which risk level, what fund should i pick (age 30)?

royal23

hi

i've got a pension plan with Aegon, through my employer (group personal pension plan).

current value is £10K.

i contribute £120 pm (3% of my basic salary), plus my employer tops up 5% so that's another £200 = toal of £320.
i'm going to increase this by £200, bringing the total to £520 (from august).

nice thing about the plan is: only paying 0.25% TER, because we get a discount (via a monthly refund). that applies to ANy of the 250 funds they have available.

I'm 30 (31 in September), so i got well over 30 years to go.

How risky should I get? i keep reading that especially in the first 15-25 years one should be very aggressive with pension investing.
that's because a) i can't touch the money anyways till a certain age and b) it's locked away so the volatility shouldn't concern me in the slightest.

up until recently everything was in a lifestyle fund (some blackrock consensus lifestyle). the standard typical average risk thing.

i don't want to be micromanaging my pension fund. so i looked around and found their "risk profile portfolios"
http://www.aegon.co.uk/Funds/Our-range-of-funds/Our-risk-profile-portfolio-range/Core-Risk-Profile-Portfolios/index.htm
of which i have selected the "adventurous core portfolio".
it's 100% equities, all index tracker funds.
target volatility is 16% over a market cycle (3-5 years).

http://dms.aegonse.co.uk/download/622a1d0799acd84f4c77d0a88b52b5aa

i like the geographical split.
but the main question is:
100% equities, is that TOO risky even for a pension fund that has over 30 years to go?

Voyager2002

A matter of opinion.

Bonds have traditionally been seen as safer, and so in the wake of the credit crunch lots of money went into bonds, so that in my opinion they are ludicrously over-priced and offer little or no scope for growth.

With equities, diversity is key since some firms will fail and their shares will become worthless. Diversity means moving into certain sectors and markets where index trackers are not appropriate: the imperfections of the markets in places like Russia and India mean that if I had any money there, I would want it to be actively managed by someone who lived there and was fully engaged in monitoring the situation.

dunstonh

only paying 0.25% TER, because we get a discount (via a monthly refund). that applies to ANy of the 250 funds they have available.

Are you sure? The 0.25% on internal funds is fine but I cannot imagine they would offer the external funds at 0.25%.

How risky should I get? i keep reading that especially in the first 15-25 years one should be very aggressive with pension investing.
that's because a) i can't touch the money anyways till a certain age and b) it's locked away so the volatility shouldn't concern me in the slightest.

You should go a risky as you can tolerate and afford to tolerate. There is no point going medium high risk with the potential for 45% loss if you would panic when you see your value almost halve (and these periods will happen).

jamesd

That mixture has 41% in the UK. The UK is about 8% of the global market.

Use caution with the reported volatility, which covers only the last three years. That means it missed the 2008 drop.

royal23

dunstonh wrote: »

Are you sure? The 0.25% on internal funds is fine but I cannot imagine they would offer the external funds at 0.25%.



You should go a risky as you can tolerate and afford to tolerate. There is no point going medium high risk with the potential for 45% loss if you would panic when you see your value almost halve (and these periods will happen).

hi dunstonh
as i understand, all funds that have the standard AMC, i get it reduced to 0.25%. or rather, i believe everything is discounted BY 0.5%. so the standard funds are at 0.75%, therefore we get them at 0.25%. i think that's how it works.

for the Adventurous Core Portfolio I've chosen, it definitely applies (and it should, because it's a passive tracker, not managed fund)