Selling multi-asset funds for retirement income

[xxd09]

I think you are right-it is unproductive capital-we used to get 5% pa and up to recently 1.4%
However the job of a cash buffer is to avoid having a forced sell of Equities or Bonds in crash/downturn
Crashes happen regularly-last a short time -1-2 years usually .Often about 10 years apart.We are due for another soon
Some very conservative types have 5 years worth of cash-it is personal how much you keep
If you don’t have enough in your cash buffer -you haven’t saved enough!
xxd09
PS if you can find the Bogleheads forum-there is a salutary post by a poster called Sheepdog on this very problem
Maybe one of the posters here can provide a link for you
I keep it beside me for reference at all times

[xxd09]

I think you are right-it is unproductive capital-we used to get 5% pa and up to recently 1.4%
However the job of a cash buffer is to avoid having a forced sell of Equities or Bonds in crash/downturn
Crashes happen regularly-last a short time -1-2 years usually .Often about 10 years apart.We are due for another soon
Some very conservative types have 5 years worth of cash-it is personal how much you keep
If you don’t have enough in your cash buffer -you haven’t saved enough!
xxd09
PS if you can find the Bogleheads forum-there is a salutary post by a poster called Sheepdog on this very problem
Maybe one of the posters here can provide a link for you
I keep it beside me for reference at all times

[SalvorHardin]

PS if you can find the Bogleheads forum-there is a salutary post by a poster called Sheepdog on this very problem
Maybe one of the posters here can provide a link for you
I keep it beside me for reference at all times

I think that this is the post (and thread)

I can't believe I am thinking this
https://www.bogleheads.org/forum/viewtopic.php?t=25126

and a more recent thread about emergency funds

If you knew a recession was coming, what would you do?
https://www.bogleheads.org/forum/viewtopic.php?t=244476

I keep roughly four years of basic living costs in cash. Fortunately my portfolio is large enough (and my expenses low enough) so that a 50% fall in both capital and income won't affect my lifestyle.

[xxd09]

Apologies for double post!
xxd09

[Dod101]

I think you are right-it is unproductive capital-we used to get 5% pa and up to recently 1.4%
However the job of a cash buffer is to avoid having a forced sell of Equities or Bonds in crash/downturn
Crashes happen regularly-last a short time -1-2 years usually .Often about 10 years apart.We are due for another soon
Some very conservative types have 5 years worth of cash-it is personal how much you keep
If you don’t have enough in your cash buffer -you haven’t saved enough!
xxd09
PS if you can find the Bogleheads forum-there is a salutary post by a poster called Sheepdog on this very problem
Maybe one of the posters here can provide a link for you
I keep it beside me for reference at all times

Last time we had whet you call a market crash was 2007/8. My dividends mostly kept rolling in and I simply adjusted my expenses to make up the shortfall. No need to decide what to sell. Much easier all round. My asset allocation is about 90/95% in equities and ITs. The balance is in bond funds. Works a treat.

Quite separately I hold about three years of expenses in N S & I Index linked certificates which just roll up. I have never had to touch them for living expenses since I retired nearly 25 years ago.

Dod

[xxd09]

That is a really good system but it predicates two thing’s
The size of your investment portfolio and how much you spend
I remember reading years ago on Motley Fool UK of a early retiree -a single lady- who had made so much money that her whole Portfolio was in Gilts (called herself “Jennie the Dog” )-if I remember rightly
Admittedly Gilts paid quite well in those good old days
Most of us save enough but without such large safety nets unfortunately
xxd09

[hiriskpaul]

I agree with the points made about diversification and would say it is prudent to use more than 1 broker. If a broker fails your assets could be inaccessible for a while even if you do not lose money due to fraud, etc.

If investing in actively managed funds it is definitely worthwhile diversifying across multiple funds. The outcomes from actively managed funds can vary hugely, even within the same sectors and as the Woodford saga has demonstrated significant market underperformance is not at all unlikely.

When it comes to something like the Vanguard Lifestrategy funds though, diversification is much less important. These are based on cap weighted index tracker funds and the long term difference in performance between tracker funds is marginal, mainly determined by charges, differences in index composition and trading efficiency.

There is also much less risk of a cap weighted tracker fund doing a Woodford. They are not going to end up overweight illiquid securities and will not massively underperform the market. As far as I know, no broad cap weighted index tracker anywhere in the world has ever failed or been frozen. Even so, for the sake of extreme prudence I would agree it was best not to put everything into a Vanguard LS fund.