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Sold up today - house purchase

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
Adamski
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Sold up today - house purchase

#439998

Postby Adamski » September 6th, 2021, 11:03 am

Been personal investing for 3 years, basically tracked the world market.

Sold up over half my non sipp holdings today.

Had a good run this year portfolio up about 12.5% ytd.

I'm moving house so will need the cash very soon. Also a crash would now cause me a problem. And feel made enough this year, so happy to lock in gains.

What I've learned in 3 years, more important to stay in the market rather than what you invest in or time the market (although I'm trying to time market by selling this morning).

My Dad was in stock market for over 30 years, used his pep and isa allowance for him and Mum, every year - thats the way to make serious money. He had great patience. I haven't that level of commitment.

Other thing learnt is not panic sell when had Mar 20 crash. My best decision was to stay in even though every fibre was telling myself to sell. Worst decision was got in and out of SMT couple of times, should have held and not switched so much.

So now I'm going to bricks and mortar, moving to bigger house, rest will be tied up in pensions, we are supposedly a nation of home owners or at least those lucky enough.

Anyone else sold or thinking of de-risking in current market?

Take care, Adam

Hariseldon58
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Re: Sold up today - house purchase

#440017

Postby Hariseldon58 » September 6th, 2021, 12:13 pm

No one knows what will happen next….however I reduced my cash/bond exposure from April 2020 onwards and increased equity exposure.

I have been restoring that allocation to close to its normal level over the last fortnight.

For a house purchase you’ve done well over the last three years, particularly holding your nerve last year, investing the funds in the equity markets for a house purchase was ‘courageous’

TahiPanasDua
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Re: Sold up today - house purchase

#440104

Postby TahiPanasDua » September 6th, 2021, 4:51 pm

Adamski wrote:
I'm moving house so will need the cash very soon. Also a crash would now cause me a problem. And feel made enough this year, so happy to lock in gains.




Take care, Adam


Coincidentally, I am doing the same thing, upgrading my house and paying the excess by cashing-in shares, and have the same nagging fear that the market will collapse before I pay up.

Under the Scottish system, I have a verbal acceptance of my offer but have to delay the share sales awaiting a a more dependable seller confirmation. You can be gazumped in Scotland but it is much less likely than in England.

Rich men's problems?

TP2.

Adamski
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Re: Sold up today - house purchase

#440211

Postby Adamski » September 7th, 2021, 8:52 am

Hariseldon58 wrote:..I reduced my cash/bond exposure from April 2020 onwards and increased equity ...investing the funds in the equity markets for a house purchase was ‘courageous’


Thanks for comments, and sounds like you've done well by increasing equity after the crash.

Think my investing history is mixed, been a bit lucky suppose but I don't think my psychology is very suited as I can be too short term.

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Re: Sold up today - house purchase

#440213

Postby Adamski » September 7th, 2021, 9:00 am

TahiPanasDua wrote:Coincidentally, I am doing the same thing, upgrading my house and paying the excess by cashing-in shares, and have the same nagging fear that the market will collapse before I pay up.

Under the Scottish system, I have a verbal acceptance of my offer but have to delay the share sales awaiting a a more dependable seller confirmation. You can be gazumped in Scotland but it is much less likely than in England.

Rich men's problems?

TP2.


Indeed it's a first world problem. I sold another big chunk today. I'm now more afraid of losing, and don't need any more gains. So now just going to hold cash at near zero interest, until moved. Moving house is stressful enough. Good luck with yours.

Problem round here is market running hot, houses sell as soon as go on. Bit crazy. Suppose will settle down soon, or should do, as got a post covid bounce in building and house prices.

Cheers Adam

staffordian
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Re: Sold up today - house purchase

#440220

Postby staffordian » September 7th, 2021, 9:09 am

I did similar in 2013. We had a house but wanted to buy a bungalow and sell our house to our son with a private mortgage.

I'd done very well with my equity investments (HYP focussed) over the previous few years so as soon as we'd found a place we wanted I sold the lot. Losing out on a small potential gain was nothing compared to the risk of a crash and not being able to do as we planned.

tjh290633
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Re: Sold up today - house purchase

#440227

Postby tjh290633 » September 7th, 2021, 9:50 am

I did something similar in 1977, when I wanted to buy a new house but had to finance the deposit before the sale of our then current house. I sold about 30% of my investments, disposing of the one which I had had the longest and one other.

