Pension pot loss

Callum_J

Hello  everyone.

I wonder could I have some thoughts and advice?
I have a private pension plan with Scottish Widows. Last September it was worth £77,791; but to my horror, last Friday, I was informed that it had dropped to £73,000.
My financial advisor informs me this is normal, and to be expected after Russia’s invasion of Ukraine, and the subsequent effect on the Stock Market. Is he correct? I got a bit of a shock after my pension plan increasing steadily over the last few years.

My funds are invested in Vanguard (I think Life Strategy) 20% and 40%, since last year. Before that it was Scottish Widows own funds.

I am 60, and probably can’t retire for another 5 or 6 years.

Thanks Callum.

cfw1994

Funds going down less than 10% in the volatile period we've seen this year is nothing I would be concerned with. 
If you are in Vanguard LS20 or 40, do you need the added expense of an advisor?  What did they cost you?

Callum_J

It cost me nothing, he gives me free advice now and then.

dunstonh

I have a private pension plan with Scottish Widows. Last September it was worth £77,791; but to my horror, last Friday, I was informed that it had dropped to £73,000.

Why horror?  Its only a small drop.

My financial advisor informs me this is normal, and to be expected after Russia’s invasion of Ukraine, and the subsequent effect on the Stock Market. Is he correct?

Yes.    

 I got a bit of a shock after my pension plan increasing steadily over the last few years.

How did you feel when it lost more in 2020?  or 2018?  Or 2015/16 or 2008/9 or 2000-2002?

cfw1994

Callum_J said:

It cost me nothing, he gives me free advice now and then.

Ahhh…free guidance then: like you can get here…..but not technically advice 😉
Per dunstonh above: how have you felt over other dips in recent years?

Marcon

Callum_J said:

Hello  everyone.

I wonder could I have some thoughts and advice?
I have a private pension plan with Scottish Widows. Last September it was worth £77,791; but to my horror, last Friday, I was informed that it had dropped to £73,000.
My financial advisor informs me this is normal, and to be expected after Russia’s invasion of Ukraine, and the subsequent effect on the Stock Market. Is he correct? I got a bit of a shock after my pension plan increasing steadily over the last few years.

My funds are invested in Vanguard (I think Life Strategy) 20% and 40%, since last year. Before that it was Scottish Widows own funds.

I am 60, and probably can’t retire for another 5 or 6 years.

Thanks Callum.

Possibly one of the reasons the value has 'increased steadily' is that you/your employer were making contributions to it and that's no longer the case?

Otherwise what, as Dunstonh said, happened on all the previous occasions when stock markets moved sharply against you?

Johnnyy_Boy

I remember at the start of the pandemic seeing a loss of 30k in less than a week. I read advice on here saying just stick with it and do nothing and it all came back within a month or so. 

older_and_no_wiser

Yes this is normal. It's quite a small reduction in your portfolio value. It's not a loss until you cash it in. The drop may well continue but don't panic and sit tight. If you don't need access to the money now then ride it out. Things always pick up, but we don't know how long it will take. 

Once you start needing access to your pension then you need to plan a withdrawal strategy to avoid future downturns if possible. This usually involves cashing some in (flexible drawdown) when markets are good and keeping 2-3 years in cash so you don't need to sell at a loss when the next dip/crash happens. 

Callum_J

That’s reassuring to know it’s normal in the current climate. I’m afraid I wasn’t paying attention in previous years…that was silly, I know. Hopefully things will recover in time, but it’s an uncertain world just now. My adviser tells me the Vanguard funds are good, is that the general feeling of those with a lot more experience than me?

Bimbly

Callum_J said:

I’m afraid I wasn’t paying attention in previous years…that was silly, I know. 

Not necessarily silly. If you correctly invested (which you seem to be), just checking in once a year is fine. That way, you don't get spooked by all the ups and downs.

dunstonh

 I’m afraid I wasn’t paying attention in previous years…that was silly, I know. 

On the other hand, it prevented you from making a bad decision during those loss periods.

Hopefully things will recover in time, but it’s an uncertain world just now.

How is now any different to the majority of modern history?