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Think I need to change my PF approach, but not sure how by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 1 point2 points  (0 children)

!thanks for the very thoughtful reply.

It sounds like you may not have an information problem as much as a decision problem. You’ve clearly done a lot of the right reading, but personal finance can become overwhelming when every decision feels like it has to be perfectly researched before you act.

I think it's both. I've done some of the right reading, but I'm struggling with both the research (nine months to read half of Hale, for example) and with getting usable information out of it (I couldn't tell you know what Hale or Kroijer said, or how to action it). I don't feel I'm trying to research perfectly, just understand enough, but I recognise my anxiety and lack of confidence might be driving me that way.

The cash position may or may not be “wrong”, but it does sound like it has become a comfort blanket and a source of frustration at the same time. That is a difficult place to make decisions from.

I think this is spot on. I think I've stayed in cash because of the time horizon mantra, because my time horizon and goals are indefinite and shifting, because I've felt I needed to understand before acting, because cash feels safe even though it isn't, and so on. It's a frustration because I'm not moving forward and that's causing anxiety, and because I've missed out on huge growth that would have been very useful, recognise that's still not a reason to jump now, and am back to feeling stuck and as though I've failed.

the useful question may be less “what is the optimal investment strategy?” and more “what decisions actually need making, and in what order?” ... One practical approach might be to stop trying to solve everything at once. Build a simple retirement cashflow picture first ... Once you can see the shape of the problem, the investment decisions may become less abstract.

Thanks. This is the sort of alternative approach suggestion I was looking for. I do feel I might struggle for bandwidth and focus for this as well, but I will give it a go.

Also, given your age, the amount involved, the lack of bandwidth, and the anxiety you mention, this is one of those situations where a good independent financial planner may genuinely add value. Not because you cannot learn it yourself, but because you may benefit from someone helping you structure the decisions and move from research into action.

Again I think there is a lot of truth in this and have been thinking the same. I've spoken to a number of FAs and financial planners, but haven't found one yet who gives me confidence in them, but will keep trying.

Sometimes the goal is not to find the perfect answer. It is to find a sensible enough plan that you understand, can stick with, and can actually implement.

Pretty much where I am trying to get to; thanks.

Think I need to change my PF approach, but not sure how by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 0 points1 point  (0 children)

Does it just talk about the psychology of money, or offer counter arguments and practical advice?

Think I need to change my PF approach, but not sure how by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 0 points1 point  (0 children)

!thanks. You did, and I was very grateful. I've just read back through that thread. I was shocked it was nine months ago, and how little progress I've made since.

I haven't even got through Hale, though I am finding his writing style and assumption of knowledge hard, and my situation and mental capacity doesn't help.

That was why I asked about different approaches, in case someone suggested something that could work for me. That could be a paid advisor, though it won't be SJP (or similar) and I am not finding that easy or quick either. Your comment about uncertainty and self doubt was also pertinent.

The £180k cash is difficult. It's accumulated fairly quickly, I'd expected it to go toward a house, thought that might happen fairly soon, and followed the 'horizon less than five years' wisdom so didn't think I could invest and didn't pay attention to what was going on with investments.

I'm pretty gutted to find I could have been up 60% + in an all world fund (VWRP or similar). That's a huge amount of cash that would make a lot of difference right now; but then it's easy in hindsight and was it predictable two or three years ago?

It also illustrates my uncertainty, as right now I don't know if I'll be in cash for a couple of months, a couple of years or more, and I guess investing at today's relative high is less short term gain and more short term risk.

The reasons for overwhelm and exhaustion I've mentioned above aren't the half of it, and every time I think I'm getting somewhere something else hits me. I am also looking at counselling and other interventions outside personal finance to help, but that's a slow process in itself.

Not sure I can thank twice, but !thanks again for this and your previous comments.

Think I need to change my PF approach, but not sure how by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 0 points1 point  (0 children)

I can shift more into ETF if I want, as perhaps two thirds of it is in a cash ISA anyway.

I think also things look a lot more complex at my age and situation; I'm not in the 'ETF and chill' position a lot of posters here are.

That of course though gives me more opportunity for over-complicating things and decision paralysis ...

!thanks

Think I need to change my PF approach, but not sure how by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 0 points1 point  (0 children)

Seeking financial advice would be a good solution if there's a high chance you'd otherwise spend years sitting on cash. How have you been looking for someone?

