Estimating pension pot - fund performance

Notepad_Phil

Ngozi wrote: »

I'd like to contribute more but unfortunately, even if I only did 13% (other 4% from employer) I can't exactly afford to have over £200 a month going out of my pay, not right now at least

Try to get there as fast as you can - your future self will thank you

I found that putting a big chunk of any pay increase I got into my pension stopped me from just spending the increase on new things that I/we didn't really need.

Thrugelmir

Ngozi wrote: »

I'd like to contribute more but unfortunately, even if I only did 13% (other 4% from employer) I can't exactly afford to have over £200 a month going out of my pay, not right now at least

Helps to focus ones mind to personal money management if nothing else. We all have choices.

bostonerimus

Deleted_User wrote: »

Fair enough. If you can derive whatever it is by knowing your portfolio then all is cool. Really what matters is that you have plenty of $s but % growth you are quoting is not necessarily meaningful. Shares and bonds did well, on that we agree.

Aggressive saving and sensible asset allocation give you the best chance of success. I was/am a very aggressive saver and my circumstances meant that I was able to save over 50% of my salary for many years. If I was to include those contributions in my numbers it would produce a result that's meaningless for most people.

[Deleted User]

bostonerimus wrote: »

Aggressive saving and sensible asset allocation give you the best chance of success. I was/am a very aggressive saver and my circumstances meant that I was able to save over 50% of my salary for many years. If I was to include those contributions in my numbers it would produce a result that's meaningless for most people.

Don’t see how you can calculate your portfolio returns in a meaningful way without accounting for cash flows in and out. Never mind

bostonerimus

Deleted_User wrote: »

Don’t see how you can calculate your portfolio returns in a meaningful way without accounting for cash flows in and out. Never mind

For portfolio comparison I think CAGR is the cleanest way to look at things.

[Deleted User]

bostonerimus wrote: »

For portfolio comparison I think CAGR is the cleanest way to look at things.

No. CAGR is meaningless for a real investment portfolio. Only has any meaning for a one-off lump sum investment, in which case it is the same as XIRR.

[Deleted User]

CAGR can be calculated only when we have present value, future value and time duration of a single sum. It can’t be calculated for a stream of cash flows, revenues, etc

https://xplaind.com/894653/compound-annual-growth-rate

AnotherJoe

Ngozi wrote: »

This is just what AEGON automatically set everyones account up as, unless they were near retirement.

For the average person is very hard to know where to allocate your pot, work out the fees etc... so kind of have to place faith in someone who you'd hope knows better.
.

I think the problem is that most providers, especially when it's not on an individual basis, are always going to err on the side of caution, because there's two factors in play
Factor one is what growth the individuals will get.
Factor two is, Will the individual panic, sue, complain, leave, make irrational decisions , if there are large fluctuations especially downwards, at any time, even though over say 30 or more years this is is to be expected.
So this will lead to more cautious allocations than should be done for the long term because the "someone who knows better" doesn't want hassle from the investors.