I have the impression that the current 2-year long rally might get out of steam in the next 6-12 months and could turn into a bear or stagnant market. I’m quite new to investing and trying to learn to prepare for it.
What are your strategies for those types of markets in a SIPP? For example on a bear market, would you trade short ETFs? Gilts and bonds? Cash out until you spot an opportunity? Or keep everything as it is as it will eventually come back up?
In a stagnant market, I reckon the idea is to find companies paying good dividents and Gilts /bonds.
I would never ‘trade’ with my Sipp because that could end in disaster. I’m not going to one of those people who blows up their pension pot.
It’s better to decide your risk tolerance then ensure you have an appropriate mix of shares, bonds, gold, cash, property etc, to suit your tastes before any downturn.
Short-term, knee-jerk reactions to market movements often don’t serve investors well.
I would agree with @rehpot and personally wouldn’t try and time the market in your SIPP. Having invested in a pension for many years I’ve seen my fair share of bull and bear markets and my advice is just ride the rollercoaster.
There is a stat somewhere that says if you miss the top 10 best days in the market you would have reduced your returns by 50%.
Thanks @rehpot and @NeilR . I agree that not jumping around is a good strategy. When I save, I started putting ~90% of my holdings in ETFs with the intention to hold them until I retire, and use the remaining 10% for higher risk/reward investments.
If you are just starting out on your investing journey and have a long time horizon, the best thing you can hope for and pray for is a large stock market crash, for stocks to plummet and a prolonged bear market.
During this period you need to accumulate as many assets as possible while prices remain low, if its a monthly investment, see if you can invest a bit more during this time. This is the best time to build wealth and a great opportunity. The longer the downturn the better.
Buy, buy, BUY and buy some more!
I personally would ignore bonds, gilts etc, unless you are at the stage of preserving your wealth all my money would be funneled into etfs and stocks.
I don’t have a huge trading experince, but still I was in the market for 18 years. And let me be honest - there was not a signle month during that time, when I didn’t see articles talking about immenent crash tomorrow. Even at the very bottom of 2008 crash, there were enough people saying that “the crash is just starting, prepare for complete meltdown”. So now I kind of say “yes, yes, of course it is going to crash”, and continue to be 100% invested.
Regarding SIPP strategies - again, I don’t see SIPP as a “pension pot”. Every investment of mine (GIA, ISA and SIPP) are to some extent pension pots. The only reason for me to have a SIPP is because my employer double my investment in the beginning. Otherwise it is an investment acount with onerous provisions (meaning liquidity) and with unquantifiable risks (single person, even if not smart or not democratically elected, can walk up from the bench, deliver “budget” and put all calculations regarding SIPP part of your investments into a complete chaos).