We know the client has another two to four years of income in his cash account. So what we do in April/May is nothing. We wait for the funds to recover (they nearly always do within a couple years) and then we top up the cash account.
The result is income is never affected, sequencing risk is eliminated and clients do not lose investment value as funds are able to recover. From an investment perspective, it is as if Covid never happened.
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This is what my cashflow planning spreadsheet does.
Simon Panton is director of Lifeline Financial Planning
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