Why is my pension pot still increasing?

Thrugelmir

Ballard said:

Thrugelmir said:

Combination of free money and increased debt levels.  As the US Treasury mails cheques to all and sundry whether they need the money or not. Why repay debt such as mortgages when interest rates are on the floor. When rising asset prices provide such an easy return.  Difficult to believe that there's a global recession outside of China. 

Sovereign debt has gone through the roof and will be with us for generations. Once we're through this crisis they'll need a plan to reduce this debt. The obvious place would be taxes.

Or allowing some inflation, not high as in the past. One only has to look at Japan for the past 30 years and the effect of an ageing demographic. The developed West faces the same challenges. 

Alexland

Ballard said:

Similarly, Gilts/US Treasury/other sovereign bonds will have become save havens and could well see a negative yield so any funds holding those would take a hit.

The conventional bonds you might hold in your pension had their interest set at the point they were issued so will always pay a positive coupon. If the prevailing long term view of interest rates is that they will stay low for a long time then people will start paying more to buy into those existing bonds causing the asset price to go up and the % yield to go down.

Ballard

Alexland said:

Ballard said:

Similarly, Gilts/US Treasury/other sovereign bonds will have become save havens and could well see a negative yield so any funds holding those would take a hit.

The conventional bonds you might hold in your pension had their interest set at the point they were issued so will always pay a positive coupon. If the prevailing long term view of interest rates is that they will stay low for a long time then people will start paying more to buy into those existing bonds causing the asset price to go up and the % yield to go down.

Yeah. In a previous role I settled bonds so they're one area where I have a decent understanding.