Stock Market Crash in Retirement - How to protect your future

The situation in Ukraine is creating waves in financial markets. If you’ve got time on your side, this could be a buying opportunity. But what if you’re about to retire? Or you’re already retired?
Retirees are especially vulnerable during the first few years of retirement. In this video, I talk through the systematic strategies you can implement to make retirement planning as stress-free as possible.
👉🏻 Looking for help with Financial Planning?
I am a Chartered Wealth Manager and Partner in a financial planning practice based in the UK. If you would like to find out more about working with us, please follow this link: go.novawm.com/getintouch
DISCLAIMER:
This channel is for education purposes only and does not constitute financial advice - James is not responsible for investment actions taken by viewers. Please seek out a regulated advisor if you require assistance (while James is a financial adviser, he does not provide advice through this KZbin Channel, which is not affiliated with his employer).
James Shack™ property of James Shackell
Copyright © James Shackell 2022. All rights reserved.
The author asserts their moral right under the Copyright, Designs and Patents Act 1988 to be identified as the author of this channel and any video published on it.
0:00 Intro
0:48 Sequencing Risk
4:46 Step 1
5:31 Step 2
7:19 Step 3

[@JamesShack]

How lucky we are to be sat at home watching videos about retirement. Where a stock market crash is the worst of our worries. My thoughts go out to the people of Ukraine and all others affected!

[@Aliassuk]

Hi James. Another great video, thanks. However please do reconsider the video thumbnail. Ukrainian flag/country next to the world relax don’t go well. Thanks

[@w0rrap5]

World War III is knocking at your door kzbin.info/www/bejne/f3rIh2l5nbymqZo

[@timhanser1943]

Well said sir.

[@JamesShack]

@@Aliassuk good point!

[@zulfhashimmi2040]

Well said ! Let’s hope peace returns to Europe asap

[@NoNonsenseJohnson]

Insane to think this info is available for free to regular people on KZbin. I appreciate your knowledge sharing. Even if it seems basic and easy. It’s only simple once you are taught.

[@JamesShack]

No problem!

[@alicejack2649]

Hello Mrs Jane the bitcoin trader is legit and her method works like magic I keep on earning every single week with her new strategy

[@hitupforinvestment360]

@@danielpatrick2366 Wow, how? I'm a newbie and I need your suggestions.

[@rebeccanoah8119]

Amazing I also started trading with her recently. $670,000 profits in just 2 months and still counting, Mrs Sophia is the crypto trade queen as far am concerned.

[@andy.m265]

@@rebeccanoah8119 Of course you did 🤡😂😂

[@greghoughtin]

Spot on my friend. Awesome video! Thank you for all the knowledge and nuggets you had thrown my way over the last month. I have accumulated 210k today. Started with 17k in last month 2024 Investing with Juliana Heidi

[@mark-fm6ey]

Wow that's huge, how do you make that much monthly?

[@toulahen-sd6zk]

Honestly? I'm so excited. Juliana Heidi strategy has normalized winning trades for me also and it's a huge milestone for me looking back to how it all started😃

[@darrenmoore-xx5rc]

The first time we had tried, we invested $4,000 and after a week we received $16,400. That really helped us a lot to pay our bills.

[@dianelle882]

More spontaneous T.A with mrs Juliana heidi!! Keep driving those bullas! 69K BTC? Oh, yeah! cheers mate

[@kevingutierrez-nc8gw]

Wow wow please is there any way to reach her services, I work 3 jobs and have been trying to pay off my loan for a while now, please help me..

[@CarolinePicking]

You keep making videos that address my worst fears - and then you alleviate them! Thank you.

[@bighare4205]

The quality of content and the way you present it makes this the best channel for financial planning ideas. Thanks James, I have been waiting for this area to be covered. You nailed it.

[@JamesShack]

Thank you so much! I’m glad you enjoyed it!

[@omgomg2013]

Thanks Jame!!! We are super lucky to have you!!! Hope the situation in Ukraine, Siria, Palestine,... improve soon!!!

[@Peter-55]

Hi James, thank you so much for this video, and your many others. I retired in August 2020 and have a significant drawdown amount. I have not really had a robust, stress-free method of managing the account up to now. With your video and a lot of research, I have now written down a plan with rules. I have also changed the portfolio structure to better manage the ups and downs. Once again, thank you so much.

[@jrc5515]

The day I stumbled across these videos James was a real game changer.Proper hooked on your content.I definitely need an advisor as hoping to part retire at 55 in two years.Thanks again keep em coming 👌

[@JamesShack]

You’re welcome! I’ll keep going!

