DC Pension - Am I Investing Correctly @ 24

MrJamez

Hello,

I have touched upon this in other threads but just wanted further clarification.

I am in a DC pension and my current contribution is 6% with my employer matching that 6% at 24 years old.

My pension provider is with Aviva and I am currently investing 100% of my pension in their ‘Global Equity FP’ fund.

The scheme has a risk rating of 5/7 with 75% of my investment in international equity and 15% in international bonds.

Is this the correct way to be investing my money? Thanks in advance.

dunstonh

Is this the correct way to be investing my money? 

It is not an incorrect way.   However, there are many correct ways to invest your money.   Some may say that at 24  you should be 100% equities.  However, your behaviour and knowledge about investing could make that a bad idea. Can you handle 50% losses periodically?  If you can, then maybe 100% equities is better at this stage.   If you cant handle that scale of loss, then the use of fixed interest securities is there to reduce the scale of losses (and also reduce the likely long term return).

tacpot12

I would be one to say that at 24 you should be investing in 100% equities. dunstonh is right that you need to understand that equities are volatile, but it has always been thus and the sooner you learn to accept this, the sooner you can start to benefit from the historic outperformance of equities over other assets. I would look for a similar Global Equity fund but one that it closer to 100% in equities. Check the charges carefully though. You don't want to be paying any more than you are currently paying in charges, and while you are looking you might look to see if there is a fund with lower charges. 

Anonymous101

The best approach is one you can stick to.
I'd agree that 100% equities may be the best asset allocation for someone your age if you're fearful and view a fall in equity prices as a loss (which may put you off future contributions) rather than a buying opportunity then you may be best opting for an allocation with more bonds in it. 
How you view risk is the key factor in how you should invest.

AnotherJoe

Another vote for 100% equities. If falls psych you out 15% won't do much to prevent them, if they don't, pointless to have,  they will just as a boat anchor on your pension. 

MrJamez

Thanks for your replies, much appreciated!

NedS

Go big or go home, as they say.

Agree with others, at your age you may as well be 100% equities. Just make sure you are well diversified in a cheap global fund/tracker. Feel free to add some satellite funds around the periphery. If I had my time again and was 24, I'd go 80-90% into a cheap global equity tracker, and 10-20% into a couple of actively managed smaller companies funds/ITs. Expect volatility, but view it as an opportunity to buy more shares/units whilst they are cheap when the prices drop. When prices do drop, during the latest crisis of the day, consider increasing your contributions if you can. It's a win-win.