25 y/o and new to pensions

ee0u4179

Hi all,

I've just had my 25th birthday and I've made the decision that I should start paying into my company defined contribution pension scheme.

However, I don't want to just "take the default" and plead ignorance.

I understand the need to diversify my spread into different asset classes but I don't want to over complicate things.

I'm currently in 2 managed funds

70% Blackrock 50:50 UK/Overseas Equity Fund
30% Blackrock Absolute Retuns Fund.

My question: Is this sufficient in the early years of pension saving or should I be looking more in depth at the spread of my investment?

Thanks

bendix

Others my disagree, but at 25 the most important thing is that you are starting a pension, and you've overcome that hurdle. The actual fund selection at your time of life (with 35-40 years of savings to look forward to) is less important. If I were your age again, I would be looking at riskier funds that Blackrock Absolute Returns, but it's a minor point.

Something with an emerging markets focus would be preferable, I think.

There are only two mistakes someone in their 20s can do with pensions. The first is being too cautious, but that is overrided a million-fold by the second, which is doing nothing at all.

Loughton_Monkey

Agreed ^^

An 'Absolute' fund is specially geared towards a complex bag of investments aimed to be less volatile than 'ordinary' growth funds. As such, there is always a 'price' for this - which normally turns out to be much lower long term growth.

You should put it, I suggest, in a range of other funds - avoiding the specific words 'absolute', 'cautious', and 'fixed interest'.

It's anyone's guess, but personally I like to put my money into equity funds where I think there is some real growth possibilities. Personally, I fail to believe that UK, Europe, and even America can compete any more in a global market. These territories now have such an infinite variety of 'Baggage' which is destined to stifle any further growth. Most of this (EEC, EEC laws/red tape, Euro.....) cannot be unwound. Although I won't be here to pay up, I would bet my pension that your own grandchildren will be brought up in a truly 'third world' country, or more likely, will have emigrated to an economy which is far more balanced.

So consider:

Emerging Markets. [Eastern Europe, S America, India, China]
Asia.
Natural Resources.

dunstonh

I did a comparison for someone last month starting on a nil balance and putting in the same amount into 3 different risk profiles quite wide apart. It made virtually no difference for about 8 years looking at historical figures. The important thing is getting the money in and then when a value of around £10k builds up then you start to see the differences in volatility hit home.