Advice for pension funds with looming stock market crash

zagfles

Thrugelmir said:

Deleted_User said:

Trumpeting ones 1-2 year returns as evidence for a winning method = financial !!!!!!.  Its a meaningless period of time.  

For comparison, Buffett has had a more modest annualized return of a mere 20% but over a meaningful period of time.  Thats why he has quite a few billions to his name. He also took a lot of risk, of course. 

Ruffled a few feathers it seems. No trumpets on my part. Was merely attempting to give some context in a friendly discussion. If you bothered to follow the links you'll see that I've comfortably outperformed a passive global index tracker over the past 5 years. Despite holding none of the FANGS or the SP500 in any form. There's more than one way to skin a cat. 

As far as comprisons go.  Unfortunately I had to do a full time job for many years to earn a living. Unlike Warren I didn't have resources of an entire business empire nor the financial backing of an insurance company to acquire a 10% stake in a company such as Coca Cola. As it wasn't his money. He risked nothing personally. 

What Buffet and I share in common is being a disciple of Benjamin Graham and the theories behind value investing. 

Just the age old active vs passive argument. Even 5 year performance doesn't really predict future performance, plenty of examples of active fund managers who've way outperfomed over 5 or more years who then underperform. 

BTW there seems to be a contradiction in what you wrote above 27.7% gain in 2021 cal year and in the linked thread "Don't Let Your Granny Loose at the Dogs Portfolio..At 31-12-2021... Up 19% over the past calender year".

The S&P 500 was up 26.9% in 2021 cal year, HSBC FTSE All world index up 20.1%. So it would appear your published portfolio lagged an index tracker

lamont77

I really appreciate all the posts here, thanks for all your time and insight. I really dont have much of a clue here at all. I try to pick up what I can from chats with my dad and trawling forums like this. My dad actually suggested that I spread my investments out a bit in an attempt to weather any dip or crash as I told him my chosen funds were medium to high risk. I suppose he's just trying to look out for me.

Could I ask what funds people would recommend I use to diversify? Or do the funds im invested in do a decent enough job of that? 

This all being said, there is a serious amount of knowledge on display here and i'd love to learn more. If anyone could recommend some reading or online videos or podcasts to help with some learning in this area, that'd be much appreciated too.

QrizB

lamont77 said:

I really appreciate all the posts here, thanks for all your time and insight. I really dont have much of a clue here at all. I try to pick up what I can from chats with my dad and trawling forums like this.

I'm glad you're still here; I was afraid we might have put you off!

I don't know much about your funds and I wouldn't like to comment on them. There are, however, people here who live and breathe this stuff and hopefully one or more of them will pipe up with their thoughts.

GazzaBloom

Thrugelmir said:

Deleted_User said:

Trumpeting ones 1-2 year returns as evidence for a winning method = financial !!!!!!.  Its a meaningless period of time.  

For comparison, Buffett has had a more modest annualized return of a mere 20% but over a meaningful period of time.  Thats why he has quite a few billions to his name. He also took a lot of risk, of course. 

Ruffled a few feathers it seems. No trumpets on my part. Was merely attempting to give some context in a friendly discussion. If you bothered to follow the links you'll see that I've comfortably outperformed a passive global index tracker over the past 5 years. Despite holding none of the FANGS or the SP500 in any form. There's more than one way to skin a cat. 

As far as comprisons go.  Unfortunately I had to do a full time job for many years to earn a living. Unlike Warren I didn't have resources of an entire business empire nor the financial backing of an insurance company to acquire a 10% stake in a company such as Coca Cola. As it wasn't his money. He risked nothing personally. 

What Buffet and I share in common is being a disciple of Benjamin Graham and the theories behind value investing. 

That sounds very sensible and impressive. But for those who do not have the benefit of having worked in financial services, who work in a day job, with a family and don't have the time or skills to assess company fundamentals but have a pension that needs to be invested in something, what would you recommend?

