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Value of pension is freaking me out

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  • Marcon
    Marcon Posts: 14,390 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Combo Breaker
    Obviously pensions took a hammering at the beginning of Covid but my main pension pot feels like it's taken a massive hammering between December and January (lost 6%).  Pre Covid there were swings and roundabouts but the trajectory was generally upward (and I'm paying in over £1k a month so that alone should ensure that).   Is this a general pension thing or should I look at moving?
    Moving to what? 6% is a fluctuation, nothing more.
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • Audaxer
    Audaxer Posts: 3,547 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    I think the OP must have a fairly high risk growth portfolio even for 100% equities, as VLS100 is only 1.6% down this year.
  • dunstonh
    dunstonh Posts: 119,641 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Audaxer said:
    I think the OP must have a fairly high risk growth portfolio even for 100% equities, as VLS100 is only 1.6% down this year.
    If you take the peak back in November (around the 5th Nov) then you could be down 6% but that is picking peak to trough.  

    If you take 1st Dec to date then you could also be down 6% but I could only get that with 100% equities and a high proportion of tech or 100% in Index Linked gilts

    Everything else was pretty much slightly down or neutral except UK equity which has had a good 6 weeks.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • I totally understand how you feel - my pot has gone down by about 5% in the last few weeks. If you can, I would suggest investing more while the market is down as you will then benefit from lower prices. This also has the psychological impact of lessening the feeling that the value is going down. It's unlikely this is the start of a bear market, but if it is, then you could see this for several years. If you're invested in good quality, profitable, ideally growing companies that are not in a bubble, then you have nothing to worry about. If you don't have a significant percentage in assets that are less correlated to equities like bonds, commodities or property, then that might be something to consider in the future to soften the blow.
  • If you're invested in good quality, profitable, ideally growing companies that are not in a bubble, then you have nothing to worry about. 
    Do you have any examples, as most of the "quality" shares tend to be on lumpy valuations at present?
  • As others have said, move to what? 

    Move to bonds, and potentially get less short term volatility, but less long term return, indeed very possibly negative real returns. 

    Depends where you are on your pensions 'journey' too. If you are still a number of years away from retirement (more than 10 years say, maybe even more than 5) and especially if you are still saving into it, embrace it. You are buying real assets more cheaply than before. 

    If 6% fall in a month or so is such a cause for concern, you need to either change the investment strategy (and accept other consequences of that), or do some homework. 
  • NannaH
    NannaH Posts: 570 Forumite
    500 Posts First Anniversary Name Dropper
    Our smallest pension pot,  created in September with a £40k lump sum and intended to be used in 5 years time to fund an early retirement gap of approx 5 years @ £11k a year , consists of BG Global Alpha growth (30% of portfolio)  - down 6.65% and 
    BG balanced managed (70% of portfolio) down 7.8%.    So the ‘safer’ , balanced 60/40 fund has lost more than the 90% equity fund 🙄
    It’s hard not to be a bit gutted to see the drop, as the original fund sold before transfer was Blackrock volatility 4 and it gained +3.5% in the last 3 months of 2021.   
    We’ll see what this year brings.  

  • sevenhills
    sevenhills Posts: 5,938 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Were the pension fees taken out in January?
  • dunstonh
    dunstonh Posts: 119,641 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    BG balanced managed (70% of portfolio) down 7.8%.    So the ‘safer’ , balanced 60/40 fund has lost more than the 90% equity fund 🙄
    BG funds are recognised as some of the highest risk funds in their sector.  This is the problem with referring to funds as a 60/40 fund as the 60% content with one fund can be very different to the 60% content with another.

    If you include a BG fund in your portfolio then you should expect that fund to be of higher volatility.  

    It’s hard not to be a bit gutted to see the drop, as the original fund sold before transfer was Blackrock volatility 4 and it gained +3.5% in the last 3 months of 2021.   
    Blackrock V4 is volatility targetted and the lower risk means it won't be as heavy in the high volatility areas as it would make it harder to stay within their volatility range.

    So, with those two, you would expect BG to grow more over the long term but have short term periods of underperformance.  Those short term periods could be 1 month, 3 months or really anything up to around 3 years and in extreme cases (a handful of times a century) longer still.







    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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