Hi Brendan,For the vast majority of people, the answer is that you should remain 100% invested in equities.
When you retire, the name on your money just changes from "pension fund" to "my own money" and "ARF". They should both be fully invested in equities so there is no reason to go into cash only to put them back into equities later.
The only exception is where you might be buying an annuity. And even then, it's not clear that you should be switching to cash.
Brendan
There is a "long tail" of people with pretty small pensions, google gives results of in or around the €100k balance at retirement in Ireland as an average. When your pot is this small you need to be risk-averse. So the patterns you see above (and the advice given) probably make sense for a large majority of people!If they're not choosing or being advised to go 100% equities then there's something else at play. Like diversification, being somewhat risk-averse or (the big one) accountability for the advice.
Really?I’m an advocate of the 100% equities approach.
There’s possibly merit in kind of protecting one’s lump sum and moving to 25% cash.
Possibly to move something to cash, maybe 25%?
Please explain why the pft limit makes a difference and move it all to cash?Steven’s right. It really is a tricky one with maths and behavioural stuff intertwined. It’s actually easier for people where the €2m threshold is relevant. If you hit €2m/€2.15m close to retirement, the decision is probably pretty easy…move it all to cash.
I don’t know what the right answer is on the road to €2m. Possibly to move something to cash, maybe 25%?
For the vast majority of people, the answer is that you should remain 100% invested in equities.
When you retire, the name on your money just changes from "pension fund" to "my own money" and "ARF". They should both be fully invested in equities so there is no reason to go into cash only to put them back into equities later.
The only exception is where you might be buying an annuity. And even then, it's not clear that you should be switching to cash.
Brendan
That has to go down as the one of the silliest posts I’ve ever read. You’re attempting to be pedantic, but it just comes across as naive and lacking understandingReally?
If I’ve €2.15m in my pension fund and I’m ‘retiring’ in a year’s time, the risk/reward position disincentivises further growth. Why? Because it’ll be subject to penalty tax. So if the fund increases, you get penalised, but if it falls, that’s your hard luck.Please explain why the pft limit makes a difference and move it all to cash?
I really think this is dangerously bad advice.For the vast majority of people, the answer is that you should remain 100% invested in equities.
A little less than €100k.But what if I invested €1m in cash in 2000 and took out an inflation adjusted €50k a year? How much would I have had left in 2018?
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