & when with what happens.
That's probably as far as my plans go. I don't really plan on pushing more into a pension unless I get a great employer scheme, which is increasingly less likely these days.
I' not concerned though - I've got no idea on my plans for retirement dates, rather than working to a set time, I'm probably fortunate enough to be able to make a decision when I feel the time is right.
Despite my flippant comments earlier about never stopping working, I do actually have a plan.35 now and part of a non contributory pension scheme. Apparently, at 65 I’ll get £21k payout plus £7k pa until 68. At 69 I’ll get £14k pa plus £8k pa state pension, so £22k pa. However, I’ve still got 30 odd years to earn more pension. The wife should get £8k pa state around the same time too though her private pension is pretty much non existent. So approx £30k pa between us both as of today with 30 years left to earn more.
By retirement we should be mortgage free and at 31 by then, I’m hoping my son will be financially independent too!
No idea how that stacks up against the norm but I think it’s pretty good (feel free to correct me and explain why I’ll actually be destitute!)
By the time we reach conventional retirement age (I'm 34) the state pension will almost certainly be (a) means tested and (b) start quite a bit later than age 68/9. You sound like you're in a pretty good place, so you won't be eligible anyway.
If I were in the UK then I’d go with Vanguard at a 0.15% account fee which is capped at £375.
The Vanguard ISA offering is actually quite expensive compared with some other providers.
Vanguard are due to launch a SIPP this year, I may well go for that, but again will compare their charges vs my current provider (iWeb).
>Average growth per year: 8.3%
This is exactly how the whole annuity debacle came about, everyone assumed 10% pa growth was the new norm. Caused no end of problems and still ongoing.....
Same thing with pension funds collapsing (Equitable Life etc) having guaranteed rates of 8% and above in perpetuity without really thinking whether it was sustainable.
Is there any guide for how much you need to have in your pension pot now, to give you say the equiv of 35-40k a year when you retire?
I've got a couple of pensions (aged 36) i don't know if the amount i have is good or bad?
It all seems a bit mental. My father was a middle ranking civil servant - i think his final salary pension was a bit below 40k - to get that amount I seem to need to have a pension pot of more than the max allowed of a million quid.
But then you go on websites like prudential and the numbers they use to illustrate how much you get for various amounts always use figures of 50k or so - surely, if they were being realistic they should use a number at least an order of magnitude greater than that.
The take away seems to be that, unless you have a final salary pension scheme, you're essentially screwed. Right?
Don't forget you currently get £8k pa state pension, so £40k pa only needs a private pension of £32k pa.
Well, i'd guess there is a big question mark over whether that'll still be around in 2050. Even so, I think that means a pension pot of a million quid - does that mean that most people are aiming to save a million quid?
Remember that is in todays value!
IT depends on what your income is made up of when you retire. If it is all pension then you will need a large amount to get £35k+ pa, particularly if you want it index linked. You could take draw-down which will allow you to take some out each year but leave the rest reinvested. With careful nurturing and assuming you only take a sustainable amount each year you could maintain the value. For example if you were making 10% pa on £200k and take out £20k per annum, at the end of the year your £180k would be back up to £200k...
If you have other investments such as ISA's then compound interest is your friend, invest wisely and start years ago!!!
Remember that is in todays value!
How do I work out what that is worth in 2050 then? I assume the answer is **** all?
(Btw, where has the reply tool bar gone? The quote buttons etc have disappeared)
>How do I work out what that is worth in 2050 then?
You can't really as you don't know what inflation will be for the next 32 years...
However, it's probably a good guess to knock 2-3% off the compound interest rate and use that to get the total fund value in today's money.
E.g. assume 6% pa gross gain, and 2.5% inflation, so net gain is 3.5% pa.
The state pension (at the moment) rises faster due to the triple lock but your pension if you buy an annuity is locked at a fixed rate (depreciating in real terms each year) or if you buy an index linked one it will be quite a lot lower each year.