[@MikeSmith-sv5pc]

As always, great and timely advice. Love this channel. Thanks James

[@fly1ngf1sh]

Thank you for another great video with some very timely information!

[@alistairmackie4105]

This is an incredibly useful video. I'm a long way from retirement, but this has immediately put my mind at ease. I shall certainly look more into the topics you raised, to learn even more.

[@duttontube]

Another fantastic video. I'm still 20 years from retirement and an analysis strategy shift I've deployed has helped me manage these downward trends. In the past two years I fanatically tracked monthly gains, which was amazing. Now we are headed downwards I've shifted the analysis to look at monthly gains in ETF unit holdings. This has helped me get over the massive % gains and shift into a mindset of acquiring more units at discount. I'm now focused on unit accumulation Vs price increases helping me to stay in the market when the market is selling.

[@rainydayswithdogs]

Very clear and helpful explanation. Thank you James.

[@kathythompson6021]

Everytime you drop a video it’s always a blast..powerful,thorough and Clean keep It up

[@JamesShack]

Thanks Kathy!

[@thelettera9041]

Can’t tell you how grateful I am for your excellent videos and explanations. I’m actually looking forward to sitting down with a spreadsheet and working out my retirement plan! Up til now I’ve just been ineffectually worrying

[@ianbuxton525]

Great video. Useful for Ian and Lucy nearing 55 and 57. Thank you.

[@robbobkirk]

Excellent video James. Thanks.

[@jaco111992]

you're a legend bro. so helpful for me, cheers from Italy

[@JamesShack]

Thank you! Glad you found it useful.

[@dorinatudisco1308]

So glad I fell upon your channel. Great information. Subscribed!

[@JamesShack]

Welcome!

[@Blitcliffe]

I find myself at a crossroads, uncertain whether to liquidate my $150,000 stock portfolio. I'm seeking advice on the best strategy to capitalize on this current market.

[@corrySledd]

Well the bigger the risk, the bigger the reward and such impeccable decisions are better guided by professionals.

[@sheltonPston]

Very true. Despite having no prior investing knowledge, I started investing before the pandemic and pulled in a profit of approximately $950k that same year. In reality, all I was doing was getting professional advice.

[@AUstinnesc]

@@sheltonPston How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success

[@sheltonPston]

There are a lot of independent advisors you might look into. But i work with Nicole Desiree Simon , and she is excellent. You could proceed with her if she satisfies your discretion. I endorse her

[@AUstinnesc]

@@sheltonPston Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.

[@elijohua]

Another great video, cheers James

[@stephenwaters637]

Excellent content as always, very concise and valuable information. Many thanks James.

[@JamesShack]

You’re welcome!

[@richardharnwell3331]

Not sure how I missed this one at the time, but another excellent video, thank you.

[@sense90125]

Thanks James. I'm about to turn 55 (this week) and my plan was to retire in early summer but the volatility over the last few months and then the war has led me to think now just isn't a good time. I've a (long arranged) meeting with my financial planner this Friday so, with the great info from this and other vids of yours, we've a lot to talk about.

[@JamesShack]

The markets are very volatile now, it’s true. But do try to avoid getting trapped in ‘one more year’ syndrome. As there will always be another event coming down the line that causes nerves.

[@rjw6401]

Excellent video. Thank you

[@JamesShack]

You’re welcome!

[@stevenobrien595]

Excellent information! Thanks

[@julianday5466]

Another excellent video James. Informative and simple to understand. Extremely timely advice too, many thanks for covering this topic at this time when many retired folk will be anxious about their pension fund and the impact of a potential stock market crash on their future income. My new motto is 'What would James Shack do?'!

[@davidwarwick6378]

Though various taxes and rules vary from Australia,in general their information you pass on is very easily adapted. I would ( and do) recommend these videos to anyone approaching the retirement age. Absolutely the best on KZbin and I look forward to them each week.

[@JamesShack]

Ah David, thanks for the kind words! All the best to you and family!

[@johnwilliams8869]

Great video James as per usual. Love your succinct, relatable content. This video of yours is highly pertinent to myself, 63,and my wife, 64. Thankyou for delivering such delivering content which I find of a very high standard. Would you consider doing a video of how best to hold cash in these inflationary times. (ie strategies for holding cash with an element of risk?).

[@JamesShack]

Hi John , I’m glad you found it useful. Unfortunately there’s no clever way to get a better return on cash. The best you can do is match fixed term deposits to your cash flows. But cash is not there to get returns, it’s there so other parts it your portfolio can grow!