Long before tax shelters, of course, and when dividends attracted tax at the standard rate.

60-odd years on I am still virtually 100% in equities, with a decent cash buffer. My portfolio stands at an all-time high level, perhaps due to not having had need to withdraw any cash in the last two years.

Keep at it, through thick and thin. You will find it pays off in the end.

TJH

hiriskpaul
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Re: Sold up today - house purchase

#440293

Postby hiriskpaul » September 7th, 2021, 12:44 pm

Adamski wrote:Been personal investing for 3 years, basically tracked the world market.

Sold up over half my non sipp holdings today.

Had a good run this year portfolio up about 12.5% ytd.

I'm moving house so will need the cash very soon. Also a crash would now cause me a problem. And feel made enough this year, so happy to lock in gains.

What I've learned in 3 years, more important to stay in the market rather than what you invest in or time the market (although I'm trying to time market by selling this morning).

My Dad was in stock market for over 30 years, used his pep and isa allowance for him and Mum, every year - thats the way to make serious money. He had great patience. I haven't that level of commitment.

Other thing learnt is not panic sell when had Mar 20 crash. My best decision was to stay in even though every fibre was telling myself to sell. Worst decision was got in and out of SMT couple of times, should have held and not switched so much.

So now I'm going to bricks and mortar, moving to bigger house, rest will be tied up in pensions, we are supposedly a nation of home owners or at least those lucky enough.

Anyone else sold or thinking of de-risking in current market?

Take care, Adam

What you did is perfectly sound. I don't think I would even classify it as market timing, just risk management.

I don't attempt market timing when it comes to equities. It would require a lot of work for there to be any hope of a benefit other than by pure dumb luck. Work that I am not prepared to put in. I did invest more into equities last year, but I considered that rebalancing, bringing equities back up to weight, rather than market timing. After some exceptional returns on fixed income and a very good year trading options I am currently underweight equities again, so may actually buy more! I will wait until the end of the year though as I need a more widespread review of our asset allocation. It has become very difficult to find new fixed income opportunities and I have high concentration risk as a result.

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Re: Sold up today - house purchase

#440304

Postby Eboli » September 7th, 2021, 1:20 pm

Maybe I'm the exception, but I wouldn't consider investing in equities any cash I thought I would need at any time in the next 5 years.

Eb

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Re: Sold up today - house purchase

#440315

Postby Wuffle » September 7th, 2021, 1:36 pm

I am going the other way in my capacity as POA.
Rent wouldn't cover the care cost shortfall for my mom and selling part of a house is tricky, so it is going.
Today is proving to be an interesting news day to say the least and in my mind proves that everybody 'times the market' - whether they like it or not.

W.

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Re: Sold up today - house purchase

#440370

Postby staffordian » September 7th, 2021, 4:13 pm

Eboli wrote:Maybe I'm the exception, but I wouldn't consider investing in equities any cash I thought I would need at any time in the next 5 years.

Eb

Good point.

In my case the decision to move came quite quickly, and hadn't been a long term plan. The opportunity to do so only presented itself because my equities had done so well.

TahiPanasDua
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Re: Sold up today - house purchase

#440386

Postby TahiPanasDua » September 7th, 2021, 5:19 pm

Eboli wrote:Maybe I'm the exception, but I wouldn't consider investing in equities any cash I thought I would need at any time in the next 5 years.

Eb

I wouldn't do so either. However, the shares I am about to sell I bought in Hong Kong 30-ish years ago. I need to repatriate the proceeds before I go (even more) gaga as even with a UK will and power of attorney, my beneficiaries need to go through hoops to gain access to the loot.

I feel it is almost impossible to time the move.

TP2.

Hariseldon58
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Re: Sold up today - house purchase

#440434

Postby Hariseldon58 » September 7th, 2021, 7:31 pm

Eboli wrote:Maybe I'm the exception, but I wouldn't consider investing in equities any cash I thought I would need at any time in the next 5 years.