Through a combination of the following I hope to retire in 13 years @ 55
-DB Pension from previous employer with 20 years contribution
-Kids will >23 by then
-Have saved well outside pension
-Have accrued a lot of equity in house by 1/ selling up in London 2/ a series of renovations, I plan to downsize to supplement early retirement.
I am now in a DC pension and I am counting anything that comes out of this as a bonus and I have set all the inputs to high risk 😀
By the time we reach conventional retirement age (I’m 34) the state pension will almost certainly be (a) means tested and (b) start quite a bit later than age 68/9. You sound like you’re in a pretty good place, so you won’t be eligible anyway.
Why wouldn't I be eligible for state pension? Because you reckon it'll be means tested in the future? Maybe my comment about working right up until I die wasn't so flippant after all.
51 here, I've got a defined contributions pension which has a decent sum in from my previous employment. Now I'm a contractor I'm contributing to a SIPP from my Ltd company, stashing away as much as I can. Got some shares too + have been using my ISA allowance up for the last few years.
The aim is to milk the next four years for all I can and then think of moving away from working five days a week.
Cancel my last: https://www.ft.com/content/bd358400-5a77-11e7-b553-e2df1b0c3220
The article suggests that means tested state pension would only apply for those with incomes above £30k pa.
<span style="color: #444444; font-size: 12.8px;">This is exactly how the whole annuity debacle came about, everyone assumed 10% pa growth was the new norm. Caused no end of problems and still ongoing…</span>
There's a slight difference. Relying on 8%+ year on year is a terrible idea - the market tanking by 58% in 2008 would be have been disastrous for such a linked investment. <span style="font-size: 12.8px;">Funnily enough I'm hoping, and waiting (and praying) for the big equities crash that's long overdue. I actively want another 2000/2008 plummet to the bottom, and if that doesn't make sense then we're on totally different pages!</span>
The idea is that one is looking at those gains over 25 years plus. If you're not, and you are reliant on the cash in the meantime, then it doesn't work. If you are in it for the long term then it's the way to do things.
I'm not surprised by the lukewarm reaction - it's pretty normal and most people just carry on doing what they're doing. All I can advise is that anyone who's interested spends some time on the Bogleheads wiki and forum, Mr Money Moustache, Andrew Hallam, John Bogle, and Warren Buffet - his bet against the hedge funds was priceless, and telling....
Warren Buffet wins a 10 year bet against the hedge funds
I would expect any means testing of the State pension to be challenged legally. They have already stolen SERPS / SSP contributions and rolled them into a higher general benefit for all. Refusing to pay out after a life of NI. Contributions is criminal imho. If the payments are unsustainable we need to reduce payments now, not kick the can down the road (again).
Refusing to pay out after a life of NI. Contributions is criminal imho
Even to multi-millionaires ?
You pay in, they pay out.
Return: £1,010,866.43
its important to remember the impact of inflation, which compounts just as hard as gains do. £1 from 35 years ago (using your figures) would be worth 30p of its value today - so your £40k per year (assuming roughly the same inflation over the next 35 years) is the equivilent of £12.5k/year today - not such a nice income
<Even to multi-millionaires ?>
yes
They paid they get what their owed. Its a contract. It was never a scheme that said if you earn over X amount you get nothing back. You opt out you get nothing.
I'm just in the thick of all this at moment and have discovered various facts/learning points that are generally omitted from media/sales discourse:
i) Private pensions are typically charged at around 2% of total fund value, which at first sight doesn't appear ' too bad'. Some funds are 1% which sounds trivial. But if your fund is making 5% average a year, those fees are actually 40% or 20% at best of your 'profit'. The fund value drops, they still make 2%. I don't recall any 'experts' (copyright M. Gove) advising moving into cash as a safe haven pre crash.
ii)Private pensions are vigorously sold on the tax relief benefits which are real enough ok. And employer contributions are signficant.
But when you come to take your pension then if you take the whole pot as a lump sum (say a secondary private pension from past employment), only 25% is tax free and the remainder is taxed 'as normal'. If you are still working this can easily push you into the 40% tax band if you're not there already. So you get taxed on it in the end, and heavily. If you are under the caring auspices of the Child Maintenance Service they will take a further 15% so you are left with 45% of your wonderful 'tax free' pension.
iii)Even if you take it as income, it will still be taxed in the usual way.