Congratulations for the video! It's well done and explained and totally useful. Many thanks and you have a new follower and sharer of your content 😊👍🏻

[@JamesShack]

Thank you and welcome!

[@rosemarywalker6786]

Great information James and very timely for me as I retire in June. Thank you 🙏

[@JamesShack]

You’re welcome!

[@timhanser1943]

Thanks James , liked and subbed . My pot is down big .

[@Nolansr0]

Tremendous video, James

[@TJE97]

Refreshing to see a good video of sequencing risk! Althought I cant help but think the rules are a tad over-engineered - all you need to do is use a percentage withdrawal rule and sequencing risk disappears

[@chuckmurray1825]

Of course this video is a year old but 2022 was a year where both stocks and bonds fell and there was no protection from losses. Hopefully, things will improve going forward.

[@mac301060]

Fantastic 2 rules to give 99% chance of money lasting - this is “one ring to rule them all etc......” & should be more widely known. Great videos that have shown me more than any paid advisor.

[@thescand]

Love your videos, James. The investment/retirement videos are great, would also appreciate some more basic things, i.e. - what to look out for in getting your first credit card, how to build good credit history, how that impacts your future, etc. etc..

[@MartinHopkinson]

For someone with only 18 months to the commencement of drawdown, this was a re-assuring video, James. Thank you. You’re right about emotions, though. Having spent a lifetime viewing these market situations as opportunities to invest, it’s tempting to take my two years of buffer cash and invest it! But, as you and Pete Matthew (Meaningful Money) keep preaching: ‘stick to the plan’. I wonder if I can!

[@JamesShack]

Don’t even allow yourself to consider changing the plan. Lock away the keys until that annual review. Remove the decision.

[@nigelhamilton-brown1918]

Thank you for all of your videos - they have all helped me better plan for my retirement. However for this type of dynamic spending strategy - is this instead of a bucket approach of cash/bonds and shares? - or is it used in tandem to fill up the cash and bond bucket?, thanks

[@davidn3971]

Hi James. Great video as usual. You mention holding a mix of stocks and bond funds however in some of your other videos you suggest that 100% stocks is the optimal holding for long term growth of your retirement fund. So what is the optimal holding?

[@gerry2345]

I like this vid. Good insight.

[@martycarmichael3885]

Great info!

[@dubsdolby9437]

Hi James Helpful video alot of Helpful facts particularly about the role of inflation. Another protective measure that has worked particularly well for me is building a quality yield shield a portfolio of robust blue-chip dividend payers. If your fortunate to have picked up bargains along your investing journey and tucked into your isa you can have a good tax free income stream of around 8-10% if you're lucky . Covid was an exception with alot of dividends being stopped but that was a rare black Swan event.

[@paultaylor2783]

Hi James, Loving your videos! I have literally watched all of them in a few days. We are in a position to start investing and your videos have been immensely helpful. Definitely the best source of info I have come across. We are ready to pull the trigger on stocks and shares isa life strategy fund 100 or 80. But I’m now wondering if I’m best to top up my defined benefits pension with acv’s into a linked defined contribution pension. 🤔 what are your thoughts? It would be great if you could do a video on this and explain it all in your easy to follow way. Keep up the good work. 👍

[@JamesShack]

Glad you found them useful!

[@2222woosey]

Hi James, great information - as ever! Just letting you know you have a typo at 5:11 - ‘chanegs’

[@Greylocks129]

Hi James, You mentioned Guyton rules to reduce risk of running out of money. Would you rate these better than Vanguard’s Dynamic Spending rules or are they much of a muchness? Thank you, G.

[@ianmiller4478]

Hi James, awesome vide, do you have the link to the simulator you use (apo logies if its been asked for before)

[@FlyingFun.]

I just re watched this and I can defo see it now, I need to look again at my portfolio and work out exactly whats what, it's the bond part that is bugging me now, I dont know which one to get as they seem to be just as volatile as the stocks lol.

[@wgj4813]

Very interesting and great pension management advice. Being retired is not simply sit back and enjoy you have to manage your money. Having a good solid portfolio is the foundation of any management of your money. Finding that portfolio is very hard. Management fees can soak up large lumps of your cash even when the stock markets fall. Management can just invest in a medium risk portfolio on the day after you hand over your money which so happens to be the day before a correction oh dear you lose before you have even started. Then the chosen portfolio being medium risk just doesn't reach 5%. . I learnt of one professional firm investing on behalf of a client hardly ever got above 2.5% when the overall market in the 20 teens was growing at around 10% so to me getting the right portfolio is actually more important than the management.

