What return are you targeting?

[Itsallaguess]

Investing is about dealing with the world as we find it not how we'd have it be.

Survey the landscape, make your plan as best you can, keeping it pretty simply, and then get on with it.

Tweak occasionally as you go along in light of experience gained and insights formed.

Don't rush, but don't procrastinate for ever either.

All investment plans are imperfect, and the landscape less than ideal.

Learn to deal with it.

Absolutely....

We know the weather is changeable, and we make sure to provide ourselves with strategic options that can cater for most situations - different levels of jackets and waterproofs, as well as umbrellas etc...

It's the same with investing - we know the rain is coming, and it may last for some time, but there are strategic options available to us that can allow us to cope with those situations, and we should learn them and incorporate them into our investment strategies.

Cash, or near-cash buffers that allow us to draw on them during such 'inclement weather', are one such approach that I think are a real necessity, both during our 'building' phases, so that we've got cash available to pick up some bargains when we're offered the opportunity, and also during our 'drawdown' phases, so that we're not 'forced-sellers' when prices may be low.

But those buffers need to be of sufficient size and then an additional margin of safety, and beyond that we should try to gain some confidence in our approaches and continue dripping into markets when we can.

It sounds like the OP has made some great gains, and is currently taking a bit of a 'breather' whilst he surveys the landscape. Absolutely nothing wrong with that, and it's the right thing to do as it helps with the confidence side of things, but it also sounds like the current position should be seen as a step on the journey, and not the final destination...

Cheers,

Itsallaguess

[Aminatidi]

@Itsallaguess (and of course everyone else) to some degree yes.

I didn't intend to time anything but I did well in missing the jitters at the start of last year as I suspect that may have scared me off, a bit like the people who pile into SMT because they see a chart and then [expletive deleted] themselves and sell when it sheds 7% overnight - been there done that

I get that there's a lot of noise and breather is probably too strong a word as I want to be doing something with the cash, but I just don't get the feeling it's a sensible time to be piling large amounts (relative to the overall pile of cash) into 100% equities at the moment.

Said before but if I said I was piling money into LifeStrategy 40 or 60 people usually nod sagely, suggest PNL or CGT and they look at you like you have a pipe and slippers

[Itsallaguess]

I get that there's a lot of noise and breather is probably too strong a word as I want to be doing something with the cash, but I just don't get the feeling it's a sensible time to be piling large amounts (relative to the overall pile of cash) into 100% equities at the moment.

Said before but if I said I was piling money into LifeStrategy 40 or 60 people usually nod sagely, suggest PNL or CGT and they look at you like you have a pipe and slippers..

I mentioned it before, but might it be worth looking at things a different way?

What if you forgot about the current cash pile, and satisfied yourself (very fairly, in my view...) that you've put enough of *that* into the market at the moment, and would like to park the remainder for now.

That might well 'satisfy' your concerns about market jitters affecting that particular pile...

Then, why not look at what happens on a month by month basis to any free cash-flow from wages or dividend-income?

If there's enough there to consider a drip-feed into the market, then given that you've perhaps already 'satisfied' your 'current-cash-pile' concerns, it might well be an opportunity to automate a relatively lower-level drip into the market, to then help get over the psychological hurdle of 'market paralysis' that most investors need to get over at some point...

This is more of less exactly what I've done over the past couple of years, although my cash levels are probably a bit lower than yours, but the beauty about the above approach is that it ticks a number of very important boxes, but also enables you to broaden your approach so as to not look *too closely* to perhaps carrying out some sort of 'market timing' process.

The benefit too, is that if you're able to set something up like that, the only major tweak after that (apart from what you might actually be investing in...) is to play tunes with the level of cash-pile, and to work out what you think you actually *need* (plus a level of safety-margin..), rather than what you currently 'want'...

I should add that I'm glad you mentioned LifeStrategy, as I actually think something like that might be a good vehicle for the above monthly (or bi-monthly, or similar, depending on cash-levels becoming available each month..) drip-feeds, as it's then giving your psyche the best chance to get over the 'drip-feed into any market' hurdle, given that the LifeStrategy options are such broad-based investments. Perhaps something like the 80/20 option?

Cheers,

Itsallaguess

[Aminatidi]

I may even do both i.e. use some of the cash pile now and try and automate a drip.

Thing is I'm quite engaged, I mean I'm here and active on several communities so whilst I get that automating things may help with "fear" it's not like I'm going to forget to do something if that makes sense.

I was re-reading one of my old threads as someone replied today pointing out that RICA is now on a > 5% discount which is arguably money off index linkers and gold.

viewtopic.php?f=54&t=14224

[tikunetih]

Thing is I'm quite engaged, I mean I'm here and active on several communities so whilst I get that automating things may help with "fear" it's not like I'm going to forget to do something if that makes sense.

You're yet to fully grasp that, as an inexperienced investor, it is you that is the "problem" - the weak link in the investment chain - and that automating the investment process will help mitigate this to some extent by getting you out of the loop.

