Drawdown investors take level-headed approach to stock market moves

People using drawdown to fund their retirement tend to take a longer term view of their investment and are not overly concerned about stock market fluctuations.

Stock markets would need to shift significantly in one day before drawdown investors would be worried enough to consider moving their money, according to a survey of 500 people aged 55+ who have income drawdown investments.

The research was conducted by Censuswide for Canada Life.

A third (33%) of respondents said they would make no changes to their portfolio no matter how much the stock market fell in one day. Among those who said they would be worried about stock market moves, markets would need to fall by 7.5% on average in a single day to make people worried enough to review their investment strategies and move their money.

In the event of a significant market fall, 59% of investors would shift their money around a mix of asset classes, while just over one in five (21%) would transfer their entire savings into cash.

The survey also revealed that DIY investors are more likely to see cash as a safe haven (25%) and less likely to move to a mix of asset classes (50%) compared to people who use a financial adviser -- of whom 18% said they would move to cash while 66% would change their asset allocations.

Commenting on the findings, Canada Life technical director Andrew Tully said: "Dealing with the prevailing headwinds is all part of the game when you continue to invest into retirement. It is key though to have the right diversified investment strategy and ensure your essential expenditure is covered through a regular income. Only then will you will able to flex and change your investment approach as the economic environment dictates.

"As people move into retirement, it can become increasingly tempting to adopt a risk-averse stance and reduce exposure to stock markets. With global markets fairly volatile and continuing Brexit uncertainty, consumers will likely see cash as the safe haven in an increasingly blustery storm. But cash also carries its own risks, that being inflation and historical low interest rates, so settling for such poor yields exposes a pension pot in real terms.

"Making rash investment decisions without a plan can be wrought with danger. Seeking the help of a professional financial adviser can not only help consumers make proper informed decisions around retirement but can also ease the worry in turbulent times."

People using drawdown to fund their retirement tend to take a longer term view of their investment and are not overly concerned about stock market fluctuations.

Stock markets would need to shift significantly in one day before drawdown investors would be worried enough to consider moving their money, according to a survey of 500 people aged 55+ who have income drawdown investments.

The research was conducted by Censuswide for Canada Life.

A third (33%) of respondents said they would make no changes to their portfolio no matter how much the stock market fell in one day. Among those who said they would be worried about stock market moves, markets would need to fall by 7.5% on average in a single day to make people worried enough to review their investment strategies and move their money.

In the event of a significant market fall, 59% of investors would shift their money around a mix of asset classes, while just over one in five (21%) would transfer their entire savings into cash.

The survey also revealed that DIY investors are more likely to see cash as a safe haven (25%) and less likely to move to a mix of asset classes (50%) compared to people who use a financial adviser -- of whom 18% said they would move to cash while 66% would change their asset allocations.

Commenting on the findings, Canada Life technical director Andrew Tully said: "Dealing with the prevailing headwinds is all part of the game when you continue to invest into retirement. It is key though to have the right diversified investment strategy and ensure your essential expenditure is covered through a regular income. Only then will you will able to flex and change your investment approach as the economic environment dictates.

"As people move into retirement, it can become increasingly tempting to adopt a risk-averse stance and reduce exposure to stock markets. With global markets fairly volatile and continuing Brexit uncertainty, consumers will likely see cash as the safe haven in an increasingly blustery storm. But cash also carries its own risks, that being inflation and historical low interest rates, so settling for such poor yields exposes a pension pot in real terms.

"Making rash investment decisions without a plan can be wrought with danger. Seeking the help of a professional financial adviser can not only help consumers make proper informed decisions around retirement but can also ease the worry in turbulent times."