Stakeholder Pensions?

MarkCarr203

I am looking for advice on whether it's still a good idea to have a stakeholder pension due to current market volatility and predicted drop in share prices. Looking at the current bond market then I feel that my money maybe well placed elsewhere until market becomes more stable.

I opened my stakeholder with Halifax and about 10 months ago, value approx £14.5K and have made some huge gains due to playing around with funds I invest in but have started to see a downward trend happening.

Can anyone advise whether to stay and ride this out or cut my losses now? If I need to cut my losses can anyone advise best place to invest?

Many thanks

Mark

dunstonh

I am looking for advice on whether it's still a good idea to have a stakeholder pension due to current market volatility and predicted drop in share prices. Looking at the current bond market then I feel that my money maybe well placed elsewhere until market becomes more stable.

Pensions are just a tax wrapper. They do not make or lose money as they are not an investment. A stakeholder is just a budget version of a pension. It is the investments you hold inside of the tax wrapper that matter.

I opened my stakeholder with Halifax and about 10 months ago, value approx £14.5K and have made some huge gains due to playing around with funds I invest in but have started to see a downward trend happening.

If you are that worried about returns and wanting to play around with funds, then what are you doing in a bank stakeholder? Thats a bit like asking Lewis Hamliton to drive the British Grand Prix in a Rover 45.

Can anyone advise whether to stay and ride this out or cut my losses now?

What losses?

due to current market volatility

What current market volatility?

You cannot micro manage these things. This year is not much different to previous years. We had a large correction last April/May (10-15%) but by october it was back up again. No-one knows if there will be another correction today, next week, next month or next year. All we know is that there will be one and with a pension, you will no doubt go though many of them. Trying to time the market is futile.

plonkee

I opened my stakeholder with Halifax and about 10 months ago, value approx £14.5K and have made some huge gains due to playing around with funds I invest in but have started to see a downward trend happening.

Don't forget that with a pension you are investing the money from now until the time that you retire. Do you think that this downward trend will be important in the bigger picture e.g will last 10 years? Or just a blip e.g will last 10 months? You're an investor, not a day trader.

Perhaps you have been investing in funds that are outside your own risk profile (i.e. more risky than you are comfortable with). In that case, re-evaluate your portfolio.

bigbloke45

I agree with dunstonh and plonkee.. remember that volatility is you friend when you are making regular contributions, when markets fall you buy more with your money; the old adage is "buy into a falling market, sell into a rising one". You are not "cutting your losses" but want to consolidate gains. Why not switch your fund to deposit and carry on speculating with your regular contributions? Then, when you think the time is right, you can go backinto the market.

One word of caution, though, it's always easy to make money in rising markets, so don't fool yourself that you are a better investor than you really are. Keeping it simple can be a much better strategy in the long term.

And, oh! Halifax????

MarkCarr203

can I transfer my stakeholder pension to another provider? Where would be the best place to do this?

bigbloke45

You can transfer to another provider. To whom will depend on what you want from the new provider. Set down what your needs/objectives are regarding your pension planning and that should steer you to the right bunch of providers.

Looking forward to reading your ideas.

MarkCarr203

I am looking for a provider that can offer the ability to select funds by risk category or individual funds and not limited to just UK funds and no penalties or restrictions on how often you can change.

I have made approx 1.5K since opening my stakeholder and want to continue to build on this.

dunstonh

You need to be considering a personal pension or if you dont mind paying a bit more to access a greater investment choice, then you could consider a SIPP or fund supermarket pension.

MarkCarr203

Tell me more about SIPP & Fund Supermarket Pension?

purch

A bog standard tracker would have turned 13K into more than 14.5K in 10 months I would have thought

Stakeholder pensions don't have a wide enough variety of funds and sectors to try and make gains by constantly chopping and changing funds.

dunstonh

SIPPs are an advanced product. They allow access to external investments not offered by the provider. i.e. shares, investment trusts etc.

Fund supermarket pensions are a middle ground between personal pensions and SIPPs. Most people investing into SIPPs post 6th April 2006 use unit trust funds. It has been estimated that less than 10% now are using other investments. So, a new style personal pension was introduced which allows investments into unit trust funds but does it under the insured pension rules.

The advantages of a fund insured contract is that there is less admin, no need for a cash account and it can take protected rights (a SIPP cannot at this time). Some fund supermarkets also allow access to stakeholder charged funds, pension funds as well as unit trust funds. Some just allow unit trust funds (note when I say unit trust, that also includes OEICs and SICAVs). The model used is very much based on the same model used by fund supermarkets for ISAs and unwrapped unit trusts which has proven to be extremely popular and has been significant in lowering costs.

If you want to invest in things like shares or investment trusts etc then you need to look at SIPPs (there are a couple of personal pensions that allow shares and investment trusts but they are geared to the experienced investor and based on wrap platforms).

SIPPs (using unit trusts) and fund supermarket pensions are more expensive than stakeholder pensions and some personal pensions. If you dont use the features of these, you can end up paying more than. We have seen an example on these forums where someone was encouraged to go to HL's SIPP and they put it in a HL's balanced managed fund. That fund had higher charges than the personal pension they were in before and past performance was worse. So, you need to either be an active investor or have a suitable investment adviser if you intend to go down the SIPP/fund supermarket route.