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I am 73 and cautious.

20 July 2021

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Question by DB

In this present climate, with the stock market so high what do you do if you are ultra cautious? Having seen friends and relatives lose thousands when the stock market suddenly crashes and with advisers wanting to charge you loads of cash for a ten minute chat, really often I wonder if they know what they are talking about. I am in my early seventies with a pot of cash afraid to do anything with it but let it depreciate and languish in our building society returns rather than embark on a ride in the stock market and risk losing my cash at a time when I am retired and cannot replace it. Of course I have found that property is the best investment of all but this area is also fragile and at the end of the day you can’t eat bricks. My pot is depreciating fast but at 73 you wonder whether it is best to just go out and spend it. But then if you live too long you have no funds left. There are two areas that your advice would be helpful. What if you just spend thousands on buying the gold standard footsie companies like shell and the rest and keep them for five years and then cash them in ? Also you could keep rolling your pot in the money markets and keep re depositing.

Answered by Holly Mackay

A few observations – and I'm not a financial adviser and I don’t know your circumstances in detail – so I could be saying something not totally applicable to your case. And all those disclaimers! So this is a personal view only.

It seems to be as though you are very black and white on this. You can always have some cash and some investments?

Also – people only lose money in the stock market if they sell up. If your friends had shares in the crash and held on to them, by 2010 they would have been back in the black. So timeframes really are important.

At 73 – about my Mum’s age – you are a relative spring chicken compared to 50 years ago! So as you say, sitting in cash is not a great solution for all of your money.

You can look at something called a ‘tracker fund’ – this is a collection of shares as you suggest which simply buys a small chunk of all of the largest shares in any market. In proportion to their size.

Have a look at Vanguard’s FTSE All Share tracker.

With one investment you spread your bets around the standard footsie companies as you suggest.

You could also look for something similar which spreads this around globally. And with a mix of bonds and shares. These are called Multi-Asset funds. Vanguard, HSBC and Legal & General do these.

I think if you look to make a fortune through investing you will be disappointed.

But if you keep enough in cash to be your safety blanket when markets fall (as of course they will at some point) , then you can live off this when markets are behaving badly and then sell down and book some of the gains when markets are behaving well?

You also mention income. Have a look at some ‘equity income’ funds such as the Artemis one. These pay out a small income (assuming they’re doing OK – not guaranteed) and also give you exposure to capital gains through the stockmarket. If you want to buy funds like this, you’ll need to open an account (probably an ISA if you haven’t used this already this year) and for that I’d pick a bog standard good supplier such as Hargreaves Lansdown or Charles Stanley (cheaper admin fees but a bit less hot on service).

Good luck! I hope this makes sense.

Answered by

Holly Mackay

Founder and CEO of Boring Money

I’ve worked in investment markets for over 20 years. I started out at Merrill Lynch Investment Management and worked at a few big names before setting up my first business in 2008.