The Ultimate Guide to Investing in Retirement

Investing in retirement is a subject of much scholarly research, strong opinions and a whole boatload of crap information. My job today is to cut through all of that and give you the stuff you really need to know and do to invest successfully in retirement.
SHOWNOTES: meaningfulmoney.tv/UG8
ACADEMY LINK: meaningfulacademy.com/rpfounder
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CHAPTER LINKS:
00:00 - Intro
02:46 - Everything you need to KNOW
02:51 - Inflation is the silent killer
07:33 - Investing in retirement is more about organising than investing
09:56 - The law of diminishing returns
12:27 - Everything you need to DO
12:30 - Don't de-risk your portfolio prior to retirement
13:52 - Establish your cashflow needs
17:39 - Build a cashflow ladder
22:22 - Get comfortable with risk
23:53 - Learn to ignore the news
25:01 - Set your priorities
27:06 - Review
29:15 - Manage your behaviour
30:47 - Stay focused
31:34 - Summary
32:23 - MEANINGFUL ACADEMY LAUNCH
33:41 - Listener review
34:51 - Outro

[@OliverTilney]

I read comment I smiled because this is how any financial advisor also thinks about risk. I'd only add financial advisors would not use their gut feelings to measure the risk that is why they are always needed .

[@KimberlyWillowWood]

At this point, I still explore the ability to retire early but that will involve maximizing my cash on hand while minimizing my income to get the largest 0bamacare subsidy possible to pay for healthcare.

[@BEAUTIFULDIANAFRANCIS]

@@KimberlyWillowWood I agree with you but using CFA is a bonus.

[@OliverTilney]

@@BEAUTIFULDIANAFRANCISYes. Cynthia Mcclure Alexander is my CFA.

[@LeslieWagenheim]

Who is the professional who is advising you, if you could perhaps tell us? As a novice investing in stocks without the correct direction of a professional, I have lost a lot of money.

[@OliverTilney]

@@LeslieWagenheim Cynthia Mcclure Alexander .She is well known; you ought to look at her work.

[@simonrlewis]

Great video, not sure how I missed until now. Hopefully it will help me out of my inertia … but if not then your academy may be my next step…

[@RoryCormac-tj2yi]

Feeling a bit anxious about this milestone. Anyone else wondering if they're ready to retire?

[@anibalty]

have you checked out *David Marvin Willis* ? He often provides insights tailored to individual situations. Maybe he has some tips to help us gauge our readiness based on the average retirement savings.

[@DanielAdolf]

could someone shed light on personalized strategies. I wonder if there are ways to catch up if we're behind the average savings by age 60

[@terrybrown3486]

Put as much in your pension between 50 and 60 ​@DanielAdolf . No tax so you are making a 20 to 40% return immediately plus not taxed on 25% due to TFC or on first 12570 income.

[@daviddaniels5866]

Can't believe this video only has 4,200 views! Everyone needs to understand this stuff, and Pete is one of the best IFAs out there who makes this tricky subject seem simple!

[@MeaningfulMoney]

Very kind, David - thank you!

[@hakansepik5654]

Another great video 👍

[@MeaningfulMoney]

Thank you!

[@peterharris3096]

One year on and I find this very informative and comforting in a way. i retired two years earlier than expected because of the pandemic. I have watched numerous yt videos from a variety of financial gurus and read articles on the 4% rule. I had a financial plan for a fixed fee which gave broadly similar advice. All good so far but of course as you consume your cash buffer your risk will naturally increase as the years pass unless the top rung of the ladder can grow in order for you to replenish a cash buffer to see through a downturn in the market and that's timing again. Now I watch these gurus more for entertainment than anything else. As for the first two years of budgeting i simply added up the monthly spend from bank statements and compared to my plan. Not going on holiday helped limit the pain lol. Good presentation.

[@kevincowan2639]

Pete can you go into a little more detail because I thought you said a vanguard lifestrategy fund would be ideal for someone who doesn’t want the hassle or have the education to do the research into companies in there portfolios. Also I know you didn’t use vanguard as an example but does vanguard’s lifestrategy funds start to derisk your portfolio in time? Because I thought it was their target retirement funds what did that. Thanks

[@MeaningfulMoney]

LifeStrategy do not reduce risk over time, the Target Date funds do. LifeStrategy and others like them are a pretty decent done-for-you portfolio option.

[@AndrewDCDrummond]

Should you not be regularly updating your cash pool as otherwise what’s the point of its potential protection against a crash lasting 2 or 3 years before recovery?

[@MeaningfulMoney]

Yes indeed, that’s what regular reviews are for. At each anniversary, the ladder needs to be reset, drawing from profit to replenish the cash, or deferring that decision if markets aren’t in a great place.

[@johnristheanswer]

45 !

[@stevepovey2489]

How much was the founder membership?