Eb


I know where your coming from, it depends a lot on personal circumstances and personality. If you have alternate sources of funds , then you have more flexibility. If your going to worry about it,then you take the “sleep well at night” approach.

I’d certainly be more cautious today than I was 5 years ago !

No one can time markets reliably, but I do think you can be in ‘normal’ market conditions and you can tell when your at market extremes, either people are too pessimistic or too optimistic, which is where we are.

TINA there is no alternative (to equities) is popular and I have seen several posts about shall I invest my emergency funds in equities ( not on Lemonfool) that gives you a flavour of the mood.

TJH makes a valid point that with some regular reliable income then staying in equities is great approach. Or you have sufficient resources to survive a protracted downturn.

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Re: Sold up today - house purchase

#440857

Postby Eboli » September 9th, 2021, 8:23 am

tjh290633 said:

60-odd years on I am still virtually 100% in equities, with a decent cash buffer. My portfolio stands at an all-time high level, perhaps due to not having had need to withdraw any cash in the last two years.


and Hariseldon58 added:

TJH makes a valid point that with some regular reliable income then staying in equities is great approach. Or you have sufficient resources to survive a protracted downturn.


Yes, I think both of you make great observations and what you say is true...even of me. I have for 30 years maintained a portfolio of only ITs and a fairly small amount of cash outside (equal to about 6 months total regular income). But there again, I hold and have held for a long time a considerable holding of Personal Assets (PNL) that I treat as a 'cash substitute' within the portfolio (and over the last two years it has strangely risen from about 4% of the whole value to about 13% as I have sold some parts of other holdings that I think have got ahead of themselves, such as Scottish Mortgage (SMT)). Despite this, and like TJH, the portfolio has been hitting successive highs of late.

I think my original point was more a dig at not investing money before you've reached the sort of cash buffer desired if you would need the cash invested within 5 years. I have seen too many friends put off equities for life by being disappointed that their share values have not kept pace with their property values and who lost faith and long-term wealth as a result.

Eb.

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Re: Sold up today - house purchase

#440958

Postby hiriskpaul » September 9th, 2021, 1:38 pm

Hariseldon58 wrote:
Eboli wrote:Maybe I'm the exception, but I wouldn't consider investing in equities any cash I thought I would need at any time in the next 5 years.

Eb


I know where your coming from, it depends a lot on personal circumstances and personality. If you have alternate sources of funds , then you have more flexibility. If your going to worry about it,then you take the “sleep well at night” approach.

I’d certainly be more cautious today than I was 5 years ago !

No one can time markets reliably, but I do think you can be in ‘normal’ market conditions and you can tell when your at market extremes, either people are too pessimistic or too optimistic, which is where we are.

TINA there is no alternative (to equities) is popular and I have seen several posts about shall I invest my emergency funds in equities ( not on Lemonfool) that gives you a flavour of the mood.

TJH makes a valid point that with some regular reliable income then staying in equities is great approach. Or you have sufficient resources to survive a protracted downturn.

Markets tend to overshoot (both up and down), so although there is some link between valuations such as CAPE and long term returns, these links are completely unreliable in the short term.

There is no such thing as reliable dividends. Even preference share dividends are not completely reliable and IT dividends are essentially smoothed out by smoke and mirrors.

I think Eboli's approach is not unreasonably prudent, but I think it also depends upon one's capacity to be able to raise money by selling when stocks are significantly down and how much money we are talking about in terms of a percentage of the portfolio. Having to Take 1% of portfolio value at some point in the next 5 years even if stocks are 50% down from their peak is quite different to having to take 30% of portfolio value.

Also, I cannot remember the last time when I thought we were in a "normal" market conditions!

TUK020
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Re: Sold up today - house purchase

#441036

Postby TUK020 » September 9th, 2021, 6:03 pm

hiriskpaul wrote:Also, I cannot remember the last time when I thought we were in a "normal" market conditions!

A long time ago, I worked in the semiconductor business. I remember a colleague joking that the lat time supply matched demand, he missed it because he had gone to the gents at the time

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Re: Sold up today - house purchase

#441168

Postby GoSeigen » September 10th, 2021, 9:01 am

TUK020 wrote:
hiriskpaul wrote:Also, I cannot remember the last time when I thought we were in a "normal" market conditions!