Warren Buffet recommends simply investing in Vanguard's S&P500 for the majority of such people, avoiding having to sell when prices are down. As I'm sure you know he wrote about in in the Berkshire Hathaway annual report in 2013 and tells the story of how $10,000 invested in 1941 would have turned into $51,000,000.

Mind you, $10,000 in 1941 would have been the equivalent of around $200,000 in today's money and the bulk of the growth would have been at the back end, long after you were dead unless you happened to have $200K at 11 years old in 1941.

[Deleted User]

If one had a method to secure 30% returns over a meaningful period of time he wouldn't have had to require a business empire to start his path to unimaginable wealth.  Anyone  familiar with compounding knows that. 

Fifty years is a fairly typical period of time one stays invested before croaking.  Could be longer.  That's why a few years would show as meaningless blips on any chart that reflects duration in the context of pension investment.

Let's assume Mr Buffett-beater starts with 1000 GBP at the tender age of 25, adds a mere 1000 GBP annually and secures 30% annual return.  At 75 this Buffett-beating investor  will have secured 2,157,689,966 pounds and a few pennies.  Of course it would be way more than that; with a method like this, one would borrow and invest rather then limit himself to meagre 1000 GBP annual contributions. By leveraging he would earn his first billion in no time at all.  

We would know the name of this wise individual.  Nor would he have to sweat in the finance industry.  Nor would anyone be working in the finance industry who had access to tricks like that.  They would all be too busy investing for themselves and trying to figure out which country to buy their kids for their tenth birthday. Perhaps that's the kind of person we are talking to.  Or it could be someone who likes to brag and/or does not know how to calculate returns properly.  Difficult one... 

Back in the real world 30, 60 and 100% returns are entirely possible over short periods of time in the years like 2020 and 2021.  In fact a bunch of people from wallstreetbets did a heck of a lot better. But if that's the kind of investor you are, the down years will be epic.  

[Deleted User]

lamont77 said:

I really appreciate all the posts here, thanks for all your time and insight. I really dont have much of a clue here at all. I try to pick up what I can from chats with my dad and trawling forums like this. My dad actually suggested that I spread my investments out a bit in an attempt to weather any dip or crash as I told him my chosen funds were medium to high risk. I suppose he's just trying to look out for me.

Could I ask what funds people would recommend I use to diversify? Or do the funds im invested in do a decent enough job of that? 

This all being said, there is a serious amount of knowledge on display here and i'd love to learn more. If anyone could recommend some reading or online videos or podcasts to help with some learning in this area, that'd be much appreciated too.

The funds themselves look good to me.  There is overlap and some confusion between them.  Not a huge problem but simple is beautiful.   Without looking in detail, I think you have around 15% in fixed income and 85% in equities.  Is that what you want?  That is the first and the main decision you need to make. The rest is detail. 

For equities, I would go with just 2 funds: 

- 80% in SL BlackRock ACS World ex UK Equity Tracker Pn Fd - 20% in FTSE All-share.

jim8888

lamont77 said:

I really appreciate all the posts here, thanks for all your time and insight. I really dont have much of a clue here at all. I try to pick up what I can from chats with my dad and trawling forums like this. My dad actually suggested that I spread my investments out a bit in an attempt to weather any dip or crash as I told him my chosen funds were medium to high risk. I suppose he's just trying to look out for me.

Could I ask what funds people would recommend I use to diversify? Or do the funds im invested in do a decent enough job of that? 

This all being said, there is a serious amount of knowledge on display here and i'd love to learn more. If anyone could recommend some reading or online videos or podcasts to help with some learning in this area, that'd be much appreciated too.

