Pension losing money

confusedfreelancer

I started a nutmeg pension about two months ago because people kept telling me I should have a pension (I'm 31 and have always been self employed). I went with nutmeg because I wanted something as easy as possible.

It's lost £100 since I started it. Is that normal? Did I do something wrong or should I keep putting money in and assume it will eventually go up?

SonOf

It's lost £100 since I started it. Is that normal?

Very normal. Investments go up and down on a daily basis. Some periods the invesmtents will go up. Sometimes down.

An economic cycle is around 10 years. In that period you will get growth years, negative years and years where there is nothing. You average them out.

All quite normal and to be expected and you actually need negative periods to make more money. Even if what you have invested already goes down in the short term. If investments only ever went up, you would get a lower return in the long run.

jaybeetoo

A pension is a long term investment. Investments go up and down. Long term it should go up.

Albermarle

If you only put in £200 so far and lost half of it then that would be a worry that something was wrong.
However if you have put in a £1000 + , then it will just be part of the normal volatility you will see.

LHW99

Albermarle wrote: »

If you only put in £200 so far and lost half of it then that would be a worry that something was wrong.

Although that would depend on when the £200 went in and what it went in to.
Ideally in a pension you would want the "going down years" to happen fairly regularly for the first half so you build up a nice lot of units in whatever, and then a majority of "going up years" towards the end so those units you bought cheap go up in value - it doesn't work like that, but as said, over time (30 years + for you?) the ups should more than cancel out the downs.

green_man

It’s easy to get twitchy with investments if you monitor them too closely. With pensions they are a very long term investment so once you are happy with the funds you are using it’s probably better to just forget about it and keep putting the money in. The worst possible approach is to keep chopping and changing your funds or provider because your fundX was outperformed by fundY in the previous period etc.
If you are investing in some form of low cost Global equity fund then be content to know that over 30 years it should do well despite periods of commitment testing decline.
Back in 2009 by pension fund value dropped £250k despite me contributing £20k in the year, my wife called for me to stop contributing, but this is exactly the time to contribute more (if you can). Within a couple of years the fund was back well above it’s previous high.

NedS

To help you sleep better at night try to view it like this. You are purchasing an asset each month. This month the asset you are purchasing has gone down in price and is therefore cheaper for you to buy (or you can buy more for the same price).
If you were buying a house and the house you were looking to buy just went down in price and got cheaper, you'd be happy right? You'd be able to buy the same house for less money, or you'd be able to buy a bigger house for your budget.

DBdoobydoo

Is there a pension scheme that I can invest in that doesn't have this potential for losses? I am a higher rate taxpayer & I want to stuff as much of my income as possible into a pension pot for the next 2-3 years to maximise tax savings. I will only pay basic rate tax after I retire so I'm not bothered by growth or losing in real terms when inflation is so low I sure as hell don't want to lost 5% or 10% or 20% through short term market upheavals when my sole intent is to defer my income for a few years so I can take 25% as a TFLS & only pay 20% tax instead of 40% tax on the remainder.

Effectively what I want is a pension that just operates as a savings account with minimal or low interest but also costs me little or nothing to run. Does such a pension scheme exist? If not what is the nearest offering that matches my requirements?

NedS

DBdoobydoo wrote: »

Is there a pension scheme that I can invest in that doesn't have this potential for losses? I am a higher rate taxpayer & I want to stuff as much of my income as possible into a pension pot for the next 2-3 years to maximise tax savings. I will only pay basic rate tax after I retire so I'm not bothered by growth or losing in real terms when inflation is so low I sure as hell don't want to lost 5% or 10% or 20% through short term market upheavals when my sole intent is to defer my income for a few years so I can take 25% as a TFLS & only pay 20% tax instead of 40% tax on the remainder.

Effectively what I want is a pension that just operates as a savings account with minimal or low interest but also costs me little or nothing to run. Does such a pension scheme exist? If not what is the nearest offering that matches my requirements?

Yes, most SIPPs allow you to hold cash, and (some) will even pay a very small amount of interest on cash holdings, although less than inflation. Depending on the SIPP, there may be fixed term cash savings products available within the SIPP wrapper that allow a slightly better rate of interest. Hopefully others will be able to point you towards specific products to research.

SonOf

DBdoobydoo wrote: »

Is there a pension scheme that I can invest in that doesn't have this potential for losses? I am a higher rate taxpayer & I want to stuff as much of my income as possible into a pension pot for the next 2-3 years to maximise tax savings. I will only pay basic rate tax after I retire so I'm not bothered by growth or losing in real terms when inflation is so low I sure as hell don't want to lost 5% or 10% or 20% through short term market upheavals when my sole intent is to defer my income for a few years so I can take 25% as a TFLS & only pay 20% tax instead of 40% tax on the remainder.

Effectively what I want is a pension that just operates as a savings account with minimal or low interest but also costs me little or nothing to run. Does such a pension scheme exist? If not what is the nearest offering that matches my requirements?

Yes there is. However, your question is not really related to the OPs situation and there is a risk your post will take the thread off topic which would be unfair on the OP. Maybe start your own thread?

DBdoobydoo

SonOf wrote: »

Yes there is. However, your question is not really related to the OPs situation and there is a risk your post will take the thread off topic which would be unfair on the OP. Maybe start your own thread?

With amazing synchronicity I see that somebody else has just started a thread to ask a similar question. It looks like there are indeed "SIPPable" deposit accounts paying up to 2% if you are prepared to tie up your money for 3 years which would be perfect for me. I'll investigate further.

https://forums.moneysavingexpert.com/discussion/6042077pointed me to https://!!!!!!!!!!!!!!!!!!!!!!!!!!!!/a-quick-overview-sipp-deposit-accounts/