Workplace pension: switch to a higher risk fund portfolio

7sefton

Hi

I have just checked on my workplace pension, held with Scottish Widows.

Unsurprisingly, my fund choices have been defaulted to the cautious growth, middle-of-the-road risk profile. In their lingo I'm in the 'Balanced Pension Investment Approach'.

As I'm young (30) and willing to accept more risk, I'm thinking of changing my choice to the Adventurous Pension Investment Approach.

However with markets where they are at the moment, I'm not sure if this is a good time to up my risk or whether I should just sit tight.

What do people think?

LHW99

You are looking at 25+ years before you need to access the pension, and are presumably paying in monthly.
Drops in the stock market now are just what you want, so you get more for your money.
That said, make sure you know what you are changing to. Also consider whether what you have is worth keeping, and directing only new payments into the new fund.

Dox

Depends on your attitude to risk. With such a long time horizon, don't fall into the common trap of only looking at the immediate future.

kidmugsy

In your diary: for 6/4/21 write "now buy collective investments in shares". Until then be leery.

How do I know? I don't; I can't. But I do know that it's better to buy shares when they are good value than when they are poor. Just like cars, houses, butter, or parsnips. I also suspect that many of us would need some arbitrary date at which to start investing, otherwise we might for ever procrastinate.

We are probably going to start investing again in April 2020 - March 2021 so we'd like someone else to start driving up prices after we've bought. You'll do.

crv1963

Nobody has a crystal ball, but commonly people say you can't time the market, it is time in the market that counts. If you are happy taking the adventurous route than go for it now.

If it is of any help to you one of my sons (21yo) has his contributions going into 100% shares as he thinks time will do the work and he'll review his holdings after 10 years, accepting that there will be periods of big drops but hoping that as time goes by they'll recover.

Albermarle

It does not have to be all or nothing . You could leave 50% where it is and move 50% ( or whatever proportion you feel comfortable with )
As said many times on this forum , trying to time the market is very difficult. Having said that personally I would not rush to put 100% in 100% equity investments at the moment .

Thrugelmir

As I'm young (30) and willing to accept more risk

How much can you afford to lose? Takes time to build a sizable fund. 30 seconds to throw it all away. Once lost. Capital is gone. There's no second chances.

tacpot12

I would recommend you select the the hugest risk option. It gives you the best chance of maximising the return on your investment. Risk is relative, high risk with Scottish Widows is going to much lower risk than investing in Russia, Wiskey, Fine Art etc.

Malthusian

Thrugelmir wrote: »

How much can you afford to lose? Takes time to build a sizable fund. 30 seconds to throw it all away. Once lost. Capital is gone. There's no second chances.

There is minimal chance that the Adventurous Pension Investment Approach will suffer any permanent loss, unless the OP panics and cashes in.

It is extremely unlikely that any workplace pension fund will have any risk of total loss. A few might have a risk of non-total permanent loss if the scheme offers a particularly wide range (technology funds, single-sector funds, single-country funds, etc).

Thrugelmir

Malthusian wrote: »

There is minimal chance that the Adventurous Pension Investment Approach will suffer any permanent loss, unless the OP panics and cashes in.

Anyone holding a stake in a company, whether directly or indirectly, such as Last Minute .com would have suffered a permenent loss of capital.

Marcon

Thrugelmir wrote: »

Anyone holding a stake in a company, whether directly or indirectly, such as Last Minute .com would have suffered a permenent loss of capital.

Yes - but nobody with more than one brain cell would put all their pension fund in the shares of just one company. Red herring!