Tax is boring as hell but in the end it's real money.
iv)£2.5k per £100k annuity is about par, so how realistic is it to put a fund together of £400k just to make a pocket money income of £10k.
v)Private pensions are only getting a good press now because there's been such a bull market. A blindfold monkey could have made money, especially since Brexit.
vi)Private pension schemes generally don't transfer funds out of high risk investments (shares) as you approach retirement as you kind of assumed they would. This exposes you to the risk of a market tank ((35% ish in 2008) coming up to retirement and you are wiped out with no recovery time. . The solution is to transfer money into low risk investments (eg bonds) prior to retirement, but you have to request this. You would assume that the fund managers creaming 40% of your profit would do this for you, but in reality they don't. (Becuase they are making off your fund value, which I assume is why they don't transfer into cash/bonds during choppy waters)
vii) IN the wake of the whole Trump/Brexit trauma facing the Western world, I have a gut feeling that 'money' value could just collapse at some point eg Germany in the 30s, still within our parents memory so not so far fetched. . My gut is saying put money in real assetts that people really want/need eg houses.
viii)Apathy and ignorance are rarely rewarded. But most people simply don't have the time/brains to sort it. It fits in with the whole strategy of the government offloading risk on to individuals and organisations (hash tag carillion) . It may be that the solution is to talk to an IFA and bite the fee bullet. I recently 'took advantage' of the Government's free Pension Advisory Service and it was a fairly useless tick box exercise carried out at the local CAB by a well meaning but not financially qualified operative.
iv)Most financial pages /journalists are 'in league' with the financial services industry for obvious reasons so should not be treated as either independent or expert. A notable exception is Radio 4s Money Box.
x)Beware crazy claims of growth. I have a relative who had a mid level accounting role in Monaco for an everyday billionaire. The best return they ever made was 9% in boom times, with a team of pros working on it all week. So that's a realistic maximum, I can't comment on averages but don't assume anything more than 5% (less fees of course).
Gone on a bit but this is the shit I wish I'd known 10 - 20 years ago.
<span style="color: #444444; background-color: #eeeeee;">Its a contract</span>
Where can I see this contract, cos I don't recall ever signing one?
<span style="color: #444444;">iv)£2.5k per £100k annuity is about par, so how realistic is it to put a fund together of £400k just to make a pocket money income of £10k.</span>
Bottom line is an average punter is hoping to work about 40y and then live for another 20y or so without working. So if you can't save up roughly 1/3 of your earnings while working then you're pretty much stuffed in broad terms. That's completely ignoring inflation and economic growth to simplify things greatly. But a useful perspective to keep in mind. If you aren't saving very substantial amounts of money, somehow, why would you expect to be able to live without working for a substantial time?
Its a contract because you opt in or out. You can even make a verbal contract, no need to sign anything. If you do a lot of contract you learn to be careful not to commit yourself during discussions. But that's dancing on a pin head. At another level its a social contract between you and the state. I'd also direct you to Jean-Jacques Rousseau and the social contract between state and people and how to establish a political and social community for the philosophical argument.
>If you aren’t saving very substantial amounts of money, somehow, why would you expect to be able to live without working for a substantial time?
This!
><span style="color: #444444; line-height: 15.360000610351563px;">iii)Even if you take it as income, it will still be taxed in the usual way.</span>
Which is fine as you're still only taxed once* and as you're unlikely to earn more in retirement than in work, it's to your advantage.
* well dividends in pensions are still taxed.
>Funnily enough I’m hoping, and waiting (and praying) for the big equities crash that’s long overdue. I actively want another 2000/2008 plummet to the bottom, and if that doesn’t make sense then we’re on totally different pages!
Yes all those people losing their jobs, businesses, homes, life savings etc, just so you can invest this years £5k on some slightly cheaper equities, what a great deal that sounds like!
Some interesting observations above.