A long time ago, I worked in the semiconductor business. I remember a colleague joking that the lat time supply matched demand, he missed it because he had gone to the gents at the time


OMG this is the first time I've noticed that there is a TUK020 and a Gan020. Have I been conflating the two all this time?

Back on topic, 1nvest regularly and convincingly makes the point that any loss of "income" resulting from holding a significant position in cash-equivalents is more than compensated for by the option value of their liquidity and fixed price. I suspect this effect is even stronger if one has the discipline and temperament to trim when times are good and buy when times are bad.

GS

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Re: Sold up today - house purchase

#441289

Postby Hariseldon58 » September 10th, 2021, 3:40 pm

hiriskpaul wrote:
Hariseldon58 wrote:I’d certainly be more cautious today than I was 5 years ago !

No one can time markets reliably, but I do think you can be in ‘normal’ market conditions and you can tell when your at market extremes, either people are too pessimistic or too optimistic, which is where we are.


Also, I cannot remember the last time when I thought we were in a "normal" market conditions!


I always think of ‘normal’ as when I am certain I haven’t got any idea where we are, just occasionally the mood is very pessimistic or optimistic and you have a feeling of where we are, except the optimistic mood seems to be a permanent feature at present… :roll:

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Re: Sold up today - house purchase

#441361

Postby Hariseldon58 » September 10th, 2021, 8:50 pm

hiriskpaul wrote:
Hariseldon58 wrote:I’d certainly be more cautious today than I was 5 years ago !

No one can time markets reliably, but I do think you can be in ‘normal’ market conditions and you can tell when your at market extremes, either people are too pessimistic or too optimistic, which is where we are.


Also, I cannot remember the last time when I thought we were in a "normal" market conditions!


I always think of ‘normal’ as when I am certain I haven’t got any idea where we are, just occasionally the mood is very pessimistic or optimistic and you have a feeling of where we are, except the optimistic mood seems to be a permanent feature at present… :roll:

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Re: Sold up today - house purchase

#441938

Postby 1nvest » September 13th, 2021, 4:42 pm

Eboli wrote:tjh290633 said:

60-odd years on I am still virtually 100% in equities, with a decent cash buffer. My portfolio stands at an all-time high level, perhaps due to not having had need to withdraw any cash in the last two years.

and Hariseldon58 added:
TJH makes a valid point that with some regular reliable income then staying in equities is great approach. Or you have sufficient resources to survive a protracted downturn.

Yes, I think both of you make great observations and what you say is true

... until it isn't. 1900 for 20 odd years (Barclays Equity Gilt Study data) saw UK equity price index dropping -86% in real terms, income index -74%. Cash (T-Bills) also lost, -36%. Which in real terms meant that the stock purchase power of cash was 360% (bought 4.6 times more shares) higher, comparable to a near 20 year annualised 8% real gain in the stock purchase power of cash (TBills).

More often such situations don't arise, but exceptions can/do occur. A 'what if' investor might opt to diversify to address such risk.

If you compare just nominal price only values over time for each of house prices, gold, stocks, fixed income they might all broadly match/offset inflation, but at times one can be lagging significantly, another leading significantly. Simple target weighting and rebalancing is a form of add-low/reduce-high type trading of such deviations. Such trading can see volatility capture gains that might compare to the imputed rent provided by a house or dividends provided by stocks. Rewards might arise out of price appreciation, income (dividends/interest) or volatility capture. Broadly they might compare as if that were not the case investors would concentrate into the most consistently productive choice, instead however we have the likes of Options traders that target volatility, income investors, growth investors ...etc. where each has their good and bad periods.

Generally stock heavy/all-stock might more often be the highest rewarding choice, but not always. When your investment horizon is long, perhaps 30 years or more, the risk is elevated.

IIRC Jakob Fugger the worlds richest man back in the 1500's opted for a equal split between properties/land, gold/diamonds, merchandise, loans (bonds) as a wealth preservation type asset allocation (he was I believe close on to being like a half trillionaire).

All-stock additional reward isn't a risk-free certainty. The higher reward is a reflection of considerable risk that can/does periodically show. For accumulators large declines can be a good thing, enables new money to buy more shares, for those in retirement/drawdown declines can be critical/financially fatal.


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