Retiring in 6 months- AVC bond risk

T McGibney said:
I can never understand the attraction of bonds as an investment option.
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My thoughts exactly. I would go even further and say that the supposed benefits of bond investment don't seem to hold true for pooled investment in bonds. Also, as demonstrated by Liz Truss, poorly thought out government policy can have massive negative effects on the value of bond investments which completely negate any notion of bonds being a 'safe' investment. There's room for a Trump joke here, but I've just woken up.
 
Thanks.

Presume something like this? Indexed Global Equity Fund (BlackRock)

What are the advantages of it over international equity?
 
Persia said:
Lifestyling has paid off on this occasion.
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Lifestyling is preserving your current fund value. But you don't know that the current fund value is better than if you had been 100% in equities in the past 10-15 years while the fund was de-risking into bonds.
 
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T McGibney said:
I can never understand the attraction of bonds as an investment option.
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It was particularly crazy when interest rates were lower than at any point in the history of finance in and around the pandemic.

There was zero upside for anyone all in bonds at that point.

I don’t think most investment advisors realised this.
 
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Well, my Eurozone Government Bond Fund has produced a pretty good return over the last month, at the same time as my World Equity Fund has plunged in value.

That’s why I hold a portion of my retirement savings in a bond fund - diversification.
 
Although I'm 12 years or so away from retirement, I'm not a fan of bond funds. The end of the 0% interest rates showed us the downside risk in bond funds. I don't see an equivalent upside. I would only go for a bond fund if the bonds were held to maturity. There are a few such products (e.g. iShares iBonds), but not sure if they can be got through a pension.
My own view is to stick with an equity fund for as long as you're comfortable with that, and then move directly to cash.
 
Persius said:
My own view is to stick with an equity fund for as long as you're comfortable with that, and then move directly to cash.
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Would that be in a cash fund still through an ARF? If so would it be make sense to always have some element of an ARF Cash Fund to cover bear markets and deemed distribution?

I have a notion of leaving the majority of my ARF in an equity fund after I retire but having a reasonable value (e.g. €100-€150k) in a Cash fund. I believe that deemed distribution of the ARF can then come out of the Cash fund whilst leaving the equity element to ride out the bear market and hopefully mitigate against sequence of returns risks on the equity fund.
 
That article is more than two years old!

Bonds had just suffered their worst year in recorded history.

Don’t let recency bias dictate your decisions.

Stocks are significantly more volatile than bonds and typically (not always) bonds rise in value when stocks are tanking, hence the diversification benefit.

Cash dilutes equity risk but it can’t diversify equity risk. Cash doesn’t “zig” when stocks “zag”.
 
fredsussman said:
If you’re close to retirement, it’s important to focus on protecting your money rather than trying to make more from risky investments.
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Take the example of an Irish woman planning to retire at 60, something not uncommon.

Her life expectancy is 25 years meaning expenditure to 85! There’s something like a 5% chance she will die by 70 and again something like a 5% chance she’ll live to 97.

Protection of capital is important but also recognition that life can be long.

I have pension wealth in state pensions (like almost everyone), occupational DB scheme and an occupational DC scheme. My DC wealth is about a quarter of total pension wealth and I plan to keep it all in equities for life. I’m in my forties now.
 
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