Itsallaguess wrote:dealtn wrote:zico wrote:
I'm sticking with my plan of buying funds on a weekly basis, with perhaps a big cash injection if markets really tumble.
Not the only place I've seen this, so nothing personal, but where are people finding the ammo to keep buying, or using "...a big cash injection..."?
I would have thought most folks would be allocating funds to general living expenses. It seems some appear to have a "bottomless pit" of funds for reinvestment. With dividends drying up to a trickle, even this source isn't open going forward.
I think the answers you're going to get are likely to be different for what I'd perhaps call 'sophisticated investors' (i.e. investors with more technical experience in these matters - so perhaps read someone like GoSeigen as being in this category - https://tinyurl.com/w5wkjnr..), and those that are much 'less sophisticated', and I'd most certainly lump myself into that latter investor-category...
So personally speaking, and with that said, many years ago as my invested portfolio started to grow to a considerable sum, or at least a 'considerable sum' for a lowly farm boy like me, I found that I needed to alter my strategy so as to 'allow myself' to remain 'fully invested' with my 'currently-invested portfolio', whilst at the same time giving myself something to help me sleep at night for when these really quite inevitable market crashes come around.
I initially typed 'in case they come around' there, but using those words doesn't really explain the fundamental inevitability of these market drops, so I've removed the phrase 'in case' from the previous sentence, and said it like it is - simply inevitable...
So the best way I've found that works *for me* regarding these 'inevitable' issues is to always maintain at least 'some level', and in reality 'a number of levels' of cash funding or near-cash-equivalent, that can be called on to take advantage of these types of market drops. I don't hedge with gold, or any other of the fancier instruments available like bonds etc., so I've nothing 'sat there' in normal-conditions that I'd expect to 'go up' whilst everything else might be 'going down', which might then be available to sell to generate funds - I just have some cash, and then a few other 'layers' of near-cash that I can call on should push come to shove.
It's clear that during 'normal market conditions', those funds will sit where they are and *generally* lose money to inflation, and I'm really quite content with that. I pay money to insure my house, and I pay money to insure lots of other things in my life that are important to me, and which would be difficult to replace, and so I see any 'money lost' on those available funds to be another 'insurance cost', and nothing more. No problem, I don't worry any more about that particular aspect...
But now, during these types of hugely volatile market drops, that insurance can come into play. I can access that cash if I think I want to invest some of it, and I can drop the capital into the market as and when I want to. I've done some of that earlier this week. If my first layer of cash were to be depleted, which is some way off as we currently stand, I've got access to an NS&I account with some more in, and then I've also got access to some Premium Bond capital, which can again be made available at really quite swift time-scales if required.
I'm also still working, and that enables me to have monthly additional funds available to invest in these kinds of market drops, as well as any dividends that come in from what is primarily an income strategy that I'm running. If the market stays around it's current levels, I would expect to perhaps release the rest of the first-level cash that I've got left over the coming months, and also add to that some cash from my monthly wages and dividends as they come in. My current thinking is that the NS&I funds, and the Premium Bond capital will only get touched if we see any further dramatic falls from current levels, but I am prepared for that scenario and will have no problem processing those funds as required if that were to come about..
So, for a simple farm boy like me, the above strategy helps me sleep at night very well during 'normal market conditions', and whilst the value of my invested-portfolio has taken a hit from the current market turmoil, the cash-element part of my approach has now come into play, and I'm taking advantage of that as part of my overall strategy.
I have absolutely no doubt that there are more efficient ways that I could be managing the above issues, and I'm sure many here do, but the requirements for this part of my strategy are only that I know that I'm doing 'something' to enable me to manage during these types of inevitable situations, and to be able to take advantage of them when they occur, and also that the approach is both simple to understand and simple to execute, and all of those boxes are ticked with the above process.
The above approach worked well, for me, during the financial crash of 2007/08, and I expect it to work well during these current issues too.
Cheers,
Itsallaguess
I have to agree with you. Over the years I have castigated myself for always keeping about 3 years worth of basic existence money in the bank rather than being fully invested to reap the maximum return. I mainly did this due to the fickleness of my line of work. When I was forced into retirement at the end of last year I still sat on my hands thinking of the stock market what if's, but did start to move some capital into the market in January. Fortunately, not too much damage has been done, and I'm very glad to have 2 1/2 years cushion still in the bank to see how this all turns out. While my main investments have remained in equities I have been surprised how reasonably calm I am about the losses. I do believe that by the time my cushion is running thin, normality will have returned. I do have niggling worries about how long this correction will last and how long it will take for my investments to revive, but I have at least been offered the choice of sell or hold, rather than being panicked into flying for what might be a safer harbour. I have learnt a lot in the last month about my own attitude to risk.