Defer payments into ISA instead of pension in 09?? advice

Queen_of_the_Hive

Hi,

I have a very small personal pension which I contribute £80 a month into in addition to a works one and was wondering if, considering the poor state of the stockmarket whether it would be more beneficial to put this extra money into ISA instead until things pick up and then transfer back over the money into Pension? Last time i got my statement my little one had lost 26% of its value which is pretty scary!!

Also, before anyone says this is a very little amount, unfortunately I cannot afford to put anymore money into at the present time apart from the 10% increase which it is set at.

Any comments, greatly recieved

Claire

dunstonh

considering the poor state of the stockmarket

1 - What makes you think that the stockmarket is in a poor state to receive your regular contributions?
2 - If you have doubts about 100% stockmarket exposure (which you should do unless you are a high risk investor) then what about the other asset classes and sectors you can hold in a pension?

would [it] be more beneficial to put this extra money into ISA instead until things pick up and then transfer back over the money into Pension?

Changing the tax wrapper doesnt change the performance. The same funds in a pension or ISA will grow or lose money at identical rates.

Last time i got my statement my little one had lost 26% of its value which is pretty scary!!

Thats not scary. Thats normal and actually, its below the amount of the full drop in the FTSE that was seen before it went on to grow by over 20% on its low point. That suggests either you are not looking at the full extent of the drop or you are not fully invested in the stockmarket.

Basically, what you are proposing is stopping your money going into buying units cheaper than they were last year (we are back at 2005 prices generally) and waiting until they have gone back up again and buying them at a higher price meaning you have missed out on the growth you would have got.

MrMicawber_2

Claire - as suggested above - stopping your regular contributions to a stocks and shares personal pension and starting doing the same to a socks and shares ISA doesn't really get you anywhere.

In bad times (like now), making regular contributions into funds is not a bad thing to do at all - on the assumption that things will, in due course, get better.

How you have your money invested (i.e. equities, bonds, cash, property) is another matter and this will depend on your age, length of time you are investing for, appetite for risk etc.

jem16

MrMicawber wrote: »

Claire - as suggested above - stopping your regular contributions to a stocks and shares personal pension and starting doing the same to a socks and shares ISA doesn't really get you anywhere.

It's quite possible that Claire was referring to a cash ISA as most people tend to think about when they talk of ISA.

MrMicawber_2

jem16 wrote: »

It's quite possible that Claire was referring to a cash ISA as most people tend to think about when they talk of ISA.

True, and it is possible to put pension contributions into cash getting tax relief on them.