Worth putting more money into my pension?

smartpicture

I have a reasonable pension fund spread over several companies and several ISAs. I'm self-employed, and every year when I know how much I've earned I tend to pay in a lump sum to my pension/isa of 10k-20k. However - my pension fund & ISAs have obviously taken a big knock just recently, and I'm wondering whether it's worth putting the money in this year. I'm 45.

My alternative idea is to put it together with some savings I have and invest in property in six months or so when prices have slumped a bit more.

I know I'm in a fortunate position compared to a lot of people, but I really don't know what to do for the best. Pensions slump, ISAs slump, property crashes, banks crash, I had money in Kaputhing which has vanished into the ether, where do I go from here? Where's safe? I've always been a Save for a Rainy Day kind of girl, but now I'm starting to think maybe I'd be better going on a world cruise and blowing the lot rather than risk it all being for nothing! What do you think?

dunstonh

My alternative idea is to put it together with some savings I have and invest in property in six months or so when prices have slumped a bit more.

The last price crash was over 4-5 years. We are just over 12 months so far. The size of the property value decline is likely to be greater than the decline on the stockmarket. So, if the stockmarket drop has got you rattled, wont property do the same?

Also, when you say invest in property, do you mean 100% of your money or with borrowing?

Pensions slump, ISAs slump

They havent slumped. They have done what they normally do in a bear market. The volatility was more than normal but seeing as the overall drop was less than what occured in 2000-2002 when the markets last dropped, what is it that has you spooked this time round?

There have been 8 financial crisis since 1956. An average of one every 7 years. Ever heard of buying cheap?

smartpicture

I suppose property feels more comfortable because it is something tangible, I'm aware I might have to hold onto it for a few years but I'm not in a rush. I suppose your argument is that in that case I may as well stay with shares-based investments, and they'll bounce back more than property, is it?

The last time the market crashed, the most I thought I was risking was a drop in the value of my pensions / isas. This time, the difference is that I feel there's a risk of losing it all. Governments don't have endless pockets to bail out multiple financial institutions, whatever they may say. And all a pension / isa is, is a piece of paper or a record in a database. My money which is not in either my Kaupthing or my Nationwide account is supposedly safe, and I'm patiently waiting for it it to turn up, but the fact is that no-one can tell me where exactly my money is, and I can't get hold of it. At least I could go and physically see & touch & sell a house I own!

If I invested in property, I'm probably talking about 50% my money and 50% loan.

dunstonh

I suppose property feels more comfortable because it is something tangible, I'm aware I might have to hold onto it for a few years but I'm not in a rush.

If you bought before the last property crash, it took upto 12 years to recover in some places. For property to work in retirement you need around 4-5 properties at least. If you are borrowing then probably a good few more by the time you have to pay the lender back and then pay capital gains tax.

I suppose your argument is that in that case I may as well stay with shares-based investments, and they'll bounce back more than property, is it?

Investing doesnt mean you go 100% into shares. When you are younger you can afford to have a greater holding in equities and you look for times like this as the time to buy. However, a balanced portfolio is what you should aim for. Property funds exist for pensions as well.

The last time the market crashed, the most I thought I was risking was a drop in the value of my pensions / isas. This time, the difference is that I feel there's a risk of losing it all.

If you lose it all then you wouldnt give a damn about your pension. It would be the end of society as we know it. Back to the middle ages.

Governments don't have endless pockets to bail out multiple financial institutions, whatever they may say. And all a pension / isa is, is a piece of paper or a record in a database.

and you think that having multiple mortgages on properties with tenants who then stop paying because they cannot afford to is going to be any less riskier?

At least I could go and physically see & touch & sell a house I own!

a house mostly owned by the lender.

I am not ruling out property as a valid option but if you are going to do it then you need to do it in conjunction with other things and on a larger scale than just 1 or 2. Mortgaged buy to lets are a high risk transaction. All your comments dont suggest you have that sort of risk profile.