Pension value down = good time to invest ?

shilts

I have a personal pension that is ‘looked after’ by my IFA which I am totally happy with . My knowledge of pensions is very limited so felt it best to leave it in the hands of an expert . I totally understand that there are ups and downs which I am comfortable with . The value of my pension has been somewhat volatile over the past few months and has lost about 5% after making some good gains . This I’m not overly concerned with because as I said I trust my IFA and understand that this happens. It occurred to me though that when the markets are like this that it may be of benefit to me as I invest regularly on a monthly basis . Is this the general feeling that you need these down times to buy cheaper , thanks ?

Barny1979

shilts wrote: »

I have a personal pension that is ‘looked after’ by my IFA which I am totally happy with . My knowledge of pensions is very limited so felt it best to leave it in the hands of an expert . I totally understand that there are ups and downs which I am comfortable with . The value of my pension has been somewhat volatile over the past few months and has lost about 5% after making some good gains . This I’m not overly concerned with because as I said I trust my IFA and understand that this happens. It occurred to me though that when the markets are like this that it may be of benefit to me as I invest regularly on a monthly basis . Is this the general feeling that you need these down times to buy cheaper , thanks ?

My Hargreaves Lansdown SIPP has dropped recently too and thinking of putting more in too.

jonnygee2

Is this the general feeling that you need these down times to buy cheaper , thanks ?

Well yes, at the most basic level, you buy shares when they are cheap.

But, they are always cheap for a reason. UK shares are cheaper right now because many people believe they could collapse after Brexit. This is the problem, you know when shares are cheap compared to yesterdays prices, but what you need to know is whether they are cheap compared to tomorrow's prices.

Still, had you had the guts, and the cash, to buy a tonne of US and UK equities in December 2008 you would be doing very well right now. Many people keep cash or bond reserves with the idea to reinvest them in a repeating situation.

Joey_Soap

Keep drip feeding but at a higher level if you can afford to. Makes sense to buy more on the way down than on the way back up. You can always trim back again later if you need to. I feel in five years time you'll look back at 18/19 turmoil and wish you'd bought more. Good luck.

planteria

in short, yes shilts.. continuing to invest monthly makes sense. but also, if you have a lump sum to invest or want to increase your regular contributions while markets have dipped, that makes sense too.

Alexland

My only regret on my lump sum pension contribution during the financial crisis was that I didn't add more and reduce my bond exposure.

Having the self control to limit your exposure when market prices are hard to justify and then increasing your equity exposure when you see markets drop can form a big part of your overall returns.

Alex

jamesd

Your basic thinking is right but equities still aren't cheap, just less expensive. Still looks better to accumulate cash or bonds.

Back in early 2008 after the initial drops I set pension salary sacrifice as high as I could to buy cheap and added stooze pot money around April 2009. That meant lot of buying at truly cheap prices.

There have been some drops so you could do what I did in early 2008 and hope for more later.

Alexland

The problem is you never know how low a drop is going to go and if you spend ages waiting for 'the big one' (and even then might not time the bottom accurately) you miss a lot of opportunities and growth.

That's why I prefer gradually reducing cash then bonds as markets weaken and then when 'the big one' happens I would start switching to leveraged and hopefully discounted trusts.

Alex

Audaxer

Alexland wrote: »

That's why I prefer gradually reducing cash then bonds as markets weaken and then when 'the big one' happens I would start switching to leveraged and hopefully discounted trusts.

Alex, interested to know your thinking as to why you would switch to ITs when there is a big crash rather than just rebalancing back by investing more into your equity funds?

TcpnT

In hindsight definitely better than buying a few months ago but who knows whether it will turn out to be a good time in the longer term

shilts

Thanks everyone . I have about 10years to go until planned retirement if everything works out as planned . I was thinking It might pay to try and get a little more in monthly for the foreseeable, thanks .