[@haroldbetterson1877]

Pls do a vid on draw down and paying tax. Say you have 100k and draw down, is first 25k tax free of taking it monthly, and also how to do the relevant tax return ☺️ subscribed

[@alwAudio]

This is excellent but it highlights to me how the pensions industry is doing such a poor job for.their customers. Many of us are forced to use providers that our companies choose and in many cases their standards of service are poor. My annual statement doesn't even give me a percentage return or a breakdown by fund choice, so I have to do that work myself. The management site doesn't even link to up to date fund information sheets. It scares me to think how few will watch a video like this and then implement it. I've read a lot of research recently and I think it's clear that with the UK pensions freedoms people aren't behaving how regulators and providers expect them to. You are providing a fantastic service so thank you!

[@JamesShack]

You’re welcome Andrew! Pension freedoms - with great power comes great responsibility, but most don’t have the knowledge they need to use that freedom correctly. And many end up making grave mistakes.

[@arunmenon6513]

Great video again, a bit technical with the moral of the story - one does need a good financial adviser😀

[@majorpentatonic2310]

Buying an annuity reduces all stress. That's what I did earlier this year while the rates are up 😊.

[@meadowside5kkzukjustgotkji787]

Hi James. I am 3 years away from retirement with both a DB (closed off 10yrs ago now worth @44% of current salary down an expected 60%) plus a DC pension that took over from the DB. My older colleagues are mainly selling their DB benefits between 20 and 23 times annual pension and going the ARF route. I was always told to hold onto the “Rolls Royce DB pension” so getting rather confused. The attraction of a higher tax free lump sum at retirement plus an inheritable asset for their families are the main reasons why they are leaning more towards the ARF. At retirement I should have several times annual pension in cash and be mortgage free. Family health history is good with parents well into their 80s. Have you any opinions? Thanks for your informative and thought provoking videos. Regards Joe

[@fontane007]

Excellent

[@bikeman123]

James, your thoughts on fixed term annuities?

[@sarchmaster5779]

Thanks for another video James, great stuff. With bonds returning nothing these days is there still any point in holding them over cash? And what about smaller allocations into Crypto and Gold for diversification?

[@bobcowley9370]

It depends who you are. If you're in (or near) retirement then holding bonds can make sense because Government bonds go up when shares go down, unlike cash. That said, I intend holding cash and bonds, something like what was shown in the video. Cash takes care of the short term income requirements, bonds are for medium term stability and shares for the long term growth.

[@jocar-1735]

Hi James, i found this lesson very interesting having retired early a couple of years ago just before the stock market crashed due to Russia invading Ukraine. I used to think the 4% rule was appropraite for SIPP annual drawdowns but have now adjusted to the Guyton Klinger methodology as this gives me more confidence in ongoing dynamic drawdowns. I do have a few questions regarding the inflation adjustment withdrawal rule and would be grateful for your advice because there are different examples of the method in online articles. 1. For year 2 SIPP withdrawal, is the amount determined by comparing SIPP value year 2 to (SIPP value year 1 - year 1 withdrawal amount) ? 2. For a year 2 withdrawal amount to have an inflation increase, does the year 2 SIPP value simply have to be higher than the year 1 SIPP value minus year 1 drawdown value or does the year 2 SIPP value need to be much higher taking into account an inflation adjusted year 1 value minus year 1 drawdown ? I hope the above makes sense it is confusing !

[@threeqs2424]

Thought this was excellent.

[@JamesShack]

Thanks

[@robertknott9349]

James - Great video for me as 57 and looking to retire in the next 5 years - Could you do a video for my kids shed 20 to 30 advising them on their investment plans as they are relatively new to investing 😄

[@JamesShack]

Hi Rob, thanks for the comment. Yes I’ll be doing more on that shortly!

[@robertknott9349]

@@JamesShack thank you 🙏

[@willewinky6527]

Perfect timing for me because I'm 60 years old and invested in the Railway Pension Scheme in the Global Equity Fund. It looks like I'm going to work an extra 5 years because the stocks and shares market is plummeting.

[@phytlargy8196]

Great video James thanks. If I have a Vanguard 80/20 fund how do I withdraw just stock or bonds. Assume that is not option and withdrawal just rebalances fund

[@JamesShack]

The Vanguard fund rebalances it for you. When selling you can only sell the whole unit. It gives you less control but that’s not a problem.

