Private Pension lost money

Bluesgal

Hi

I wonder if anyone can give me some advice, I have a private pension that I have paid into for a number of years (I'm self employed). It had a value of £18,800 last year, this year even after taking into account my monthly payments and tax relief it only had a value of £17,500 (they state a loss of £2,700 taking into account my payments).

This seems like an awful big loss and when I think about the financial hardship I endure to pay into my pension it is rather galling.

Any sage words of wisdom?

Thanks

Pinner_Ram

You may not want to hear this but that is investing for you. It comes with downs as well as ups. Another year you may be more pleased with the annual review than you are currently displeased. By all means revisit your asset allocation and be sure you can sleep at night. You'll need a lot more in the fund than you currently have to derive a useful level of income later.

Bluesgal

Thanks for replying Pinner Ram, I thought this may be the case, hopefully next year it will do better. Unfortunately I'm too old (59) to be able to build it up much more, now just really using it to release a lump sum when I do retire.

Pinner_Ram

In which case taking advantage of the tax breaks (watch out for the budget on 16 March) and investing in low volatility assets may work for you.

dunstonh

This seems like an awful big loss

Sounds like an awfully small loss. It is 14%. That is nothing for investments.

You shouldnt be unhappy either. it is great news as the regular payments are now buying investments cheaper. If there were never any short term losses, then the long term returns would be lower.

Investments go up and they go down. They zig zag on a daily basis. That is how they work. You should never be unhappy about short term losses because they are inevitable.

atush

What are you ging to do with your pension?

If you wil buy an annuity, or cash it all in, then you should have already been moving it to cash year by year.

If you will drawdown, then keeping it invested (and maybe adding eo during market falling periods) would be the better option.

How did you feel in the last 5 /6 years when orices were rising?

pathtofreedom

How many years until you plan to retire? What is your pension currently invested in? There has been a global dip lets say the past few months, which has impacted lots of different investments. One way to look at it is it is a perfect time to chuck more money in as you're buying more units at a cheaper price. If you have 10-20 years + until you need the money, then hopefully it should grow more. So you're taking advantage of buy cheap, sell high.

You need to see what the breakdown is really as well, if it is all in global investments, do you want more just uk ones. Can you invest in property funds or anything else similar. What about bonds.

If you're closer to wanting to take the money, the general advice is you move more and more into bonds and out of equities (share funds) as that should be less volatile. There are different schools of thought about this though as if interest rates suddenly go up a lot then bonds might not give you as good a return on your money.

It is good you're checking it, and you don't need to check it all the time, especially if seeing it go down right now has scared you. It is worth teaching your self about different investments though. http://monevator.com/category/investing/passive-investing-investing/ is a good place to start. Then once you understand that, check what options your pension fund lets you choose. Some you can pick anything you fancy, my current work pension for example though has very generic categories to choose from, but all depends who your pension is with and what sort. Then you can also start thinking about having a work pension as well as a sipp possibly, depending on the fees involved and investment choices you like, to help spread your risk.

Then depending if you are looking at more short term investments, so want to retire in next 5 -10 years, that depends how much you want to keep invested in things where the global markets change more, as you've just seen. If it is more long term investment though, it is best to chuck money in now while it is cheap, so your gain is more later when the prices recover (assuming they do, I hope they do