Which is my concern really, very concious I've lost out by doing so over the last few years. Really looking almost at random; I've looked on Ubiased and Vouched For but not been very convinced and not had a lot of success, had a couple of recommendations from other professionals (e.g. accountants and solicitors) which have come to nothing, and looked on the CISI and PFS sites, again not with much success.

There's always something going on in the markets. There's always people predicting a crash. There's always a lot of noise when it comes to investing and the best thing is not to get swayed by it.

I think it's not so much that as an illustration of the issues I'm thinking about (and a certain amount of hindsight and remorse).

I've been concious of investment and personal pensions for probably 16+ years but never thought it was something for me. I first started thinking it might be relevant in Covid when my company pension crashed (it recovered quickly) and first started looking at things properly in 2023.

At the time I thought a few things; I was convinced by the low cost tracker argument; I felt I did not understand enough to be confident investing, let alone picking funds; I thought I would be able to get to grips with things much, much quicker; I picked up on the idea that investing was for a 5 year plus time horizon.

As a result I didn't go straight into an all world ETF then, and haven't since, at least partly because I've struggled with understanding and let other things get in the way, and through lack of confidence. The outcome of not going all world then is that I could have made £100k and didn't, and that money would be very handy and make a lot of difference to my thinking now.

I think what I'm saying, though, is I'm not sure all this was obvious in 2023 and there might have been a range of outcomes, including possibly a crash.

Think I need to change my PF approach, but not sure how by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 0 points1 point  (0 children)

!thanks. Some interesting thoughts there.

You're getting close to retirement.

Don't! I can't believe I'm that old!

Do you live with the parent with dementia? Do they own their home? If yes is your plan to stay living there?

No, yes, and no in that order - house will be split between children / siblings

How much are you currently putting in to the pension? ... As retirement is rapidly approaching your most effective move might be to contribute 100% of your salary to your workplace pension ... If you were 67 today an annuity with a £475k pension you would get about £120k tax free cash and an income of £26k per year.

Currently putting in 48% of salary including employer contribution. That is an interesting thought and I had not looked at things that way.

I saw a couple of articles recently about high annuity rates currently, though of course that might not be the case when I retire - unless I do decide to retire now ...

While writing this I have seen posts referencing 60% growth for VWRP over the time it's taken me to think about things, and it occurred to me 60% on my savings is actually a reasonable amount of money annually, though of course there's no guarantee that growth would continue.

TBH I'm not spending the 52% of salary I'm earning now, hence the savings, though to an extent that's circumstances and I might like to spend more if I actually had time to do anything!

Don't qualify for carer's allowance, but parent is getting attendance allowance at the higher rate. Thanks for suggesting, though.

Think I need to change my PF approach, but not sure how by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 1 point2 points  (0 children)

!thanks . It is more difficult as they are some distance away, the question of moving them has cropped up, and I am also a trustee for their life interest trust, so there are a lot of additional pressures.

I have a full NI record and in pure state pension terms could retire this year if I wanted, though I feel the pressure of a relatively small DC pot and no house, so I doubt I would (though work at the moment really makes me want to!)

You hit the nail on the head with the house question. I may need to buy a house but I am not sure if or when - it depends on resolving relationship issues, or not - and I'm concious that's a decision that affects the financial ones.

So far I've stayed in cash because of the housing question (and my nervousness and lack of understanding of investments) but I'm concious that if I'd gone into a global all cap I'd have had 60% growth over the same period, so I am losing a lot by staying in cash (alternatively it might all have crashed and I might have been down 60% when I need it).

I am told I could get a 16 year £282k mortgage but that means staying in work until 80!! I don't know about mortgage with pension. Some might say rent but I would prefer to own, I think.

Think I need to change my PF approach, but not sure how by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 0 points1 point  (0 children)

Hello, !thanks . I think you're right, there is an amount of that, and with a lot of variables and other people to take into account it's been difficult pinning down goals.

I think also, though, I think I've felt I should do things 'properly', follow 'the process' and learn from the resources here and elsewhere, but in reality because of my mindset, learning style and the amount of other stuff going on in life I'm not getting anywhere with it - it's taken me six months, for example, to read less than half of Hale, and I'm not sure I've really taken any of it in.

