Pension in cash, is the cash safe?


#1

Hi folks,

I’m a long lost returnee to the pin. It steered me right in 2005 onwards and I am hoping the collective knowledge can do the same again in 2020.

My major concern at the moment is that the bursting of the corporate debt bubble is going to bring on a new financial crisis.

Being the eternal pessimist I moved my pension fund which is with Zurich out of stocks and into cash during 2018. I expected the stock market crash that is underway now to have kicked off much sooner.

I’m concerned that the meltdown that will occur in the coming 6 weeks will affect the banks on an even greater scale than what happened in 2008.

So my question is what will happen to the cash that Zurich is holding on my behalf?

Is it safe? Given that I can’t withdraw my pension fund at this time is there a better option than cash within Zurich where I can move my pension funds to?


#2

Snap. Being another eternal pessimist I did exactly the same in 2018. Looked sensible in 2018 as the cash fund outperformed the equity fund. Looked nuts in 2019 as equities soared. Looks prescient in 2020 as all the equity gains from 2019 are already wiped.

It never occurred to me that the cash itself could be at risk. The description of the asset mix (it’s with New Ireland) is “primarily cash deposits, high quality floating rate notes and short-dated investments”.

Anyway, I’m just waiting to time the reentry to equities and make a killing. Because eternal pessimism is just the manic flipside to insane optimism. And I’m also a complete idiot when it comes to investments.


#3

At this stage I am more concerned about “return of investment” rather than “return on investment”.

Probably more suited to the GFC 2.0 thread but I don’t believe that there will be a rapid bounce back of the markets, I think that we are now facing a global depression.

Last week I was reckoning on moving back into stocks around June with the Dow bottom around 18,000, this week I think that is rather optimistic.

I now think the bottom will be around 12,000.l, but who knows?

Covid 19 is in itself going to cost trillions but the bigger cost will come from all the other bubbles it will burst.


#4

I am a trader rather than an investor. I use automated algorithms to trade on the US stock markets - they went 100% cash on Feb 21st and have not identified (apart from a couple of minor trades two weeks ago) anything since the market peaked back then. Everything seems to be selling, even safe havens like physical gold.

I am waiting to see what happens - by their nature, these algorithms react to market conditions so what else am I going to do. But the Feds action yesterday has had the opposite effect to what they intended so there seems to be a lot more near-term turmoil ahead. It is reasonable to expect a big, temporary bounce at the first hint of an effective antiviral or vaccine, but after that credit issues will take over.

In the meantime, cash is king.


#5

Down 20%, 100% equities, age 44, any point going into cash at this stage??


#6

It’s chaos right now so it’s anyone’s guess. My pension was 94% Cash for the last few months and I just moved it to 96%. I can’t see equities racing back to what they were any time soon i.e. priced to perfection. Perfection has left the building. Does anyone remember in 2016 when the Dow was 18,000 and everyone thought it was an insane bubble (even Donald Trump).
Not many living will remember when the Dow Jones was in an insane bubble in 1929 and then took 25 years to get back to the same height.
When Jim Rogers became a trader in the 1960s nobody wanted to do that job. I think in a few years nobody will want to be a trader again.
I’m not too optimistic about cash in pensions being safe but it feels the safest for the next few months. I had thought that they would then turn on the taps and inflate the money supply destroying cash. Might take some time for that to take effect. Probably better being in something else than cash then.


#7

Where is the pressure for this coming from? Surely we will see deflation alongside the ZIRP. Worth remembering that the Irish banks have a glut of deposits on their Balance Sheet now. Not like in 2008. Liquidity is great for most. Tiny Mortgage books compared to 2008 also.

Sovs I do worry about even before all this, but that’s for another thread.