Pension complaints - what sort of things are considered higher risk of complaint

jamesd

Dunstonh has provided a useful list of areas where people should be taking particular care to ensure that what they are doing makes sense for them and properly covers the risks of the route they are choosing. Thanks!

EdInvestor wrote: »

Readers will be aware that DIY drawdown using low cost prpoviders and direct investment has the potential to reduce considerably the risks of drawdown, by cutting fees and charges paid to IFAs and fund managers which eat into fund returns and cause depletion of the capital.

Readers should read this comparison of HYP with a fund to see how they can get lower total investment returns with higher risk using the HYP direct investment approach you commonly suggest as an alternative to funds.

Note that single fund investing is also not a good idea, nor is investing in one country, like the UK, only. Recently the UK-only side was down or a little up while markets in various other parts of the world, from the US to South America and Asia were approaching or passing record-breaking levels.

EdInvestor

jamesd wrote: »

Readers should read this comparison of HYP with a fund to see how they can get lower total investment returns with higher risk using the HYP direct investment approach you commonly suggest as an alternative to funds.

HYP is an equity income strategy, not a total return strategy. Its quite a compliment that a low-cost do-nothing investment like this can compete so well with one of the most highly regarded funds in the country run by a top manager.

The current yield on an HYP would be in the 5-6% range, so quite competitive with annuity rates, and also giving the potential for long term capital growth. :)You do need to compare the yields based on the original capital as you would with an annuity.

dunstonh

The current yield on an HYP would be in the 5-6% range, so quite competitive with annuity rates, and also giving the potential for long term capital growth.

Which also means giving you the potential for capital loss.

If you accept the risk, fine. However, it is not a risk free option. The FSA believe that far too many people invest above their risk. A fair point of view when you consider that complaints about investment products always go up after a stockmarket crash or correction.

EdInvestor

dunstonh wrote: »

Which also means giving you the potential for capital loss.

Capital fluctuations are not a problem - remember this is a long term strategy - it is stable and rising income that is importnat with this strategy. Although there is some risk of a dividend being cut, diversification across 15+ companies means this is unlikely to have a major effect: and anyway dividends are historically much more stable than cash interest.

dunstonh

Capital fluctuations are not a problem - remember this is a long term strategy -

Capital fluctuations are a problem and are something the vast majority would be concerned with.

anyway dividends are historically much more stable than cash interest.

Shame the share price isnt.