Yes, that's exactly what it is!Though is that just me trying to time the market?
But if I switch now, am I not buying 60% of my portfolio at the "top" of the market at very high unit values?Yes, that's exactly what it is!
Given your age and circumstances, I would actually invest as much as 100% of your pension in the Indexed World Equity Fund.
You could argue that it doesn't make much sense to invest in fixed-income investments yielding ~1% while carrying a mortgage at ~3%.
It's important to look at your overall financial position across all accounts.
So basically I should cash in my Ark Life stuff ASAP and use it to pay off the mortgage?
20k as a liquid cash "float" would be plenty for most couples
I think that circa €50k is probably more appropriate for couples such as yourselves. Six months of expenditure is the general rule, so €50k for a couple earning around €10k net a month is probably about right.
Annual gross income from employment or profession:
90K
Annual gross income spouse:
160K
If you "know" we are at the top of the market then you should short equities and make a fortune!
The problem, of course, is that you don't know whether we are at the top of the market - nobody does.
Don't get me wrong, equity valuations (particularly US equities) are currently elevated. That just means that expected future returns are muted - it doesn't necessarily mean that we are at the top of the market.
Drip feeding money into the market (sometimes known as "dollar cost averaging") is really just another form of market timing.
Bear in mind that your pension fund will remain invested for a long time - there will be plenty of booms and crashes before you start drawing it down. I certainly think it makes sense to incrementally start to de-risk your financial position once you are within ~15 years of retirement.
That's what I would do if I was in your shoes.
On a risk adjusted basis, it's a much better use of your capital - particularly when you take investment costs and taxes into account.
I'm not going to be comfortable with zero in the back, my car could explode tomorrow (unlikely) but any number of things could "go wrong".I would almost go so far as you say you need a zero float.
You are both employees and you both have high salaries.
It is extremely unlikely that one of you will lose your job without notice and without any redundancy payment. It is practically impossible for that to happen to both of you at the same time. Unless perhaps you are colluding together to defraud your employers.
Pay down your mortgage. That will be one major expense gone anyway if you both lose your jobs at the same time without notice and without compensation.
A six month float might be appropriate for a self-employed person with a volatile income with a large mortgage who is the sole earner supporting a spouse and children. It is entirely inappropriate for a couple such as yourselves.
Brendan
I am not so sure about contributing even more to pension schemes. You are both 39. You are contributing a lot already. You probably have built up big funds. The future treatment of pensions funds is too uncertain. When you retire it's likely that you will both be taxed at the marginal rate.
You need a good pension fund but not a huge one that might become a target for future finance ministers.
Brendan
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