Pension advice

guitarman001

Moved job recently and have moved from a 0.6% AMC Aviva Lifestyle Fund (at the riskier end with more equities) to Aegon. With Aviva I was contributing 6% and my employer 5% and I've built up £11k, age 28 (ok, not much!). NEw job, employer pays 8.5% and I'm thinking about paying 7.5% - that's what I've been urged to do, anyway.

I've always been told to go in for one or two funds with as low as possible AMC. However I'm now being advised to choose 3 or 4 funds, and rather than go for one of these balanced funds... to go for some of the Invesco or Aberdeen funds dealing in Asia Latin America - as well as a more balanced fund. Basically, those other funds sound great, but what gets me is that the AMC is so much higher, closer to 1.5% (though I get a 0.5% discount of any that I choose down to a min of 0.6%) for some as opposed to the 0.6% on the basic balanced funds. What do you think? Suck it up and go for the more adventurous funds with higher AMC? I'm putting more in and getting more matched, so should I just go for it? Or should I stick to low-cost funds? The guy wasn't a fan of Vanguard (which I can't choose.. I'm talking about in general) or any tracker in a big way - just because if the market goes down, so will that tracker.

bigadaj

You're still fairly young so probably want to be fairly high up the risk scale my approach is a base of cheap trackers and then a small number of high risk plays, typically emerging markets, smaller companies, technology etc

I think my approach is valid but there is a huge difference between say an even split or radically moving towards mainly trackers or the speculative end.

Costs are important but slight our performance will exceed the additional costs its just an opinion as to whether you think this may be achievable, I tend to be in the middle on this.

kidmugsy

guitarman001 wrote: »

NEw job, employer pays 8.5% and I'm thinking about paying 7.5% - that's what I've been urged to do, anyway.

If you don't need to contribute why do so?
(i) You will avoid 40% tax and/or loss of child benefits. Is this an issue?
(ii) Employer thereby contributes more than 8.5%. Will he?
(iii) You'll get to do it by salary sacrifice. Will you?

Otherwise you might be better off saving into an ISA, later deploying the capital into a pension when one or more of (i) - (iii) apply.

atush

As I see it, trackers and passive investing vehicles with lower AMCs are best for mature markets in the developed world.

In developing markets like LA or Asia, there can be more in depth research carried out to weed out the better investments/secotrs/companies, making larger AMCs more worthwhile. In theory.

Personally, for one so young, I think investing in ASIA and LA is a good idea. So you could always look for more passive funds in those areas if you prefer.