[@frederickwoof5785]

I had to retire in Aug 2022 and I've not seen any gains yet. Trying to transfer one pension into vanguard and its taking months. Vanguard lifestrategy 40 is performing awful which is approx 50% of portfolio. I'm only drawing about 1.5% at moment. Its a tense time in October 2023.

[@davidrobinson1492]

Most people as soon as the state pension kicks in, reduce the withdrawal amount from the drawdown anyway. Also I see that as you get into your 80s, spending falls of a cliff, unless you are paying for your kids bills and grandchildren, the next big expense is care homes, that’s a topic on its own.

[@simikhanna7650]

Is it really beneficial to put as much as 30% of one's Portfolio Investments in Bonds in the present scenario?

[@graveworm1000]

Great content as always man😎🤘 what is the name of the software that showed the succsess rate?

[@JamesShack]

Timeline - you can download a free trail otherwise it’s quite expensive. It’s targeted at advisers to use with their clients.

[@timmitchell6799]

There is also "portfoliocharts" which has the historical annual returns in the background. However, this is aimed at American investors and anyway it takes a lot of thinking about - if you're not very careful you can draw all sorts of dodgy conclusions.

[@lornaprice5679]

A very interesting and instructing video. Is the software you are using to produce these simulations available to buy?

[@JamesShack]

www.timelineapp.co/features/?gclid=CjwKCAiAvaGRBhBlEiwAiY-yMLRov3ADA1Q2TlELTfk4pSE_zeZ61iSVfvcV_Wjatlja3WWcSxa56xoCiCoQAvD_BwE

[@andyandy7980]

Hi James I really appreciate your videos and has really helped me understand how to invest for my future and made me feel so much more comfortable. I have opened vanguard Isas and wife has transferred her old pensions there too. What I am still unsure about is what funds to put your pension pot in when I retire. I was thinking of moving it to a vanguard drawdown, I like the lifestyle funds and invest in that now. Would this be a good option once I retire too and split across the different lifestyle funds. Could you do a video on this topic?

[@JamesShack]

I can't say what would be good for you specifically, but lots of people do use the LS funds throughout their lives. You just need to work out how to manage cashflow and risk in retirement, that's the main challenge.

[@harish2107]

Never commented on a video before, but thanks for an excellent video! Hate to be a pedant :-) but @5.20 you slide on Annual Review has misspelt Changes

[@JamesShack]

Haha - so many slides in this! Was always going to be one! Glad you enjoyed this!

[@kavanoise1543]

Great video. Can I just check would you choose 1 method or the other the use please?

[@JamesShack]

As with most things , it depends. Depends on how large a withdrawal rate you’re trying to sustain. Guardrails are more aggressive and absolute. Inflation adjustments are less easier to tolerate.

[@marshmello1848]

So you would take out once a year in retirement. Must admit, I don't really understand the video - would you consider doing some videos on financial maths by any chance?

[@oli0808]

Your videos are really useful, thank you for making them. In a lot of the videos you seem to say that you are guaranteed growth over 30 years with index funds. How does this tally with the Nikkei 225 index? Is it not possible that in the near future the Western indexes (which form a large percentage of vanguard life strategy) could drop and never recover for 40 or 50 years, or maybe never again? If this were to happen would inflation stop like it did in Japan? With regular monthly payments from 1989 to 2019 in the Nikkei 225 you'd make 2% I read, which is fine with no inflation, but we've got 6% at the moment. I don't know if it's possible to know these things?

[@JamesShack]

I would always advise a globally diversified portfolio for that exact reason. With a global portfolio, if we see no growth for 30 years that means the human race has not advanced at all. This could happen, but it’s very very unlikely. So unlikely that it’s not worth thinking about. Like the risk of getting on a place.

[@oli0808]

@@JamesShack Thanks, this makes sense. Also it's kind of a moot point. Other than property or art or wine, what can you really do with your money that has any chance of beating inflation.

[@robertp.wainman4094]

I think many people who've been 'overdrawing' will really be badly affected by a sustained 'crash.' It's interesting that those who wouldn't think of gambling in any form - even a fiver on a horse or a lottery ticket - are prepared to take a risk on pension withdrawal.

[@chuckmurray1825]

Thanks for making a video that gives us a "reasonable" strategy to follow. Most of my portfolio is pretty much on auto-pilot with Vanguard in charge. I have just a few ETFs and individual stocks that I manage. I've left my self-managed portion pretty much "as is" for now unless I see a chance to add to a stock that I really believe in for future growth. I'm trying to not watch my portfolio right now and keep the faith that things will improve.

[@aflexerclarinton8906]

What ETF’s have you got?

