New job, pension options - help please?

adrian_bond

Hi all!

I've got myself a new job! Hurrah!

A little about me. I'm 30, starting on £30k and have a pension available to me whereby the employer will contribute up to 4% to match my 4%. There is also a death in service payment etc. My investment options are below; (I can spread the percentages into any of my choice)

1. Prudential M&G global leaders fund

2. Legal and general global equity index fund

3. Newton real return fund

4. Legal & general property fund

5. Legal & general over 15 years gilt index fund

6. Legal & general cash fund

7. Prudential with profits fund

I also have been contributing £200 a month (although this has hardly been touched this year, so at present hardly anything) into a cash isa with Natwest. This is worth approx £6300 and forms the rest of my pension. As you can see, I need to get going quickly in Ryder to have any kind of nice retirement! I'm thinking of contributing 6%, together with the companies 4%, and keep contributing £200 a month into my isa. Hopefully in a couple of years (with hard work) I should Hit the 40% tax bracket, so might cash in my Isa then......maybe

Any ideas, insights, opinions and options are welcomed as I would appreciate your input greatly before I make my choices. Thanks everyone

Adrian

atush

First of all, congrats ont he job ;-)

Second, grab that pension, and put in 4% or more. At your age, if this is your first pension you should be putting in 15% incl the employer so you should really put in 11% if you can.

I am not familiar with most of those funds, and don't have time to research them. But look them up individually and see how they are doing, and have done over the last decade. Then decide where you think the world economy is going and invest accordingly. For instance, did yo know the markets that did best in the last year were USA, Indonesia and Qatar? I think that gilts and property are not somehting i'd be adding too just now, and I think global exposure and cash tend to be great ideas in most times.

Linton

Agree with advice to maximise your employers contribution. Whether one should put any of ones money into a pension beyond that point has been discussed here several times. You certainly need to save more somewhere, S&S ISAs and pensions have advantages and disadvantages.

As to the funds:

As you have many years to go before retirement you can afford to have a high % of equities. Suggest you have the majority of your pension in (1) and (2). The Pru with profits fund (7) has been good in the past,and you could consider a relatively small amount of (3) and/or (4).

Gilts and cash are less relevent I believe. The former have done very well over the past 3 years but are now expensive, the latter produces returns (if you are lucky) close to the BOE rate, not a bank deposit rate.

adrian_bond

Thanks for your feedback guys. So very sensible advice there! I think I'm going to have to re examine my savings to get me the largest savings whilst still being financially stable!

To start then; what do you think of this for a split of funds?

1. 30%
2. 30%
7. 20%
3. 10%
4. 10%

I'm thinking of contributing 6% with 4% matched by my employer. The remaining savings coming from my £200 a month isa savings
Please let me know your thoughts

Ade

vbm

At your age I would have 100% in either fund one or two, or 50% in each.

No need to have any holding in Cash or fixed interest. You can look to de-risk later on in life, you will be invested for at least 30 more years (sobering thought) so you can ride out the swings.

adrian_bond

100% in one pot or 50% in both? Sounds like a risk having all my eggs in one basket! I agree I have a ludicrous amount of time to go before I retire (38 years till free bus pass and incontinence), so can afford a high degree of risk within reason. Would this put the majority of my savings at risk by an in proportionate amount?

Cheers guys keep it coming!

atush

1, 2, 7. Maybe 3. The bulk in 1, 2 with some in 7,3.

I agree that if you hold cash ISAs at your age you don't need cash or fixed interest in your pension yet. I'd look to be adding it later in life. Most people get enough property exposure thru owning their homes. Commercial property may have another slide if the economy worsens.

Linton

atush wrote: »

..... Most people get enough property exposure thru owning their homes. Commercial property may have another slide if the economy worsens.

Commercial property is a very different investment to residential property. Commercial property shares and funds are very much more volatile, but especially with REITs there tends to be a good steady income. And of course they are much easier to buy and sell in small quantities.

I certainly wouldnt recommend it as a mainstay of a portfolio, but it does provide useful diversification. The problem we have at the moment is that any investment could easily have another slide, whether its equities falling on more bad news or the gold and fixed income bubble collapsing.

bobthedambuilder

OP, why do you want to cash in your ISA when you reach the 40% tax bracket?

I would have thought that the benefit of the ISA increases when you reach that point ....

You could up your pension contributions then because you'd be getting more share of them from HMRC.

atush

Linton wrote: »

Commercial property is a very different investment to residential property. Commercial property shares and funds are very much more volatile, but especially with REITs there tends to be a good steady income. And of course they are much easier to buy and sell in small quantities.

I certainly wouldnt recommend it as a mainstay of a portfolio, but it does provide useful diversification. The problem we have at the moment is that any investment could easily have another slide, whether its equities falling on more bad news or the gold and fixed income bubble collapsing.

I have held commerical property for a while now, I know it isn't the same. but don't feel it is a good investment to add to now. I don't need a lecture to what it is, thanks

IMHO, with the economic uncertainty I would not be a buyer now. But go head if you want to.

Linton

atush wrote: »

I have held commerical property for a while now, I know it isn't the same. but don't feel it is a good investment to add to now. I don't need a lecture to what it is, thanks

IMHO, with the economic uncertainty I would not be a buyer now. But go head if you want to.

Sorry - its just that you implied that holding residential property was a reason not to hold commercial property.