I d just add after listening to the ft and ic weekly podcasts today....lots of investors have only experienced this 10 year bull run. Start thinking about what would happen if your portfolio shrank 35%. What circumstances would make you a forced seller.
Also, debt...think when interest rates go back to normality, how is the debt mountain going to be serviced.
>I’m dreading this scenario.
Yep, every stock market crash has been associated with a jump in unemployment, bankruptcies, personal insolvencies, suicides, home repossessions; as well as reductions in spending on the health service, schools, etc.
Hardly something to be relished.
What is wrong with this ****ing website. Haven't you people heard of US ****inT
And as for this piece of shit phone. UA ****ING T
How odd. I could have sworn this forum used to have an Edit post function...
ho hum
I'm 45 this year but my finances are a bit of a mess so although I want to retire it's not going to happen any time soon (short of a lottery win). That said, it's strangely comforting to read just how bad other ppl in their 40's finances are!
I've been paying into a pension for 15 years (mostly in high risk funds which hasn't paid out as well I'd hoped :p ) but also need to remortgage this year (pay off some debts and fix up the house), I'll need at least a 17 year mortgage so I'm screwed for retiring early. I could be due a decent inheritance but I'm trying to convince my dad to enjoy his last few years and blow the lot but seems he doesn't want to - I guess it could allow me to retire early or at least pay off the mortgage and change to a 3 or 4 day week but I'm not counting on it (in case he does finally discover coke and hookers).
>How odd. I could have sworn this forum used to have an Edit post function…
You only get 5 minutes not rather than 15.
I have to edit every post to remove all the crap formatting html garbage which it auto inserts.
Start thinking about what would happen if your portfolio shrank 35%. What circumstances would make you a forced seller.
If my portfolio shrank by 35% then I would be purchasing as much as possible at a discounted rate. Selling because something has become cheaper is the opposite to what should be done, but panic is panic, and this is what happens. Unfortunately for the hand wringers amongst us "the time to buy is when there's blood in the streets".
The issue is if your retirement date coincides with a crash, such as in 2008. Still, however, if you followed the 4% rule for cashing out each year, you'd have still been golden going forwards.
>Unfortunately for the hand wringers amongst us “the time to buy is when there’s blood in the streets”.
The time to buy is now. You can't predict the ups and downs and when the crash comes, you're unlikely to suddenly find yourself cash rich. Pretty much everyone just buys every month at whatever the market rate is via their monthly pension contribution, which is pretty sensible. Even if you hoarded your cash, you're unlikely to pick the bottom correctly as it is only defined by the recovery which follows it, after which it's too late as you'll have missed the largest gain (which normally comes at the start of the upturn).
You should probably spend less time hanging around on stock picking forums listening to Walter Mitty wannabe Gordon Gecko types....
You can’t predict the ups and downs and when the crash comes, you’re unlikely to suddenly find yourself cash rich. Pretty much everyone just buys every month at whatever the market rate is via their monthly pension contribution, which is pretty sensible.
I totally agree. The question was asked: What would you do if the market tanked by 35%. I responded accordingly. Generally it's sensible to contribute as much as you can as regularly as you can, plan for the long term, and ride out the short term noise. Trying to time the market is a mugs game.
You should probably spend less time hanging around on stock picking forums
I've recommended one forum, Bogleheads, and to describe this as filled with wannabe Gordon Gecko types is both amusing and utterly wrong. Go have a look.
A Boglehead is someone who follows the investment strategy of one John Bogle, the founder of Vanguard and Godfather of index investing, who is the polar opposite of what you describe.
I own one ETF, VWRD, which I add to quarterly, and I haven't checked my account since the last time I deposited before Christmas.
What's weird is that low cost investment in passive funds is the most conservative and buttoned up approach to investing money, yet it's seen as high stakes gambling.
+1 to all that. great relief to see sane advice when so many seem to think they can "beat the market". Just trickle in your money regularly, as much as you can sensibly afford, and the long-term will see you right. Unless we are on the verge of something spectacularly bad in which case tins of beans and a bunker is probably the way to go 🙂