Having the right structure in place for your finances can go a very long way to overcoming the inevitable ‘temporary declines’ that your pensions or investments will experience.
Specifically, holding sufficient cash to cover essential spending, or planned capital spending, for at least two years would be prudent.
Historically, a properly diversified portfolio tends to start to recover within two to three years after a decline and therefore, holding cash avoids the need to sell assets that have recently declined.
But, what about the current temptation to sell parts of your portfolio and reinvest the proceeds into Fixed Rate Savings Bond e.g. National Savings offering 6.20% (Gross)?
We regularly refer to the long-term evidence that suggests trying to time your way in and out of investing/cash is a game that’s beyond even the brightest minds in the investment world, so please don’t try this one at home!
A better longer term investment strategy
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