[@ChristianThomasTring]

This is great advice, thanks for publishing! - Very broadly, do you have any views on what proportion of overall investments should be in which rung of the ladder? What % would be in the 10yr+, 6-10, 3-5, 1-2?

[@daviddaniels5866]

If it helps, I have 100% cash in years 1-2, 100% bonds in years 3-5, 50/50 equities/bonds in years 6-10 and 100% equities in years 10+, which gives a weighted average of 67% equities and 33% bonds/cash. To keep it simple, I therefore invest 67% of my portfolio/cash in equities rather than trying to allocate a bit to each rung of the ladder. Hope that makes sense?

[@edwardkenworthy7013]

@@daviddaniels5866 Cash in money markets?

[@edwardkenworthy7013]

Personally I wouldn't do that. I have six (two don't really count) "buckets": immediate actual cash in the bank for ~3 months. Then 1 year's money in money markets (not a great return but better than the zero from actual cash) and then my investments proper: 20% in short term bonds, 40% in global equities, 20% in Japan and 20% in global small cap. Each year I plan to total it all up, deduct the amount I need for the next year and put than into my money markets bucket and then rebalance as per the above percentages. This naturally means I sell winners and buy losers. And it's much simpler (and obvious) than trying "flow" money between buckets in a way that doesn't mean all your actually doing is selling your 10yr+ investments every time.

[@daviddaniels5866]

@@edwardkenworthy7013 Mainly premium bonds

[@jamietaylor5570]

Choosing when to take cash out of investments based on the state of the market sounds a lot like market timing. Do you think there is really a mathematical advantage to doing so or is it more behavioural/psychological?

[@MeaningfulMoney]

No way to reliably get a mathematical advantage, I’d say. Definite emphasis on behavioural programming here. The Cashflow Ladder is merely a construct to aid planning and make decision-making slightly easier. It also seeks to avoid market timing where possible, by providing a window of time in which to make disinvestment decisions, rather than having them driven merely by cashflow needs. This is definitely more art than science, and far from a perfect solution, which doesn’t really exist.

[@willlsmith8063]

As always content that cannot be equalled anywhere else on KZbin ... outstanding Pete and on a personal level extremely timely .... legend!

[@edwardkenworthy7013]

I have to say I think the bucket strategy is flawed. It's half a good idea but it leaves us with a mystery of how you refill the buckets. Afterall if you draw cash, then refill using short term investments and then refill that with long term investments, then that's just the same as drawing cash straight out of your long-term investments. Or you have to "obsess over detail" and review your investments multiple times a year for when to optimally move money between the different buckets. A much more sensible solution, IMHO, is to indeed have the buckets but to withdraw as part of re-balancing. Calculate the current value of everything, deduct the amount of cash you need for the next year, rebalance your investments using the money remaining. This will naturally mean you sell some of your winners and buy some of your losers. Isn't that more sensible than the arcane mystery of how you move money up and down the ladder?

[@MeaningfulMoney]

That’s exactly right, Edward - that’s how I do it personally…

[@terrybrown3486]

​@@MeaningfulMoneythat means it isn't a bucket strategy just a mix of assets. I agree with taking from the winners plus rebalance once a year. I was wondering if I should take a year's worth out in one go from the winners or do it monthly/quarterly?

[@Dazzy1107]

Super useful subject and great insight uncle Pete, thanks for producing.

[@MeaningfulMoney]

Glad you enjoyed it!

[@sergioperezcanoves1214]

Thank you very much Pite for your advice, so useful for feeling secure about our financial future following your recom. Keep going Pete ¡ HNY ¡¡¡

[@ch4gascare]

Great starting video to this subject, which will be useful and important to everyone. Looking forward to this Ultimate Guide and to the Meaningful Money Retirement Planning course. Thanks for all of this.

[@michaelm5741]

CHRIST .... That 7IM sound effect just scared me to death 😆 Great Content Pete.

[@nibbler2796]

You answered my other questions a few months ago really well and I am sorry to bother you again, but I have another. Regarding student loans, as I am allowed to pay back the minimum per year, then what's stopping me from just taking out the maximum amount of maintenance loans and putting it all in the stock market and pocket the gains? Is this essentially free money as the minimum repayment will stay the same and if I am only paying the minimum, I wouldn't end up paying it all back anyway so it makes no difference? Thanks. :)

[@nibbler2796]

Even if I lose it all on speculative plays, would this matter at all as I still wouldn't end up paying all of the loans off anyway?

[@MeaningfulMoney]

I've heard of people doing that, Nibbler. I presume you're talking about the UK Student Loan system? If so then you're right, the payment is based on earnings, not the amount owed, so you could take out the maximum amount and whatever you didn't need you could invest. I obviously can't recommend you do so, borrowing to invest - leverage - always adds to the risk, but I've seen plenty of people do similar. Ultimately it's a question of maths and your tolerance for risk. Hope that helps.

[@nibbler2796]

@@MeaningfulMoney Ok, thank you, you have been very helpful :)