[@JamesShack]

You’ve put your portfolio on auto pilot so you don’t have to worry about this stuff !

[@chuckmurray1825]

@@aflexerclarinton8906 Just a few right now; Energy, Financials, Communications and Consumer Discretionary (a recent add).

[@aflexerclarinton8906]

@@chuckmurray1825 do you mind sharing the tickets for research purposes?

[@MrKlawUK]

someone needs to make an app or website that semi-automates this. It looks like a great plan, but am I going to go through this in detail each year when I’m 76?

[@maino9752]

The 100 year market data that you base this on, what is it? S&P 500?

[@bumblebee9288]

Love your videos James. I am aiming for 1 million in retirement and am about £600 k at moment. I see stock market crashes as opportunities to buy at lower prices hopefully for a few years until I retire possibly in 8 years time. However you ALWAYS need a contingency plan so I have plenty of other investments that will hopefully see me through guaranteed future crashes.

[@JamesShack]

You're still in the golden zone, a crash right now would be optimal!

[@bumblebee9288]

@@JamesShack I know I work at Aviva and I am paying £1070 a month into my work pension each month hoping that the s&p keeps falling as I am currently picking up bargains but I want it to drop more!!! Also they gave us all £1k in shares so that's my dividend income in retirement given another boost! You are doing a great job hopefully you get more viewers and subscribers as you deserve them !! 👋👋👋

[@lyndaaustin6190]

Hello James, agreed with your pinned comment. Worrying times and it puts things in perspective. I have learned so much from your videos. Such clear explanations. Can I ask ... I have a rare thing ... a defined benefit pension (NHS). I am also investing. How should my investing strategy change in this situation? Can/should I be more aggressive or follow the same principles from some of your earlier videos?

[@JamesShack]

Yes you could think about taking more risk than the average person so long as the DB pension covers a fair bit of your costs.

[@lyndaaustin6190]

@@JamesShack thanks James, keep up the good work

[@outthesaddle2109]

What application do you use to back test portfolios with different portfolios (08:29) for instance?

[@JamesShack]

timeline.com

[@tmcche7881]

Please, repeat this video. Include high inflation, then talk about asset allocation.

[@happychappy7115]

The theory of a reverse correlation between Stocks versus Bonds, has broken and needs to be reviewed please

[@philgalz]

great video James (again). the Guyton rules are quite hard to understand but this has explained it very clearly, I am wondering if there is a handy Spreadsheet anyone knows of that can do the maths automatically on a year by year basis to help calculate the coming years income? i was about to write one myself but often there is a much better one out there.....

[@JamesShack]

I have not come across one yet .

[@philgalz]

@@JamesShack no worries, I've put one together now cheers

[@skinnymoonbob]

I always assume that the real value of my portfolio is 80% of the current balance. This will absorb any potential shock in the market.

[@johnsanderson9703]

Hi James, a quick question about Step 2, Portfolio Construction theory 101, assuming I am retired and no longer adding to my DC pot. If my entire portfolio is constructed of e.g. a single Vanguard Lifestrategy fund, can I assume that the rebalancing is done automatically, and hence I would simply top up my cash pot by selling some of this fund each year without the need to do any other rebalancing?

[@JamesShack]

That’s right.

[@duramajin3118]

I hit FIRE in November. I quit work but haven't started actively drawing on the portfolio, a little scary atm lol.

[@JamesShack]

Congratulations! It’s a very strange behavioural step to get your head around.

[@MattMcQueen1]

Sadly, as with all investments, there are no guarantees. Bonds have been underperforming, to the extent that my pension fund with Royal London (a lifestyle fund that moves more of your investment into "safer" bonds as you approach retirement age) is worth less now than it did two years ago, despite me putting a considerable amount into it every month. In addition, UK fund managers seem to favour putting your money into the UK stock market, which has also underperformed over the years. Lots of us have a reduced pension because of this. Note that the pension fund I am invested in is the default fund at Royal London - there will be many people, I am sure, who never look at their pension and are just happy that they and their employer are contributing to it.

[@krassidimitrov2]

Dear James, I have 3 flats that I have already payd off and Im renting them at the total price of 3k per month after tax. The value of them is around a milion euro. Im 36y with 2 kids.. Im thinking to start investing in buying land. Is that ok to you?

