My pension pot is taking a big hit

Reg_Smeeton

I’ve just been updating my spreadsheets and was very pleasantly surprised to find I’ve made a very small time weighted return of 0.19% between Dec 2021-Dec 2022. 

My portfolio is nominally 80/20ish, all conventional equity and gilts. I have an allocation to value stocks which has done really well and outperformed everything else in the last 12 months, I also rebalanced frequently during the mini budget period hence buying more gilts when they were rock bottom and capturing some of the subsequent rebound.

Prism

garyelder said:

There will be more conflict around the world soon and further it will fall so far 54k from 540k
I need to get proper advice it seems 

That is a perfectly acceptable return, all things considered. Advice isn't going to improve on that.

SouthCoastBoy

Not sure a nominal 10% loss, real term loss around 20% is a "perfectly acceptable return". Personally I see around 5% growth per annum as an acceptable return, as long as inflation is around 2 to 3%, so perhaps my perfectly acceptable performance is long term average 3% above inflation.

saucer

SouthCoastBoy said:

Personally I see around 5% growth per annum as an acceptable return, as long as inflation is around 2 to 3%, so perhaps my perfectly acceptable performance is long term average 3% above inflation.

I think that would be ideal, if looking highly ambitious at the moment 

dunstonh

Advice heNot sure a nominal 10% loss, real term loss around 20% is a "perfectly acceptable return". 

It is........

Personally I see around 5% growth per annum as an acceptable return, as long as inflation is around 2 to 3%, so perhaps my perfectly acceptable performance is long term average 3% above inflation.

The problem is that your 5% p.a. is acceptable (and realistic) but it doesn't happen like that.     If you take a typical 5 year period, you will get a negative year, a nothing year and three positive years.  You never know the order they will come.  And like a house on a flood plain with a 1 in 25 year chance of flooding, it doesnt mean it will flood only once every 25 years.

So, a loss of 10-20% in 2022 is acceptable because it was always coming and expected.    It will be offset by the positive years and in the long run, you will get closer to the long term average.

You should never look at single years in isolation.    You need to take the rough with the smooth and average them out.

Audaxer

SouthCoastBoy said:

Not sure a nominal 10% loss, real term loss around 20% is a "perfectly acceptable return". Personally I see around 5% growth per annum as an acceptable return, as long as inflation is around 2 to 3%, so perhaps my perfectly acceptable performance is long term average 3% above inflation.

You could still get an acceptable average 5% return per annum over a 10 year period, which includes a few years showing losses of 10% or more.

dealyboy

I am no expert and I don't pretend to be.
The past is no predictor, the future? ... cannot see!

I am in a well respected global multi-asset fund, seven years to go
- I check performance once a quarter ... is it still well respected? what else would I do?
- I add to my pot when I can, when I have the money, wars, pandemics, climate ... crisis    what else should I do?
- my pot is going down, but it was going up, what else could I do?
Am I doing right? or am I doing wrong? then again who really is to know.

michaels

garyelder said:

My pension pot is still dropping the only winners are my financial advisor and who my pension pot is with You asset management 
I know many mates are in the same position all saying what do we do 

I can’t see no end to it 

I suggest you sell now then buy back once the market is clearly up and rising.

I am always like this, if I have the choice of buying something for £30 or for £50 then I will of course choose the latter.  Similarly when selling.  If something would sell for £50 I will hold on to it and only sell if the price falls to £30.

Albermarle

garyelder said:

There will be more conflict around the world soon and further it will fall so far 54k from 540k
I need to get proper advice it seems 

The comment in bold is almost guaranteed to be correct, as there has been conflict around the world since history started.
We are all focused on Ukraine and maybe US - China tension at the moment, but there are plenty of other conflict zones, always have been, and always will be.

Rattusnorvegicus

I buy stuff in my pot that has fallen in value by 60%. I dont really care about whether it returns anything over the next 5 years.  Just so long as it makes me my 250% return by going back to the previous high in a decade timeframe eventually. A (5% usually but halfprice so dividend doubled) 10% dividend along the way sweetens the deal for me.

What would make me giggle alot is if we're in a bear mini cycle until 2029 with 3 bears and 3 failed bulls, as we recover from MMT.

My plan is just to save cash, and buy opportunities hard every bear market, and sell the bulls.  Because right now the FTSE-100 shows a 4% compound future return , and the s&p 500 a 3.53% forward return. Which tells me both are overpriced until inflation drops under 5.5%, or theres more P/E deflation. So not sure where the wishful thinking about 5% comes from.

Of course people should do their own price discovery. People who look at their nominal return need to subract inflation, and look at the real return.

Theres still too much optimism in this thread for the future. Another year of negative real returns hopefully will make people gloomier, and give me hope for a clearly defined bottom. 2023 needs a nice 20% capitulation event, so i can fetch the wheelbarrow and load up.