Just fiddling about with a spreadsheet or two, trying to keep our finances under control, and I found myself wondering what other folks are thinking about likely future trends in interest rates, inflation, and future asset returns might be?
I'm extremely risk-averse and financially pessimistic, so I'm working on 5% inflation, 3% increase in index-linked pension, 0% increase in equity-based investments, and 5% increase in land/property assets, which are earmarked to pay for a nursing home for either/both of us.
Whaddya reckon? too pessimistic - or too optimistic? And what have I forgotten?
When the market crashes (which it will) do you panic and sell making major portfolio adjustments or sit tight? In the 2008 crash the people who panicked lost the most and took way longer to recover (a number never have) than those that sat it out and stayed the course. Having at least a 1 year cash asset fund to help ride the initial storm and psychological ability to cut back on expenses are real winners in any portfolio.