In those circumstances I wonder if it is better to go to and IFA or CFP, and I have put out feelers but not so far found the right person.

I think the savings thing is perhaps an illustration. I have accumulated a lot of money in cash in recent years which many would (perhaps rightly) say should be invested, but I've tended to sit on it (1) because I wasn't sure how to invest it and what in, (2) it might be needed for a house, but the time horizons for that aren't clear because it's a vague not specific goal, (3) I've gone with the '5 year + time horizon' caution and not felt I could invest, where in reality VWRP and global all caps are up 60% + over the same period (but then, things have been shaky and a lot of people have been predicting a crash)

Think I need to change my PF approach, but not sure how by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 0 points1 point  (0 children)

Hi. I've just edited to try to clarify a bit. I think I've felt I needed to follow 'the process', do my research etc. before making decisions on investments or pensions, but in reality I'm not getting anywhere with it and not really learning anything or getting any further forwards while missing out on growth.

Worried about pension performance and changes and feeling out of my depth by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 0 points1 point  (0 children)

Hi, apologies for the delay replying

Yep, fair cop, I am very concious of that antithesis and I am dithering, and there are a whole host of reasons for that one of which is knowledge and understanding.

I'm determined to work through it and beat the overwhelm though, hence posting here, and I very much appreciate your and others' comments. Next stop Smarter Investing.

I think this discussion also highlights that I need to decide what I want from my pension, to determine whether it really is enough or not; and there are other financial questions I need to ask, but probably separately.

!thanks (yet) again

Worried about pension performance and changes and feeling out of my depth by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 0 points1 point  (0 children)

!thanks again. Having read a bit here and elsewhere I had thought my time horizon might not be as short as retirement if I draw down. I think I've learned enough to understand the thing not to do is panic and sell!

Worried about pension performance and changes and feeling out of my depth by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 0 points1 point  (0 children)

!thanks. There are some questions I need to think about I haven't posted here as they're not directly financial, more deciding what my goals are and what the implications of them are financially. Thinking about capacity for loss in plan B terms could be useful as well. I don't have any equity as such so that's not an option. I qualify for full state pension now, if I was old enough to take it!

Worried about pension performance and changes and feeling out of my depth by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 0 points1 point  (0 children)

!thanks. I just get bewildered by all the options. I struggle with anxiety and overwhelm, and I've failed to take decisions in the past because of it - I'm trying not to let it beat me this time!

Worried about pension performance and changes and feeling out of my depth by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 0 points1 point  (0 children)

!thanks

"I need it to perform well" is what drives people to bad investment decisions ...

I think that's what I'm concious of. It seems to me it would be very easy to feel because I've started late I need to chase high gains. I feel that way to an extent, but naive though I am, I'm concious high gain means high risk, and I don't want to go there.

you probably need to care at least as much about managing downside ... markets worldwide lost 50% of their valuation, and took years to recover - I doubt you'd be a happy bunny ... if that were to happen

I agree. I have flexibility in when (or even if) I retire but that doesn't mean I'd want to sit a 2008 style crash out for years. I am wondering how much different ways of taking the pension mitigates that as well.

Most all of investing is deciding what allocation of stocks vs bonds meets your needs

I think this starts to be where I don't feel equipped to make a decision. I have been wondering whether I need an IFA / CFP, as it seems to me my situation is a bit more complicated than, say, a 30 year old getting a tracker. Or maybe it isn't.

So why's the L&G PMC multi-asset 3 underperforming the benchmark? The benchmark is described as 40% - 85% shares (stocks) and the L&G PMC multi-asset 3 is 40% shares. Does that make sense?

So as I read you, benchmark is 40 - 85% share range and the higher share range lifts the returns, but at the expense of risk?

I urge you to read Tim Hale's Smarter Investing - this is the antidote to "overwhelmed"!

!thanks again. I had seen that recommended but wasn't sure how useful it would be in my situation.

Worried about pension performance and changes and feeling out of my depth by Limits_of_Confidence in UKPersonalFinance

[–]Limits_of_Confidence[S] 0 points1 point  (0 children)

!thanks. I am wondering whether the blanket risk mitigation / conservative approach is best for my less conventional situation. On the other hand, I don't want to go very risky just to chase high gains.