Lump sum into private pension

DaveGa

Bit of a dilema, If I plan to make a lump sum payment into my pension fund before the end of this tax year - is it best to wait and see the result of the deal/no deal Brexit fiasco.

ermine

DaveGa wrote: »

is it best to wait and see the result of the deal/no deal Brexit fiasco.

If you feel that's what you want to do, you can always hold it in the pension as cash pending your decision. That way you get to make the lump sum before the end of the TY but your investing decision at a time of your choosing.


There is an argument to say that Brexit is in the price, but that's a different consideration. As long as you don't leave the cash to stew in the pension for more than a year or so inflation shouldn't erode too much of it, though of course a no deal devaluation could make you wish you'd bought. You can hedge that by buying assets with half of the cash.

Linton

If you waited and the BREXIT conclusion was other that you would want would that change your mind about putting money into a pension in the first place?


If not, buying now is no more nor less risky than waiting. If you wait and it turns out to be a no deal one can assume that the £ will decrease in value and so foreign investments will become more expensive. Conversely if BREXIT is cancelled either actually or for practical trade purposes.


Its a 50/50 choice at the moment, so you may as well do whatever makes you happier. A downside of waiting is that by the time you know and understand that BREXIT is you may be into the next tax year. This may or may not be a problem for you.

dunstonh

is it best to wait and see the result of the deal/no deal Brexit fiasco.

How is that going to impact on anything to do with the pension?

DaveGa

As I see it -
Paying in a lump sum before brexit and ending up with NO DEAL would be bad.
Paying in before brexit and ending up with a DEAL would be better
Paying in after brexit when there is a NO DEAL might be good if the market drops and then recovers.
Paying in after brexit when there is a DEAL would be a missed opportunity.

Starting to make my head boil. According to my pension providers valuation it's not exactly beed a good year already.

Linton

DaveGa wrote: »

As I see it -
Paying in a lump sum before brexit and ending up with NO DEAL would be bad.
Paying in before brexit and ending up with a DEAL would be better
Paying in after brexit when there is a NO DEAL might be good if the market drops and then recovers.
Paying in after brexit when there is a DEAL would be a missed opportunity.

Starting to make my head boil. According to my pension providers valuation it's not exactly beed a good year already.

Disagree. Assuming you are investing globally the key impact will be via changes in currency valuations rather than share values (except perhaps for UK Small Companies). So if something unexpectedly bad happens the £ will fall in value against other currencies which increases the £ value of shares priced in those currencies. In which case it would be bad to wait since the same number of shares will cost you more later. Conversely if something unexpectedly good happens. And so on giving the reverse of what you have stated in all your cases.

dunstonh

Paying in a lump sum before brexit and ending up with NO DEAL would be bad.

Why?
Sterling will fall which will push the value of overseas holdings up.

Paying in before brexit and ending up with a DEAL would be better

Not necessarily. Indeed, values on overseas holdings will fall as Sterling rises in value.

Paying in after brexit when there is a NO DEAL might be good if the market drops and then recovers.
Paying in after brexit when there is a DEAL would be a missed opportunity.

Probably the wrong way around.

The UK stockmarket for small and mid caps will rise with a deal. However, large caps and overseas will be affected by the rise in Sterling.

According to my pension providers valuation it's not exactly beed a good year already.

I disagree. 2019 has been a very good year so far. 2018 was a negative year but we were due one.

Albermarle

As Brexit itself is unpredictable . Could be No Deal; No Brexit; Delayed Brexit ; half in/half out Brexit and probably the final deal will be some years off. So in summary , do not try too much to second guess the markets and just keep investing as you have an approx. 50% chance of being right and 50% being wrong.
Generally adding one big lump sum is generally not advisable in most circumstances . Best to split it over a period and not all in one type of investment .

Marcon

When do you expect that result to be known? You aren't going to wake up on 30 March and find all the answers.

AnotherJoe

As per the other responses here, your analysis is back to front and also irrelevant since if you are sensibly globally invested for the long term then Brexit makes little or no difference.
Like a large number of recent posters here asking what is essentially the same question, you talk about "the" market and appear to think that world markets turn on what happens in the U.K. They don't. Indeed they barely notice.