I don't think you should rush to change things quickly. I've been investing for thirty years (mostly in trackers) and am still learning. It can be fun deciding how to manage your "asset allocation" and the relief of making a decision can be quite liberating. Try not to tinker too much and only buy individual shares if you can afford to lose just about all that you've invested in them (I speak from bitter experience here!)
I enjoy listening to the Moneyweek podcast, the Monevator website is a fantastic resource and I enjoyed the audiobook of J L Collins The Simple Path to Wealth (although it is very US biased). Over the years I also took quite a bit of inspiration from the FIRE movement, with Jacob Fisker's book "Early Retirement Extreme" and Mr Money Moustache's blog being key figures here. There are also some really good podcasts by The Mad Fientist in this area. 

https://www.madfientist.com/podcast/

Good luck, and keep learning!

coastline

lamont77 said:

I really appreciate all the posts here, thanks for all your time and insight. I really dont have much of a clue here at all. I try to pick up what I can from chats with my dad and trawling forums like this. My dad actually suggested that I spread my investments out a bit in an attempt to weather any dip or crash as I told him my chosen funds were medium to high risk. I suppose he's just trying to look out for me.

Could I ask what funds people would recommend I use to diversify? Or do the funds im invested in do a decent enough job of that? 

This all being said, there is a serious amount of knowledge on display here and i'd love to learn more. If anyone could recommend some reading or online videos or podcasts to help with some learning in this area, that'd be much appreciated too.

This is a decent read for basics and I'm still learning after decades.

Start here - Occam Investing

Home (occaminvesting.co.uk)

Videos

PensionCraft - YouTube

Blog (pensioncraft.com)

kinger101

Deleted_User said:

lamont77 said:

I really appreciate all the posts here, thanks for all your time and insight. I really dont have much of a clue here at all. I try to pick up what I can from chats with my dad and trawling forums like this. My dad actually suggested that I spread my investments out a bit in an attempt to weather any dip or crash as I told him my chosen funds were medium to high risk. I suppose he's just trying to look out for me.

Could I ask what funds people would recommend I use to diversify? Or do the funds im invested in do a decent enough job of that? 

This all being said, there is a serious amount of knowledge on display here and i'd love to learn more. If anyone could recommend some reading or online videos or podcasts to help with some learning in this area, that'd be much appreciated too.

The funds themselves look good to me.  There is overlap and some confusion between them.  Not a huge problem but simple is beautiful.   Without looking in detail, I think you have around 15% in fixed income and 85% in equities.  Is that what you want?  That is the first and the main decision you need to make. The rest is detail. 

For equities, I would go with just 2 funds: 

- 80% in SL BlackRock ACS World ex UK Equity Tracker Pn Fd - 20% in FTSE All-share.

If one wanted simplicity, I'd say VLS80 instead.  Or maybe one of the targeted retirement funds.

[Deleted User]

kinger101 said:

Deleted_User said:

lamont77 said:

I really appreciate all the posts here, thanks for all your time and insight. I really dont have much of a clue here at all. I try to pick up what I can from chats with my dad and trawling forums like this. My dad actually suggested that I spread my investments out a bit in an attempt to weather any dip or crash as I told him my chosen funds were medium to high risk. I suppose he's just trying to look out for me.

Could I ask what funds people would recommend I use to diversify? Or do the funds im invested in do a decent enough job of that? 

This all being said, there is a serious amount of knowledge on display here and i'd love to learn more. If anyone could recommend some reading or online videos or podcasts to help with some learning in this area, that'd be much appreciated too.

The funds themselves look good to me.  There is overlap and some confusion between them.  Not a huge problem but simple is beautiful.   Without looking in detail, I think you have around 15% in fixed income and 85% in equities.  Is that what you want?  That is the first and the main decision you need to make. The rest is detail. 

For equities, I would go with just 2 funds: 

- 80% in SL BlackRock ACS World ex UK Equity Tracker Pn Fd - 20% in FTSE All-share.

If one wanted simplicity, I'd say VLS80 instead.  Or maybe one of the targeted retirement funds.

Thats true but everything he has is via Standard Life. I assume its because its a pension scheme and the selection is somewhat limited.  

Targeted retirement is a great concept but most people prefer a little bit more control rather than automatically moving most investments into FI by a certain date