Indexed Stock Stakeholder Pension??

savingnewbie_2

Hi, I'm 29 yrs old and have recently left my job and entered the big bad world of self-employment. Up until now I have been completely oblivious to savings/pensions etc and simply put the money into company schemes without taking too much interest in what was being done with my money. Not very clever I know.

However the fact that I'm now responsible for my own pensions and savings, and today's economic climate, has given me a much needed kick up the backside.

A stakeholder pension seems to be the best option for me right now as I can't commit to making regular payments at this stage, and it gives me the flexibility to change in the future.

In today's climate would it make sense to invest in a UK Indexed Stock Pension, which invests mainly in UK index-linked securities? (Rationale being that the FTSE has taken a battering over the past months, and so now would be a good time to invest when value is low).

Thanks!

dunstonh

In today's climate would it make sense to invest in a UK Indexed Stock Pension, which invests mainly in UK index-linked securities? (Rationale being that the FTSE has taken a battering over the past months, and so now would be a good time to invest when value is low).

Your rationale is correct. However, index linked securities are not stockmarket investments. They are gilts and fixed interest investments.

Also, single fund investing is rarely best quality investing. You are sticking all your eggs in one basket. Think about what happened to Iceland recently and if all your investments were in Iceland. If a dirty bomb goes off in London, what do you think your UK equity fund value will do?

savingnewbie_2

Thanks for your reply dunstonh.

Would it therefore make sense to invest in a second fund, perhaps linked to shares of companies in the FTSE 100 index or would this open me up to the exact same risks as the gilts and fixed interest investments?

(Apologies, I'm still learning about all this!)

jamesd

What you were decribing initially are called tracker funds because they track a stock market index.

Search here for "sector allocation" and "asset allocation" to learn more about how to select a range of funds.