invest higher %age of salary in pension during recession ?

shaggy

as title really. I can invest up to 10% of my monthly salary into commpany pension scheme. However, in the last year I have seen the value of my private pension scheme go down by about £10K. (approx 25K invested).

Some argue that during a recession if you buy more units your pension will be worth more in the long run.

Is this a load of carp and should i play safe and invest only a small % per month ?

dunstonh

Is this a load of carp and should i play safe and invest only a small % per month ?

Doing the opposite would mean paying more when the units are more expensive. In that scenario you would lose more when they go down and as you would be buying less when cheap you gain less when they go up.

shaggy

dunstonh wrote: »

Doing the opposite would mean paying more when the units are more expensive. In that scenario you would lose more when they go down and as you would be buying less when cheap you gain less when they go up.

So..to summarise, buy lots of units during the recession as you will gain more in the long run. I think ???

dunstonh

shaggy wrote: »

So..to summarise, buy lots of units during the recession as you will gain more in the long run. I think ???

Long run being the key thing. Short term its up and down like a yo yo. Longer term, you average out these ups and downs by buying monthly.

Another way to do it is rebalancing your portfolio. Dont allow the riskier parts of the portfolio to grow too much in good times without moving some of it into less risky (less growth potential) areas. Protect those profits in good times. Rebalancing also means you tend to reinvest into the riskier ends in bad times as they have fallen more than the low risk parts of the portfolio.

jamesd

shaggy, you want to be buying low and selling high, which means buying regularly when there's panic around and switching money slowly into less volatile investments when everyone is talking about how we're in a boom that can never end.

Choosing a mixture of investments of varying risk levels then rebalancing to the original target percentages is one way to do the second part of that, since it takes money from the more volatile booming areas and reallocates it into the ones that will suffer less in the subsequent downturn.