Pension losing money

crv1963

confusedfreelancer wrote: »

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?

I would keep paying in. Ups and downs are normal as has been described in posts above.

My son started checking his pension on a monthly basis when he first started it, again normal behavior, now he looks at it every now and then. Be prepared for some very big drops over time and don't panic into costly chopping and changing of funds. Decide your risk level and stick to it. If the level causes you sleepless nights then you may have set it too high.

DBdoobydoo

DBdoobydoo wrote: »

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/

I'm not sure why MSE has censored my second link to investmentsense as they don't look like a dodgy operation. If you want to find them this munged link will work better www dot investmentsense dot co dot uk/sipp-zone/sipps/investacc-lite-sipp/ (replace the dot with .)

thickasabrick

Yes, it is normal.
I found JLCollins articles explain the girations of investments in the stock market quite well. "The Market Always Goes Up"

Definitely keep up your pension contributions.
You are looking at investment over a minimum of 24 years if you retire early at 55 or 36 years away if normal retirement at 67.


Personally, maintaining a minimum 10% contribution to my pension fund in my 20s and 30s, 15% in my 40s has been a life saver. Now that I am nearing 55 I am very grateful to my younger self for those contributions as I can now consider early or a flexi retirement.

confusedfreelancer wrote: »

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?

confusedfreelancer

Thanks everyone. I'll leave it automatically paying in each month.

I wondered whether I'd made a mistake choosing medium-high risk level, which nutmeg recommended, but I guess it's ok since I have so long to go until retirement?

SonOf

I wondered whether I'd made a mistake choosing medium-high risk level, which nutmeg recommended, but I guess it's ok since I have so long to go until retirement?

Nutmeg do not provide advice. They made no recommendation. It is a guided service to lead you to an outcome (which will not always be correct) based on the way you answered questions.

Ironically, advisers are told they must not rely on answers to questions alone yet guided services do just that and are allowed to do it.

What did you think "risk" meant when you chose medium/high?

Alexland

SonOf wrote: »

Nutmeg do not provide advice.

Nutmeg recently launched advice - not that I would suggest using it.

https://www.nutmeg.com/personal-financial-advice

confusedfreelancer

Yes, the recommendation based on the questions.

People here told me it wasn't possible to get a lower rate on a pension than I get on cash savings (average of about 2%) but I guess that's over the long term?

steampowered

Think of it this way: house prices in the South West dropped by -0.4% last month. So if you had a house worth £200,000 the value of your house would have dropped by £800. Does that mean people shouldn't buy houses?

The answer to that question is no.

Shares, just like houses, will go up some years and down some years. But there is a clear long term trend - the average annual return generated by the major stock markets is 7-8% per year. Over the long term the ups and downs average out.

steampowered

confusedfreelancer wrote: »

I wondered whether I'd made a mistake choosing medium-high risk level, which nutmeg recommended, but I guess it's ok since I have so long to go until retirement?

"Medium-high risk" means that your investment can fluctuate up and down, but average returns over the long term are likely to be higher.

As you are looking at another 34 years until retirement, that is absolutely what you need. You shouldn't worry about short term fluctuations.

Over the long term cash savings are "high risk" since you are guaranteed to lose money due to inflation.

Clive_Woody

Your money buys "units", when prices go down it means any new money you pay in buys more units (because they are cheaper), so that when the value goes up you have more units going up in value.

Over time things tend to average out, but generally speaking over time your investments will go up in value.

There is a lot more to it than that, but basically keep paying and take some time to read about pensions as there's lots to learn (I'm definitely still learning new stuff every day)