According to Martin Hawes who wrote “investing for twenty good summers”
P24 “the investors second biggest risk (after inflation) is becoming a forced seller. When there is a downturn in the markets, it is important that you do not have to sell to continue to put bread on the table. Markets always come back after a fall (although sometimes they can take a long time to do so). You have to arrange your money so that you are still in the market when they do come back. The way to do this is to hold some cash, perhaps enough to cover you living costs for one or two years while the markets are not performing. This cash acts as a buffer so that you do not have to sell investments at a bad time to fund your living expenses.”