[@bencarter8905]

Potentially an idea for a video. Would sequencing affect the accumulation phase of a portfolio while saving for retirement as drastically or would the initially lower amounts and longer time horizon mean that the spread is less significant. Not sure if this is something timeline can do

[@JamesShack]

When you’re accumulating you want the opposite . You want a long and painful crash, or series of crashes so you can keep buying in low. Then pray it reverts to the mean with a big rally before retirement 🙏🏻

[@bencarter8905]

Yeah exactly. That’s why I think it’d be interesting to know how much impact sequencing has on the accumulation as I’ve only ever seen how drawdown is affected by retro testing. My gut would say while there’s some difference, the smaller sums that investments start with will be more impacted by the contributions and there’ll be a smaller variance in the pot of cash after say 30 years

[@USBCABLEGUY]

I had no intention of growing my pension when I retire I thought that was the whole reason you work 35+ years. I plan on just 'making it last' until I'm in my late 80s. Unless you plan on leaving your kids a fortune is there any point in trying to continue building wealth into your 80s and 90s if you even live that long?

[@nb-ii2rb]

How often would you sell investments to generate your retirement income, every month / quarterly/ annually?

[@JamesShack]

Annually typically

[@johnnygo6187]

How do you view the Golden Butterfly portfolio mix? Has 40% stock, 20% LT bonds, 20% ST bonds, and 20% gold for retirement? It seems to have the least recovery period compare to other mixes (backtested from 1970 to have 3 years worst recovery vs. 60/40 bonds as 13 years or something like that).

[@JamesShack]

Why is time to recover the primary characteristic you're looking for? What are you actually trying to achieve?

[@jacacc12]

Hi James, what is a reasonable fee for a financial planner to look & plan your pension / retirement ? Also do you think it is best to take a final salary or transfer value which is much more higher in value ?

[@davidrobinson1492]

James can’t answer that question about moving a final salary scheme, it’s all dependent on your circumstances, health, marital status, personal circumstances, how much other savings and other investments you have, inheritance tax situation, if you want to leave a legacy, and risk profile. As for fees, you will need to pay someone to take the responsibility of moving the DB scheme, I am an ifa and I send any request for a DB pension transfer to a specialist transfer company, I would say 50% I reject before I send them ti them, as they are not suitable, they then go on to reject say 30% of the ones I send. The FCA says that the starting point for any transfer is it’s unsuitable, then we have to build a case to show why it’s is suitable. I had one transferred for a client of mine who was 45, he had terminal cancer, no widow, his scheme would have returned his contributions ti his children, say £5000, we transferred it, and they got £350,000, he died within the week he signed it.

[@jacacc12]

@@davidrobinson1492 Thank you for your reply David, I did't expect James to be able to answer the final salary or transfer value question & I understand the reasons why. But could you please give me a reasonable idea of what an IFA or a company should charge for advice on the above ? Our whole estate is being left to charity as we have no children & we are very fortunate to have more than enough money to see us through life. I just don't want to get ripped off as regards to fee's and just would like a reasonable figure or percentage of what I should be being quoted as there seems to be a lot of scammers about.

[@kevincowan2639]

James do you think we’ll have another 10 years of portfolio performance like the last 10? Because I do I actually think it will be better than the last 10. I don’t understand how other people don’t? Because whether they like it or not there is trillions of pounds of more money in the economy and yes some people do have it and just some people don’t and that doesn’t mean the economy is going to crash.

[@JamesShack]

I’m a optimist too, I think the future is bright but I know it will be a bumpy journey to get there. With the type of investing I do being a pessimist does not get you anywhere. It just causes undue stress!

[@sevensorrows2595]

Well it's kind of underway already, James, judging by the big falls on the FTSE on Thursday and Friday, wouldn't you say? Not a massive 50% fall, of course, but still looking like the first couple of steps of a tumble down the stairs. Partly inflation but mostly Ukraine, in my humble, ill-informed view. Love your channel. Looking forward to future videos on the best ways to invest around £10-15k, as per your recent poll. Take care.

[@JamesShack]

Thanks for watching! In my unqualified opinion, I think this is just a catalyst for blood letting in the markets, which was probably needed. The number of businesses affected by Ukraine/ Russia sanctions compared with the overall markets is tiny. I see demand starting to come off, and inflation abating. But what do I know!

[@sevensorrows2595]

@@JamesShack Haha, well I think you know lots more than me, but fair enough. Even Warren Buffet can't predict the market, of course. Keep up the great work. Your channel really is very watchable!

[@sevensorrows2595]

@@JamesShack ps... I was dumb enough to buy Evraz about three weeks ago! Lost about 90% so far. What do you reckon? May as well hold in the hope of recouping maybe a third of my dosh?

