Pension fund rapidly losing money

onomah25

I have recently moved to a new pension provider moving my pension pot into a SIPP. I am alarmed had how far it has fallen in value (nearly 7%) in past four months. I realise that the markets have been a bit volatile but I wasn't expecting it to drop so rapidly. I have 27 years to go before I reach retirement age. Should I sit tight and ride it out or ditch this fund immediately before it's too late?

dunstonh

I have recently moved to a new pension provider moving my pension pot into a SIPP.

SIPPs are for experienced investors wanting more advanced options. Do you fit that profile?

I am alarmed had how far it has fallen in value (nearly 7%) in past four months.

A 7% drop is nothing. A correction is 10%. A crash is 20%. 7% is insignificant.

How are you going to react when a real drop occurs (dot.com and credit crunch saw the markets go down 3 times the level of the current drop - So, if this worries you, what are you going to be like then)?

have 27 years to go before I reach retirement age.

So, why are you worrying about a 7% drop now?

Should I sit tight and ride it out or ditch this fund immediately before it's too late?

is it just one fund? Is that fund multi-asset or single sector? What is the fund?
Do your investments match your risk profile and your knowledge and understanding?

Thrugelmir

onomah25 wrote: »

I realise that the markets have been a bit volatile but I wasn't expecting it to drop so rapidly.

That's the nature of markets. To the same degree anything you invest now is buying you a larger stake. As while markets may move it's still the same Companies trading away every day.

tony4147

Nearly 7%, mines near enough 11% since April and I retire in 15 years and my Scottish Widows pension is 'lifestyled' which is supposed to smooth out volatility.
As people will tell you on here you have to take the rough with the smooth. You need to be prepared for drops of 25%-30% when times are really bad.
You have 27 years before retirement, thats plenty of time for peaks and troughs. It's all about having the right mix..............and timing when you come to take your pension.

dunstonh

and I retire in 15 years and my Scottish Widows pension is 'lifestyled' which is supposed to smooth out volatility.

The lifestyle funds do not smooth out volatility. Indeed, many can be far more volatile in the years before risk reduction. It is a processed reduction in equities at give points (regardless of market conditions) based on the pension scheme age.

Lifestyle funds are now going out of fashion. They are really only suitable if you intend to buy an annuity.

tony4147

dunstonh wrote: »

The lifestyle funds do not smooth out volatility. Indeed, many can be far more volatile in the years before risk reduction. It is a processed reduction in equities at give points (regardless of market conditions) based on the pension scheme age.

Lifestyle funds are now going out of fashion. They are really only suitable if you intend to buy an annuity.

Hence why my IFA is reviewing my pensions as I wasn't happy with lifestyling and want something more actively managed.

Kendall80

onomah25 wrote: »

I have recently moved to a new pension provider moving my pension pot into a SIPP. I am alarmed had how far it has fallen in value (nearly 7%) in past four months. I realise that the markets have been a bit volatile but I wasn't expecting it to drop so rapidly. I have 27 years to go before I reach retirement age. Should I sit tight and ride it out or ditch this fund immediately before it's too late?

I would think most of us have seen our investments fall over the past few months. You have 27 years to go so in my opinion the past few months are fairly insignificant. A good time to top up maybe? If you are not happy with such volatility you could consider your asset allocation and maybe introduce some bonds/property.

Playing_with_Fire_2

If you are in the right fund for you then there is no need to worry about a 7% drop, even though it is a bit tough mentally when it drops so much so quickly after you've paid money in. Unless you are in something unusual this is probably reflective of the markets and not your fund(s).

If you want a second opinion on your fund then maybe post what it is.

robin61

Similar experience with my wife's SIPP about 7% over the last 6 months. Never mind hold tight and it will go up again eventually.

onomah25

Thanks for the feedback. I am happy that the fund matches my risk profile and I understand how and where my money is invested. As 'Playing with fire' suggested it's just a bit tough mentally when it drops so soon after paying money in.

kangoora

onomah25 wrote: »

Thanks for the feedback. I am happy that the fund matches my risk profile and I understand how and where my money is invested. As 'Playing with fire' suggested it's just a bit tough mentally when it drops so soon after paying money in.

Rest assured you aren't the only one, if that helps. I increased pension payments in a big way in April as I finally had a lot of 'spare' cash each month.

Now in my first year of my final countdown and I'm barely up on the amount I had in April and I've calculated I'm 6.4% down overall taking payments into account.