Should I bank this years huge increase in pension

farmhillb

As everyone is probable aware pensions have risen almost 30% in the last 12 months. With experts saying the stock market is over priced should a person bank this years rise and transfer the pot to a lower risk pension for a year knowing that the market is sure to turn or should you ride out the storm

bostonerimus

I would never recommend trying to time the market. But you might want to rebalance your portfolio if it has shifted from it's set allocation. All through 2007 and 2008 I was selling bonds to buy stocks as the stock market fell. In hindsight that looks like a smart move.....when all I was doing was rebalancing.

nickcc

Thought for a minute that the OP was talking about the state pension, mind you I'm just grateful for whatever tiny increase I get before the hurry up and die brigade comment.

atush

How old are you? When will you retire?

If retiring soon, sure you should bank profits and be restructuring to a lower volatility. Maybe should have done so already.

But if you are 35-40 and wont retire for 20 years, no. Keep on putting in money monthly, dont worry about current market swings (if youare diversified as you should be).

Look up pound/cost averaging.

AnotherJoe

atush wrote: »

How old are you? When will you retire?

If retiring soon, sure you should bank profits and be restructuring to a lower volatility. Maybe should have done so already.

But if you are 35-40 and wont retire for 20 years, no. Keep on putting in money monthly, dont worry about current market swings (if you are diversified as you should be).

Look up pound/cost averaging.

I'm retiring tomorrow. Are you suggesting i should sell up and buy, I dunno, say VLS20 even though i will likely be invested another 20 years?

farmhillb

50 years old this year paying in around £3600 a year. This year pension has risen £30,000. Should I switch this now trying to guess the market will fall soon?

PeacefulWaters

farmhillb wrote: »

50 years old this year paying in around £3600 a year. This year pension has risen £30,000. Should I switch this now trying to guess the market will fall soon?

When do you plan to retire and actually utilise some of this fund?

With a life expectancy of another 40 years or so I'd be cautious about making short term decisions. But if you want to draw 25% of your pot out in five years then some ring fencing of that in lower risk assets may not be unreasonable.

farmhillb

thanks for input folks. One other thing when people talk about diversifying what is the normal / average way people diversify. Is it as simple as 25% low risk, 50% medium risk and 25% high risk or is there some other method of leveling out the risk associated with trying to grow a pension. As it stands now I have my pot split between 2 equity funds, one uk based the other US based. Both are in a medium risk 5 out of 8 rating. Thoughts please

PeacefulWaters

farmhillb wrote: »

thanks for input folks. One other thing when people talk about diversifying what is the normal / average way people diversify. Is it as simple as 25% low risk, 50% medium risk and 25% high risk or is there some other method of leveling out the risk associated with trying to grow a pension. As it stands now I have my pot split between 2 equity funds, one uk based the other US based. Both are in a medium risk 5 out of 8 rating. Thoughts please

There are a million shades of grey. It's as simple or as complex as you like.

Answering the questions posed in post #7 may open up contributions from others with more specific thoughts for your circumstances.

Keep_pedalling

AnotherJoe wrote: »

I'm retiring tomorrow. Are you suggesting i should sell up and buy, I dunno, say VLS20 even though i will likely be invested another 20 years?

We are both in early retirement, with 3/5ths of out income coming from FS and state pensions and the rest from drawing down from our savings, which are currently 60/40 equities/bonds, but we have decided, after consulting our IFA, to go the opposite way to to the OPs suggestion and switch to 100% equities.

We will also keep a 2 year emergency cash fund that can be called on to replace the draw down on equities, if, or more likely when, the market takes a dive so we are not having to sell at the bottom of the market to maintain our lifestyle. Seems like a good plan for the next couple of decades.

I must admit having rock solid pensions providing a good chunk of our income makes this a lot easier decision, especially for my far more cautious better half.

aldershot

Be careful how you rate risk. The days of Equity = higher risk and bonds = lower risk are over in a world of near zero interest rates. Global equity indices are trading lower because bonds are trading lower.