Nest Pension - is this low value pot?

Richierichbristol

Is it really a massive gamble? I to have the same fund

Afraid_of_Kittens

Richierichbristol wrote: »

Is it really a massive gamble? I to have the same fund

100% equities weighted to US and Tech. High growth but high risk. As you are in a pension fund for the long run enjoy the rollercoaster.

jamesd

Richierichbristol wrote: »

Is it really a massive gamble?

No.

george4064's assertion that "you are taking a lot of unnecessary risk" wasn't true:

1. "a lot of" isn't that much greater than a more complete global tracker fund. Something like a 40-50% drop in a very bad year can be expected as part of the rollercoaster in reverse that is long term investing.

2. "unnecessary" depends on you. If you want to have less money in retirement or invest more to get the same result it's unnecessary. For everyone else with many decades in retirement this one looks a little better than their high risk fund.

NEST doesn't offer any actually good choices for that timeframe. A FTSE or MSCI global equity tracer would be good.

NEST made a considered set of decisions to deliver worse retirement outcomes for their customers in their use of low growth initial investments, middish growth middle years then a long term reducing growth investment. With the long initial and final periods meaning that middle aged workers won't even get any middish growth years.

Magsy99

Im in the same fund but have only 2 years till aged 66. Ive already got an nhs pension that I accessed 2 years ago so not allowed to have another nhs pension, I thought nest would be ok as a sort of saving thing plus of course employer contributions.  Am I taking a chance in the sharia fund or should I play safe?

charrisonch

Magsy99 said:

Im in the same fund but have only 2 years till aged 66. Ive already got an nhs pension that I accessed 2 years ago so not allowed to have another nhs pension, I thought nest would be ok as a sort of saving thing plus of course employer contributions.  Am I taking a chance in the sharia fund or should I play safe?

As you are close to retirement, I think you should be more cautious. As you've probably seen during the last couple of months, there can be massive "losses" in the short term. As you are about to start selling off your investments in order to live off them in retirement - this is not so good.

But someone in their 20s should be in the 'Higher Risk' fund. Not being in it is taking a much higher risk. The risk being that you are throwing away decades worth of growth. Unlike in the case of someone close to retirement, a "loss" of 50% now is meaningless to a 20-something as those investments have almost 50 years to recover and then some.

And to those that say, "well there's no guarantee that global markets are going to continue to grow". Yes, that's very true. But the global economy has been growing for the last 300 years. At some point, you have to take some "risk". The alternative is saving your income as cash and having it eroded away by inflation. If the global stock market completely collapses and doesn't recover in our lifetime - your pension pot is the least of your worries.

Albermarle

As you've probably seen during the last couple of months, there can be massive "losses" in the short term

The initial losses with the Covid situation were quite high but there have been worse in the past.

In the last couple of months a lot of these losses have been regained , especially in the US markets .( although nobody knows if this will last) .

A typical pension fund with say 50% equity and bonds etc is back approx where it was at the start of the year.

jampot7us

Am I right that the ethnical fund is out performing the higher risk fund? I am 47 and switched from the ethical to the higher risk pension ..Was this the right decision or is it not as straight forward as that?...I do have a much larger personal elsewhere so thought I would take a bit more risk with my employer pension but now having second thoughts...

Albermarle

The comparisons on their website were made at the end of March , when markets were near the bottom . A high risk fund would have taken the full ( or nearly full )  brunt of the drop but will have recovered strongly again since . To get a more accurate comparison you would need to compare the two funds today.

dunstonh

Am I right that the ethnical fund is out performing the higher risk fund?

Historically, ethical funds have underperformed over the long term but do have short term periods when they have outperformed.

jampot7us

Albermarle said:

The comparisons on their website were made at the end of March , when markets were near the bottom . A high risk fund would have taken the full ( or nearly full )  brunt of the drop but will have recovered strongly again since . To get a more accurate comparison you would need to compare the two funds today.

Ty...I am yet to see the higher risk fund doing better than the ethical fund.. pretty much somce autoenrolmemt started...