Talk Morgan Forums Community The Malvern Arms Financial planning: what indexes are you using?

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.

Isn't a lot of this subject to the stage you are in your life, eg if coming up to retirement or whatever that may influence what actions you have to take at the time. I know my pension pots more than halved in 2008,I retired early in 2010 so had I draw down a pension then I would have been scuppered, but because of other assets and savings I allowed my pots to grow again before drawing on them. Had I not had access to other funds I would have most likely had to continue to work beyond 55, no great shakes some may feel, but I'm reliably informed you are only here once.

I can assure you that some of the most gifted asset/portfolio managers lost their shirts in 2008 and those that really did well out of the crash were those that had the resources to buy the assets at the bottom of the market values awaiting the upturn.. there is a further dimension these days and that is cryptocurrency that have the potential in a crash to wipe the world pretty flat. One of the interesting changes as a result of Covid is that in general the UK is saving more money now than at any other point in time as evidence by reduced credit card borrowing and increased bank deposits, so much so that for the first time ever the UK has a higher saving ratio than Germany, Downside of this is that we are not spending that money in our economy...whether this is a long term shift in the propensity to save no-one knows as yet, but annual Covid outbreaks may enforce the pattern as people chose to travel less, eat out less and so on, which may lead to further recession(s) within the UK leisure, entertainment, tourism etc and respective share valuations.

i shifted nearly all my capital out of equities some time ago, just leaving a couple of chunks in some financial services companies with very well distributed risk profiles, and an ethical/environmental investment fund.

Like John I retired early, having made the judgement that time is a more valuable asset than money to me. Nobody died wishing they had spent more time at the office.

The interesting thing for me at the moment is figuring out a spending profile that makes sense. We figure we have around 20 years left before one or both of us needs to sell everything and move into a nursing home, so the question is, how much of our savings do we get through now buying important things like guitars and amplifiers before we have to switch to spending the majority of it on boring stuff like food and warmth?

Some neighbours of ours worked hard all their lives, saved up carefully for their old age, retired, and then never spent anything as they 'might need it later on'. Needless to say, they popped their clogs leaving a huge pile of cash for someone else to enjoy, bless 'em. Don't want to do that, but equally don't want to end up huddled round a candle drinking cup-a-soup because I bought one too many Stratocasters. The perennial problem, for which of course there is no answer.

Agreed but I would love the last cheque to bounce.

I would be gutted if I died and had an unspent tenner in the bank.

I don't have any savings or investments bar the house. No kids, so if money gets short in retirement I'll release a bit of house equity. I'll probably retire at 65 when the house is paid off. As long as my pension pot gives me about a grand a month I reckon I'll be OK - I have simple tastes

Preferably the one to HMRC!!

Yep, we used to joke that the ideal would be to sink deeper and deeper into debt so that when they sent the bailiffs round, they'd break the door down to find two corpses and a note saying 'Too Late!"

Oh I do like the image of that but perhaps not the smell for the neighbours.

That's a bit dark, it did make me laugh though.

Tim
My old Dad once said to me, save a bit for tommorow but enjoy today. Like John Harris Grandad said 'if you haven't the brass in your pocket you cant afford it' that rings true today. A friend of my use to work in a Bank and the one thing that use to hack the staff off was people have never been forced to get credit from a bank, apart from a Mortgage agreement. So if you havent got it don't spend it!!