Is my pension contribution "worth it"

atush

Sorry, I thought we were talking the UK markets?

Anyway, if we were going to go into a 10 year decline, I would have thought it would have been from 2008.

kidmugsy

atush wrote: »

Sorry, I thought we were talking the UK markets?

Anyway, if we were going to go into a 10 year decline, I would have thought it would have been from 2008.

What, you can't seriously think that the UK is immune to such a problem? If you don't like the US as an example, consider Japan. Or almost any other developed market except (I think) Australia. People do seem to me to have absurdly sanguine views about what stock markets will "probably" deliver. Most of us don't have the investment horizon of a perpetual institution.

jamesd

kidmugsy wrote: »

The US had a couple of bear markets longer than that in the twentieth century.

The San Francisco Federal Reserve Bank disagrees with that claim, identifying the longest as lasting four years and producing an 80% drop in the Dow, most of that within three years. Using the S&P 500 instead doesn't help.

The great depression has a long bear market at four years but the bad news there also included low recovery so the market stayed down for a long time. That combination is what makes it the worst case for those entering retirement. For those investing far from retirement as being considered here it was a golden time for buying investments.

If you want longer bear markets you can look at places like Brazil. There's a page on wikipedia about the longest bear markets that has details of lots of them.

agarnett

Ad86 wrote: »

Our JOINT gross is less than 2k a month.

I am amazed at how this thread seems to be self-sustaining despite that little revelation from the OP

My advice to the OP might be to forget UK and emigrate to a place where labour is respected and the financial services industry are not such overt crooks and snake oil merchants :mad:

PeacefulWaters

agarnett wrote: »

I am amazed at how this thread seems to be self-sustaining despite that little revelation from the OP

My advice to the OP might be to forget UK and emigrate to a place where labour is respected and the financial services industry are not such overt crooks and snake oil merchants :mad:

Has he said they're both employed in financial services?

Which utopia do you recommend they move to?

Bootsox

The issue with bear/bull markets is that if you invest heavily in the last 10 years of a bull market and, in the last year or so, it turns bear then you just might not have the longevity to recover.

Don't want to bore people with a history lesson but after the Wall Street crash in 1929, the Dow-Jones finally reached its record low in July 1932, falling 89%, and did not recover to 1929 levels until 1954.

Which is quarter of a century.

...and, throughout history, there are examples of markets going from bull to bear over a matter of days.

So, although an advocate of high risk investment early on in life, I would urge more caution approaching retirement.

Unless you have the ability to regenerate "Dr Who style" of course.

jamesd

Early in life is where Ad86 is. Trouble is that there are also gains to be had from owning a home and given their income levels the pension contributions just might make a difference to that prospect over a couple of years.

gadgetmind

agarnett wrote: »

My advice to the OP might be to forget UK and emigrate to a place where labour is respected

Skilled labour is very much respected in the UK (my company pays fresh graduates £2.5k pcm) whereas unskilled labour isn't really respected anywhere.

Where else in the world might unskilled workers get a better deal than the UK?

N1AK

atush wrote: »

Sorry, I thought we were talking the UK markets?

Anyway, if we were going to go into a 10 year decline, I would have thought it would have been from 2008.

You can disagree all you like about bear markets and bull markets, country etc, however it doesn't change the fact that the FTSE100 was at nearly 7k in 1999 higher than it currently is 15 years later! Sure we've had highs and lows in the meanwhile but none exceeding 1999.

gadgetmind

N1AK wrote: »

it doesn't change the fact that the FTSE100 was at nearly 7k in 1999 higher than it currently is 15 years later!

Yes, so someone who invested all of their money at that time, has never put anything else in, and has burned all of their dividend cheques, won't have done very well.

Those who have kept drip feeding, and who have re-invested the dividends, have done just fine.

Dec30 1999, FTSE 100=6930, FTSE 100 TR=3141 * (Dot com crash high. Reached 6950.6 during day.)
Mar12 2003, FTSE 100=3287, FTSE 100 TR=1624 * (Dot com crash low)
Jan30 2006, FTSE 100=5780, FTSE 100 TR=3141
Jun15 2007, FSTE 100=6732, FTSE 100 TR=3851 * (Pre credit crisis high)
Oct12 2007, FTSE 100=6730, FTSE 100 TR=3889
Mar3 2009, FTSE 100=3512, FSTE 100 TR=2147 * (Credit crisis low)
Feb8 2011, FTSE 100=6091, FTSE 100 TR=3987 * (Inter crisis high)
Sep22 2011, FTSE 100=5041, FTSE 100 TR=3387 * (Sovereign debt crisis low. Fell below 5000 briefly next day)
Aug17 2012, FTSE 100=5852, FTSE 100 TR=4077
Dec19 2012, FTSE 100=5972, FTSE 100 TR=4198
Feb3 2013, FTSE 100=6347, FTSE 100 TR=4466
Apr10 2013, FTSE 100=6387, FTSE 100 TR=4539

Notice how quickly the total return figure recovers even though the FTSE 100 itself wobbles all over the place?