Stakeholder Pension Query

OldGranny

Hi all
I'm probably a bit thick but I've just got my Legal and General Stakeholder Pension Statement.
What I don't understand is this:
Total Payments made by you or on your behalf £2400
Investment fund growth/loss £1014,64
How can the fund growth be £1385 less than what I have paid in during the last year?
If that's the case I may as well just throw £1385 in the bin!
Thanks
OldGranny

dunstonh

How can the fund growth be £1385 less than what I have paid in during the last year?

The value of investments goes up and down on a daily basis. Some years you get growth, some years you get virtually nothing. Some years you get losses. You average out the good years, bad years and nothing years. 2018 was a loss year.

If that's the case I may as well just throw £1385 in the bin!

No.
Loss years are important and needed when you are paying into a pension. It means your contributions bought investments cheaper in that period. Then when the markets recover (as they did between January and April) those investments will make more money than had returns gone up in a straight line.

This is all quite normal and you have almost certainly gone through extended loss periods before (Pick from these for calendar year: 2014/15, 2011, 2008, 2001/02, 1994, 1990, 1985 and very many smaller loss periods every single year). Think of it as a zig zagging line on an overall upward trend. Some years you zig, some years you zag.

OldGranny

Hi Thanks for explaining it.