works pension, where to invest in the short-term

wellsie82

bigbloke, fair point about there being more bear markets ahead, appreicate that if these things are merely cycles

if the markets haven't bottomed out yet then i just think i'll be better off buying back in again in say 6-12 months time when the bottom is closer

dunstonh

if the markets haven't bottomed out yet then i just think i'll be better off buying back in again in say 6-12 months time when the bottom is closer

What happens if the market has bottomed out or you think its bottomed out, move back in again only for it to suffer another 30% loss (as it did in the last major bear period in 2000-2002.

wellsie82

dunstonh wrote: »

What happens if the market has bottomed out or you think its bottomed out, move back in again only for it to suffer another 30% loss (as it did in the last major bear period in 2000-2002.

its a chance i take but in my own mind i think things have further to fall, so far in the uk the only companies to get hit so far have been banks and house-builders, soon it'll be the retailers and then whos knows from then on

if the market dips 10% over the next 6 months and i get back in on the assumption that the bottom has been reached, only for it to drop another 10%, surely i would only lose 10%, and the full 20% had i of stopped where i was and not moved into a cash fund like ive done this week

aHullKingstonRover

Another thing to consider before you make a decision is does your company pension offer you additional fringe benefits too? By that, I mean things such as Life Insurance and Ill-Health retirement packages - I can see your concerns about falling fund values, however, in my opinion you need to consider what might happen should you leave the scheme entirely - if you fell ill and was unable to work due to sickness (or died), would you have enough financial provision to give you and your dependants a reasonable standard of living if you (or they) were forced to readjust their lives due to unplanned events like these?

bigbloke45

You can't time the market.

Why don't you switch half into cash (for accumulated fund and on-going contribution) and then see who is the winner in a year or two's time.

Then you'll see if you can time the market. I think I know what the result will be.

MABLE

Are pensions not for the long term. I really dont understand at 26 why you are concerned with the value of your pension at this moment in time. If the value has dropped this will give you the opportunity to purchase more units at a lower price. Then in years to come you will reap the rewards.

Debt_Free_Chick

wellsie82 wrote: »

if the market dips 10% over the next 6 months and i get back in on the assumption that the bottom has been reached, only for it to drop another 10%, surely i would only lose 10%, and the full 20% had i of stopped where i was and not moved into a cash fund like ive done this week

But does it matter in the short-term?

Surely the only thing that matters is the value of the fund when you come to take your pension?

MABLE

Debt_Free_Chick wrote: »

But does it matter in the short-term?

Surely the only thing that matters is the value of the fund when you come to take your pension?

I suppose like most of us at that age we expect instant gains, instant profits.

Debt_Free_Chick

MABLE wrote: »

I suppose like most of us at that age we expect instant gains, instant profits.

It's a fair point, but with a pension, one can't realise the gains/profits until retirement, of course

EdInvestor

IMHO it is good that the OP and others recognise that a pension is an investment which they can control.This is much better than the attitude of many people who don't realise that a money purchase pension is quite different from a final salary or state pension, which operate under quite different arrangments (and are not under an individual's control.)

The next step though is to realise that a pension is a very,very long term investment, normally accumulating over at least 25 or 30 years. Short term market blips will not affect it, unless they happen just before retirement.Thus not much overall scrutiny required on the investment side - an annual check on fund performance is probably adequate, particularly in the early years.

More important however is to watch charges, because the investment is so long-term.A 1.5% annual charge will wipe out 30% of the value of your fund over 25 years.

That's a much bigger performance drag than any short term market fluctuation.What kind of a return are you getting after deducting the charges? In many cases, people will not even be keeping pace with inflation, especially if they are in old-style zombie With profits funds which have even higher hidden charges.