Aviva Pension - Advice
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mcarthyryan wrote: »
I'd get more of a return on a risk 6 pension, but what are the negatives of this?
I'd rather say that you can't reasonably hope for a higher return unless you invest at, say, risk 6. But it brings no guarantees: if you buy the assets at the wrong time you could face a decade or two of worse performance. I suggest you google the performance of the Nikkei (Japanese stock market) over the last thirty years.
UPDATE: here you are. Look at that line in red.
http://en.wikipedia.org/wiki/Nikkei_225Free the dunston one next time too.0 -
mcarthyryan wrote: »I'd get more of a return on a risk 6 pension, but what are the negatives of this?
Mostly down to psychology.
You're currently investing in assets that generate growth and income to be used in the future. When prices of these assets fall, you get more of them for your money. When prices rise, you get less.
People see this two ways -
1) Oh great, the sales are on, loads of shares in companies world-wide at bargain prices.
2) Oh, noes! Half my money is gone! How can I get what's left back to cut my losses! No way am I investing in shares ever again!
I've been investing for a few decades, and have a few scary drops. I've taken position (1) and have done very well from it. I've seen lots of people with attitude (2) who have lost a lot.
As long as you're diversified across asset classes (you always need some bonds!) then you can afford to go heavy on equities when younger.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Hi mccarthyryan
So, are you saying there are a variety of funds you can choose, and these range from 1 (very low risk) to 6 (the highest level of risk)?
If this is the case, then it depends on your risk appetite.
At your age, I would suggest a split.
Perhaps put between 15-20% in one of the level 6 funds.
50% in level 5 risk (or split this between level 4 and level 5)
The remainder could go in level 2 or 3.
Is there more than one fund option for each level? If so, then try to get a balance between UK and international funds.
If this is too complicated, then see an Independent Financial Adviser. You will hopefully put a lot of money into your pension over the years, so it is well worth the effort to make an appointment to see an IFA for an hour, and they have a standard questionnaire to help find out what type of approach would be best for you.
Good luck.0 -
Thank you again for the replies.
I didn't know you could actually split the pension? That might be the way to go!
As it was opened through work, who use Aviva, I have to stay with them to get my 7% contribution from work don't I? So would an IFA be able to help in this case?
I can remember when I started my pension, and the guy (Financial Adviser I presume) just asked me what do I do with my money? My answer was I simply spend it, as I was 22 at the time.
Next question was am I risky with my money, which I wasn't...I just spent it.
That is it, and it is only recently I am thinking about my future, I looked in to my pension, and saw it was a Risk 2.
Also, another thing I have just thought of: My pension is Investment/Shares. Is there another type of pension I should perhaps think about porting over to? Or are Investments/Shares generally thought of to be the safest/best returns?
I don't want to loose all my pension by having a silly pension.
Thank you.0 -
It sounds like the first thing you need to do is to find out exactly what fund options are available in your particular pension, then come back here and tell us (e.g. how many funds at each risk level).
From my experience with my own pensions, I think most of the funds will be shares in one way or another. But some will be riskier, and some will be less risky. Less risky ones would including trackers (e.g. FTSE 100 tracker). The very low risk funds will be cash or similar (like sticking your money in a building society, really only suitable if you are very near to retirement and do not want any volatility).
Can you log online to see your pension funds, or alternatively contact the company to as them what options are available?0 -
Hi,
Thanks for the reply.
I've just set up my account online with Aviva, and see my Risk 2 is invested in:
Fixed Interest 52.50%
UK Equities18.70%
Global Equity12.30%
Cash9.50%
Property5.90%
Other1.10%
There is an option to change investments, but typically there is currently an error on their website.
It will be interesting to see what else is available once the site is working again.
Thanks
Ryan0 -
mcarthyryan wrote: »There is an option to change investments, but typically there is currently an error on their website.
That brings back to me days of cursing the Pru website. You have to wonder how many errors they make with our money.Free the dunston one next time too.0 -
mcarthyryan wrote: »Hi,
Thanks for the reply.
I've just set up my account online with Aviva, and see my Risk 2 is invested in:
Fixed Interest 52.50%
UK Equities18.70%
Global Equity12.30%
Cash9.50%
Property5.90%
Other1.10%
There is an option to change investments, but typically there is currently an error on their website.
It will be interesting to see what else is available once the site is working again.
Thanks
Ryan
Just my opinion, but I think this is a very cautious set of funds for someone who is only 30.
You need to have a look at what funds are available in the higher risk categories, decide what your risk appetite is (bearing in mind you probably have 30 years or more left before taking this pension).
In your place I would definitely see an IFA who will be able to help you choose new funds at the higher levels of risk, if that is what you want. I think it is well worth paying an IFA for an hour or two as a one-off to help you make such an important decision.
It can only help if you find out what sort of other funds are available at the higher risk levels. I would personally go for something like 20% in a UK FTSE tracker (fairly low risk), some sort of ethical fund, and then international funds and maybe a Pacific Rim fund, and emerging markets. I would not have anything in cash or property, but maybe you are different which is why I suggest you have a look yourself but then get an IFA to help you make the actual decision.
Good luck.0 -
Hi Annie,
Thanks for your help again. I'll need to try to get time off work, and see an IFA. Will they be happy giving advice, even though I am with Aviva already? As I presume I need to stay with Aviva due to it being through work?
The Aviva website is working now, and I can see I can now change my 'Investment Style':
Defensive:
Cash: 6.38%
Fixed Interest: 45.78%
Global Equity: 27.80%
Property: 9.72%
UK Equities: 10.33%
Cautious:
Cash: 4.4%
Fixed Interest: 29.13%
Global Equity: 37.82%
Property: 14.12%
UK Equities: 14.53%
Balanced:
Cash: 2.95%
Fixed Interest: 9.68%
Global Equity: 50.48%
Property: 15.00%
UK Equities: 21.90%
Adventurous:
Global Equity: 66.27%
Property: 11.38%
UK Equities: 22.35%
Speculative:
Global Equity: 72.97%
Property: 5.43%
UK Equities: 21.60%
They are the only options they give. In the short term, before I get to see an IFA, is it worth changing it to either the Balanced or Adventurous?
Thanks a lot0 -
mcarthyryan wrote: »Will they be happy giving advice, even though I am with Aviva already?
They won't "give" you anything, but they will certainly be happy to charge you for advice. However, they will want to provide the full "holistic" service rather than advise on one issue. This will probably cost more than you'd want to pay.In the short term, before I get to see an IFA, is it worth changing it to either the Balanced or Adventurous?
That Balanced fund is about 72% equities, 15% property, 10% fixed interest, and 3% cash, which feels about right to me. The Adventurous fund lacks fixed interest, which will give you a rough ride and removes some of the advantages of a multi-asset portfolio.
If you do go for Adventurous, make sure you review it in a few years.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0
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