My pension pot is taking a big hit

dunstonh

garyelder said:

I probably panic a bit 

I should not look to often I think that’s my problem 

What is the loss potential of your investments? (ballpark figure)

You should know this because you are going to see it multiple times over retirement.     Its not a case of "if" but "when".  So, if your portfolio would suffer around a 20% loss in a major crash then you know its going to happen at some point.  As you know its going to happen, it shouldn't worry you when it does (or if a smaller one occurs).

If you cannot handle a 20% loss (or cannot afford to) then you are invested above your risk profile.

We are only a couple of months into this loss cycle.    How would you feel if you had three years in a row of losses? (as happened just over 20 years ago).     Understanding and predicting your behaviour in events that will happen in the future is key to setting your risk profile.   And convert that percentage loss into monetary terms as that is how you will see it.  e..g 20% loss on £540k is £108,000.   Can you handle your value dropping £108,000?

Grumpy_chap

garyelder said:

Should I be concerned about my pension pot dropping from 540k to 520k in the last 2 weeks
I don’t plan to take any money for the next 3/4 years
my financial advisor will probably say don’t worry 
he was expecting it to grow 50k by June this year 

That's a small percentage drop in the January period - my fund is half that and lost the same amount.  There are always drops and recoveries.

What is your risk profile?

If you are aiming to start drawing in the next few years, maybe start converting to a lower risk profile.

Political events worldwide can have an impact on the rises and falls.

Brenster

garyelder said:

Should I be concerned about my pension pot dropping from 540k to 520k in the last 2 weeks
I don’t plan to take any money for the next 3/4 years
my financial advisor will probably say don’t worry 
he was expecting it to grow 50k by June this year 

I had the same concerns, smaller pot but similar percentage drop, i had a discussion with my F.A. and his reasoning was the uncertainty of the markets due to the current issues with Russia / Ukraine......

dunstonh

Brenster said:

garyelder said:

Should I be concerned about my pension pot dropping from 540k to 520k in the last 2 weeks
I don’t plan to take any money for the next 3/4 years
my financial advisor will probably say don’t worry 
he was expecting it to grow 50k by June this year 

I had the same concerns, smaller pot but similar percentage drop, i had a discussion with my F.A. and his reasoning was the uncertainty of the markets due to the current issues with Russia / Ukraine......

In reality, it is a combination of things rather than one thing.    Russia certainly doesn't help but there is increasing concern that US equities are in a bubble (mainly tech).  There is also interest rates and inflation concern and a bunch of other things.   When concerns start to build upon each other, then fear tends to increase.   With fear, comes increased selling.   As fears go away, buying returns.   

Stubod

..how will you feel if / when it drops by 20% or more....??..thats just the nature of investing..

dunstonh

Stubod said:

..how will you feel if / when it drops by 20% or more....??..thats just the nature of investing..

Not if the person has a behavioural tolerance and/or capacity for less tolerance that requires less than that.

A lot of people who have invested all their life have never seen a 20% drop as they do not use high volumes of high-risk assets.  Others have seen 40%+.       

Being at the right level is important but many people are not.  Anybody that says they lost money on the stockmarket and says they will never invest there again is someone who invested outside of their risk level.

Brricktop69

I like to think of this as an oppportunity to buy units at a lower price ready for the bounce back

Elmer_BeFuddled

So now, or very shortly would be a good time to add some more funds to my Nutmeg package (not huge, £3k by me so far, 5/10 on risk, 23 months left 'til SP retirement.)?

MarkCarnage

4% is not a big hit as others have said. It's a blip. 40% is a big hit.

Secondly, although it's difficult to know the context as you are quoting what someone else is supposed to have said, but the expectation of it growing by c10% by June looks optimistic to say the least, although after the recent blip it's possible but unlikely. However, you don't say when he told you this. If he told you in June 2020 that he expected it to grow by 10% by June 2022, that's more ball park, but even then, markets and funds don't move in straight lines....

Thrugelmir

Elmer_BeFuddled said:

So now, or very shortly would be a good time to add some more funds to my Nutmeg package (not huge, £3k by me so far, 5/10 on risk, 23 months left 'til SP retirement.)?

Markets move in milliseconds. The real world in days, weeks and months.