[@STW1964]

Thanks for the video....I'm 58 and retiring in 1 week, got 700k fund and parking it in Royal London until things settle down and I can choose which RL funds to put the money in .... Really helpful channel 👍

[@JamesShack]

Thanks for watching Steven, good luck with the retirement!

[@STW1964]

@@JamesShack keeping an eye on your content, as well as going through the old video's. I like your perspective and have some major decisions to make in the next couple of weeks, so the more information I can take on board the better :-) Cheers

[@FlyingFun.]

Not very clear but I guess the gist is dont take out too much and dont take out too little just because there was a crash that year, Instead take out a little less the following years instead of suffering badly for one year.. If I used the vanguard 60 40 how do I just take from bonds if stocks have gone down? Maybe just swap from 60 40 to 80 20 or something?

[@FlyingFun.]

@Colin Tayler yes so lifestrategy is no good for that then.. I suppose.i.could have a lifestrategy and then 2 seperate bonds and equities and draw down from the separate ones and.then rebalance when things are favourable feeding in from the lifestrategy?

[@TheSimArchitect]

It obviously works, but at the same time you may not run out of money, but you run out of enough income. If you have a couple of really bad years and you keep cutting 10% off you end up without enough to pay rent, utilities and other bare essentials. Imagine having a 2000's style crash while you keep having to withdraw money for expenses and the market takes 20 years to recover. Yes, you won't run out of funds, but if you needed that income you're unable to survive meanwhile. 😖

[@whitakerdavid4999]

Read the paper he refers to, the Prosperity Rule is applied more often than the Capital Preservation Rule. Its a really interesting paper.

[@alleneverhart4141]

Ok this is incredibly complicated so I had to watch it a bunch of times and spreadsheet your examples. I'm getting different results than you so maybe I'm not understanding. In example 1 with 5% performance and 2.5% inflation, I'm getting that you should NOT take the 2.5% income adjustment in year 1 because that would be a 5.1% withdrawal rate (note: you need more like 5.3% performance to replace the year 0 withdrawal - still, the inflation adjustment puts you over the initial 5% rate.) Also, in year 2 the income adjustment still exceeds 5% so the income adjustment should NOT be taken in year 2 as well. I see that performance needs to be more like 8% to take the 2.5% inflation adjustment. Did I pass the test?

[@JamesShack]

Remember you should not be reducing the growth rate by inflation. You only increase the income drawn by inflation. But, you're right, if you only ever received a n annual growth rate of 5% you're going to fail a lot if you have a starting withdrawal rate of 5% that increases by inflation each year.

[@Ste6ve1]

What would your advice be James: I have a 130,000 retirement drawdown taking 1040 a month to live on. This investment has been in place for two years and has for the first time in 6 months gone 250 above what I put in. Listening to a recession on way or maybe a market crash, would you take this and now put as cash in my pension. I understand this would not make anything but it would protect what I have in there as up until last month this went 10000 below what I had in there. This was pulled out of a final salary pension at my choice because of health and money being passed to children but the stress of this disappearing what I do have not helping my health. Would you just say to ifa I no longer want to risk so freeze it and I will just draw what I need for next 10 years. The thought of this going down again does my head in, what would anyone do that understands my situation. I used to work with AXA so i know about risks in pension investments but 250 I have made in two years with IFA and investment managers taking their cut every month as well as Aviva taking theirs. Would love some advice and discussion on this please if anyone in same boat, regards Steve

[@AndrewDCDrummond]

Using up all the bonds first and not rebalancing has been shown to probably work better than plain rebalancing, and another strategy is only rebalancing when your equities gain by a certain percentage. See "Living off your Money" by Michael McClung for a rigorous discussion of different income harvesting and withdrawal strategies.

[@JamesShack]

Hi Andrew, you make good points. Increasing your risk as you get 5-10 years into retirement may be a sound strategy for some. Either you’re so far ahead that more volatility can’t hurt you or your so far behind that you need the extra risk or you’ll run out of money anyway! Thanks for the recommendations.

[@JamesShack]

@Colin Tayler Hi Colin, not quite. When you're in drawdown volatility is a nightmare if you're actively drawing down on a portfolio. As such it often makes sense to reduce risk for the first 5-7 years of retirement just in case you do get a bad sequence of returns. If you do see a bad sequence, you've protected yourself against the most vulnerable years and you can then increase your risk to make up any lost returns. If the markets perform well over that first 5 years then you're still likely to be well ahead and can feel comfortable increasing your risk again. Alternatively you could have a very large cash buffer (4-5 years), to insulate yourself from short term market movements and go 100% stocks.