Your desire to be "in control" and hands-on will likely serve you badly, make emotional responses to markets more likely, all to the probable detriment of longer term returns. The more you write, the clearer this appears.

I was re-reading one of my old threads as someone replied today pointing out that RICA is now on a > 5% discount which is arguably money off index linkers and gold.

viewtopic.php?f=54&t=14224

Why would you want to own RICA?

My view, formed empirically, is that the managers are "too clever by half": they've tried to construct an all-weather portfolio but have done so in a poor way, resulting in them generating almost no returns for investors for 6 years [~4% total nominal return, ie. negative real return of about -6% vs CPI].

If this had been a treacherous period for markets, then that outturn could be explainable, but considering the favourable backdrop over that period of: continued monetary accommodation; slow but steady economic growth; and an absence of extreme investor exuberance, then no one should have failed to make some reasonable money, no matter how conservative the portfolio construction. Ergo the portfolio construction was poor. cf. conservative CGT and PNL returned ~25 & ~32% total nominal returns, principally because their portfolio construction was informed by greater humility IMO.

Good lesson there.

[Parky]

Why would you want to own RICA?

My view, formed empirically, is that the managers are "too clever by half": they've tried to construct an all-weather portfolio but have done so in a poor way, resulting in them generating almost no returns for investors for 6 years [~4% total nominal return, ie. negative real return of about -6% vs CPI].

If this had been a treacherous period for markets, then that outturn could be explainable, but considering the favourable backdrop over that period of: continued monetary accommodation; slow but steady economic growth; and an absence of extreme investor exuberance, then no one should have failed to make some reasonable money, no matter how conservative the portfolio construction. Ergo the portfolio construction was poor. cf. conservative CGT and PNL returned ~25 & ~32% total nominal returns, principally because their portfolio construction was informed by greater humility IMO.

Good lesson there.

Agree, in hindsight, the RICA strategy has not been the right one. However, for the next 6 years it might be just right. I am slowly moving my gains into all three "wealth preservers" as the markets continue to rise. I can't ignore the RICA discount compared to the PNL/CGT slight premium, as I think, rightly or wrongly, that I'm getting a bargain.

[xeny]

I may even do both i.e. use some of the cash pile now and try and automate a drip.

Thing is I'm quite engaged, I mean I'm here and active on several communities so whilst I get that automating things may help with "fear" it's not like I'm going to forget to do something if that makes sense.

Engagement actually appears to be unhelpful. From https://www.businessinsider.com/forgetf ... ?r=US&IR=T
-------------------------------------------------------------------------------
O'Shaughnessy: "Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was..."

Ritholtz: "They were dead."

O'Shaughnessy: "...No, that's close though! They were the accounts of people who forgot they had an account at Fidelity."
-------------------------------------------------------------------------------

The issue isn't "forgetting" to do it, the issue is "being discouraged" because the market is looking down that month.

[Aminatidi]

I've read that study

I wish there was a way to automate regular investing more frequently than monthly tbh.

[kempiejon]

I've read that study

I wish there was a way to automate regular investing more frequently than monthly tbh.

Have 2 brokers? In fact with Halifax you can set several different accounts and invest in each of them monthly

[gbjbaanb]

I may even do both i.e. use some of the cash pile now and try and automate a drip.

Thing is I'm quite engaged, I mean I'm here and active on several communities so whilst I get that automating things may help with "fear" it's not like I'm going to forget to do something if that makes sense.

Engagement actually appears to be unhelpful. From https://www.businessinsider.com/forgetf ... ?r=US&IR=T
-------------------------------------------------------------------------------
O'Shaughnessy: "Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was..."

Ritholtz: "They were dead."

O'Shaughnessy: "...No, that's close though! They were the accounts of people who forgot they had an account at Fidelity."
-------------------------------------------------------------------------------

The issue isn't "forgetting" to do it, the issue is "being discouraged" because the market is looking down that month.

I've done that - i found an ancient virtual portfolio I created well over 10 years ago. The returns were better than my real one
I think is one of the reasons they say "buy a tracker" - meaning just invest in "the stock market" in general terms and don't try to be clever and beat it!

[BusyBumbleBee]

I have been meaning to answer this question for some time - the answer is "somewhere north of 9%"

[anothername]

I'm retired and trying to get used to the concept of living of capital rather than living off income !!

Gone round in circles many many times on asset allocation and lots of other things, after going through a risk assesment with a FA I
found my attitude to risk is 'different'. I don't equate voaltility and risk which seems to be the way IFA's see the world.
To me 100% cash at the moment seems the highest risk option (you are bound to lose money)

Currently I 'need' about 2% over inflation to be able to continue to spend as I did while I was in work.
I 'want' the best I can

One thing that made me think a lot about the whole risk / asset allocation thing was this monti carlo simulator
https://retirementplans.vanguard.com/VG ... ggCalc.jsf

it's quite interesting to put in the numbers then tweak the allocation to try and get the highest possibility of your money lasting
till you expect to die.

The surprising thing to me was that it seems that at least for my numbers the risk of the money running out increases
for anything other than a 100% equities allocation.