Pension pot decision query

TH1878

bigadaj wrote: »

That's quite an odd response.

Why? Not investing in things you don't understand is an eminently sensible response.

Just looked at vcts on trustnet and the range of fe risk scores is huge, from single digits up to high hundreds, that's obviously only one view but it does show the range of perceived risk that is encompassed.

Yes, if risk was measured purely by volatility, which it isn't (as you've identified below with the bonds).

Even associating p2p and vcts is slightly odd, they are very different animals.

Read my posts again, I am saying that you shouldn't invest in ANYTHING that you don't understand.

Diversification is generally a good thing, and using vcts on smaller pots is potentially inappropriate but many people are moving into p2p particularly due to poor savings returns, bypassing the banks.

If you really understand the risks of P2P or VCTs then fill your boots - that isn't what I'm saying. Jamesd clearly understands the risks and is able to accept them - VCTs are probably suitable for him but he shouldn't be peddling them to inexperienced investors with £21k to invest.

There are different risks applying to P2P. Understand them and invest, don't understand them and don't invest. Simples.

To me that issue with bonds is still a massive elephant in the room, there's just no positive view that I can see at this moment in time.

Like VCTs and P2P, there are different levels of risk within the bond market. The size of the US bond market is roughly 2 times as big as the equity market - I don't pretend to know all the answers but there is still value in there.

What I would say is that it would be wise to investigate the duration of any bond funds you're invested in, or considering investing in, and make sure the average time to redemption is <1-2 years.