Knowing what a good pension return is

Albermarle

Thanks - so maybe being risk factor 6

Also be careful when you see risk factors/ratings from different sources + funds themselves have their own ratings . Sometimes the scale is 1 to 5 or 1 to 7 or 1 to 10 .
I think 6 out of 10 or 4 out of 7 is typical for a UK investor .
As said due to your age you might want to go up the risk scale a bit, but as Son of said , you need strong nerves to be at the very high end .

Linton

I think you need to look at returns the other way around. What do you need them to be in order to meet your objective? Once you know this you can then look for the least risky way of getting that return. This strategy ensures that you always know where you are in in your plan and can make adjustments should you go off your chosen path.

If you aim for the highest possible return you will almost certainly fail. And you will be taking risks that you could have been better off not taking.

dilby

Thanks so much everyone for your responses. I've just received my report for the last year; it's branded as Aviva as I use their platform but was sent my the company I deal with who my IFA belongs to. It's a little annoying becuase I can't make any changes myself - for example add some extra/change my monthly direct debit without him coming to meet with us with a bunch of paperwork. Aviva tell me if I was direct with them then I could just do it online. This is one of the reasons I wanted to guage just how well my pot was doing; to work out if it was worth having this intermediatery company.

In regards to the questions asked about equities, there is an 'asset allocation' breakdown, and they're all equities (UK equities, Asia Pacific Equities etc) except for 'Money Market' and 'Other' which only add up to approx. 4% of my investment anyway.

If it helps, my 'top 5 holdings' are:

Alibaba Group HLDG LTD
Taiwan Semiconductor Co
AIA Group LTD
GLAXONSMITHKLINE
Royal Dutch Shell

Username999

Mine has made 13.6% return this year for example (thats the actual interest gain) which my IFA said was 'good' but I just didn't know what that 'good' was based on! I thought there might be some indexes out there that can be used as a guide.

How is the IFA paid?
Which company does he/she work for?

SonOf

It's a little annoying becuase I can't make any changes myself - for example add some extra/change my monthly direct debit without him coming to meet with us with a bunch of paperwork.

Aviva requires no paperwork for amending the contribution levels. Either on the Aviva platform or the legacy Aviva Life & pensions products. From an adviser point of view, no paperwork is needed either. However, they may tie in their servicing requirements (which includes updating information about you) with the top-up. Although that wouldn't need any forms either. It would just be a bunch of update questions that they record the answers to. Indeed, experienced IFAs may well do this within conversation without you even realising that they are finding things out about you.

So, what forms have you filled in previously when you wanted to change the amount?

Normally for something like this, an email to the IFA asking them to amend the amount would suffice.

How is the IFA paid?

In post #1 the OP said it was started 3 years ago. So, the only way an IFA can be paid is by the client.

gm0

It is hard to emotionally fully accept the positive aspect of volatility in saving/accumulation.

Hence all the chatter on behavioural risk. A couple of market corrections i.e. big zig zags on an overall upward trend while you continue to save every month through the dips is *very* *very* good for you. It doesn't feel like it at all when the annual report (or a website login) shows a 50% fall from a previous peak and you convert value "now" into future retirement income. Human nature around loss aversion means that most people react that way - worried + sad - have I made a mistake?

But roll forward another ten years and those cheap units were a truly excellent buy and the old ones bought earlier higher with the (notional) loss have sprung back up. Happy days.

Age 25-55ish you don't want a straight line smooth return, low risk, low volatility and you don't much care what order the return comes in. As many equities as you can tolerate - there are good arguments in the range 60-100. I find it hard to see why a youngster would hold a lot less. I'm glad I saved at 100% (although I was insufficiently educated and UK only FTSEAllShare for a very long time. Have partially fixed that since.

Later 55-75 in deaccumulation it is a different story - you *really* don't want to sell units stupidly cheap so that big volatility swing requires planning to avoid it. How much you derisk and in what way is a whole different conversation.

I was saving from late 80s - 2010ish and saw several crashes and recessions like this and felt bad about it at the time but fortunately convinced myself to "do nothing" i.e. a) hold nerve and remain 100% equities as a long way from retirement b) keep saving

Now the past may not resemble the future a dip and a stagnant market is possible. Look at Japan. But viewed as unlikely to happen globally all at once.

sausage_time

How do I calculate the underlying growth rate of my pension? I know how much I pay in each month (variable, depends on various factors), and I know the total value each month. And I have this data going back for years in a spreadsheet. But I can't for the life of me figure out how to calculate how the fund is doing! Any Excel gurus out there?

AnotherJoe

Albermarle wrote: »

Also be careful when you see risk factors/ratings from different sources + funds themselves have their own ratings . Sometimes the scale is 1 to 5 or 1 to 7 or 1 to 10 .
I think 6 out of 10 or 4 out of 7 is typical for a UK investor .
As said due to your age you might want to go up the risk scale a bit, but as Son of said , you need strong nerves to be at the very high end .

My thought exactly. The IFA I spoke to a few years back did risk on a scale of 1-7.

Prism

sausage_time wrote: »

How do I calculate the underlying growth rate of my pension? I know how much I pay in each month (variable, depends on various factors), and I know the total value each month. And I have this data going back for years in a spreadsheet. But I can't for the life of me figure out how to calculate how the fund is doing! Any Excel gurus out there?

Use the XIRR function in excel - there are youtube vides that can give examples

jamesperrett

dilby wrote: »

In regards to the questions asked about equities, there is an 'asset allocation' breakdown, and they're all equities (UK equities, Asia Pacific Equities etc) except for 'Money Market' and 'Other' which only add up to approx. 4% of my investment anyway.

If it helps, my 'top 5 holdings' are:

Alibaba Group HLDG LTD
Taiwan Semiconductor Co
AIA Group LTD
GLAXONSMITHKLINE
Royal Dutch Shell

Is there anything on the report that looks like a fund name (or names)? I'd be surprised if you have your own custom portfolio of individual shares so I'd guess that your money is actually invested in one or more funds. If you can extract these fund names from the report you can easily create your own portfolio on Trustnet to see how they are doing in relation to various benchmarks or alternative funds.