Royal London Pensions - starting out

strawb_shortcake

Firstly this is a "proud Mummy moment" 
My 17 year old Daughter has signed up to a work place pension, she only works part time while studying and likely to continue in her job whilst at Uni so contributions are minimal. 

I'm not really well enough today to go through and help her with ensuring she's invested wisely but hoping someone could provide some tips on how I can help her continue to make the best choices. 

She's very good at saving and currently saving towards a trip to Indonesia next year and Uni but she should be able to make some extra contributions to her pension as time goes on. 

Also is there a calculator I could show her that that would  allow her to see illustrations of what a pension will look like in future? 

I'm sure this is a very basic question but I have a DB pension so rather uninformed on DC pensions

NedS

annabanana82 said:

Firstly this is a "proud Mummy moment" 

Rightly so

annabanana82 said:

I'm not really well enough today to go through and help her with ensuring she's invested wisely but hoping someone could provide some tips on how I can help her continue to make the best choices. 

At her age, she should be investing her pension assets in higher risk investments (higher risks give higher rewards and she has at least 40-50 years to invest), as she currently has the maximum investment horizon, having just started out. A well diversified global equity tracker/fund would be ideal and about as simple as it gets. She can revisit that decision again in about 30 years, but in the meantime can just keep ploughing in money each month and forget about it. At least that is the advice I would give to my children.

[Deleted User]

She should read a couple of books on the subject. This is good to start with: https://www.amazon.co.uk/DIY-Pensions-Simple-Retirement-Planning/dp/1520782683

A quick read, very simple.

Personally, not a fan of calculators.  As modellers say, “s-t in, s-t out”. Future returns are unknown, so a calculator can predict absolutely anything and it will be equally baseless.  In general, returns are “a random walk” (unpredictable) with an upward trend. 

Royal London offers a bunch of convoluted portfolios which are quite expensive by modern standards  and sometimes contain illiquid assets. 

The best thing for a young person is to
1. Invest whatever they can afford
2. set up a low cost SIPP 
3. Buy a simple, low cost all-equity, internationally diversified mutual fund or ETF. 

Albermarle

Deleted_User said:

She should read a couple of books on the subject. This is good to start with: https://www.amazon.co.uk/DIY-Pensions-Simple-Retirement-Planning/dp/1520782683

A quick read, very simple.

Personally, not a fan of calculators.  As modellers say, “s-t in, s-t out”. Future returns are unknown, so a calculator can predict absolutely anything and it will be equally baseless.  In general, returns are “a random walk” (unpredictable) with an upward trend. 

Royal London offers a bunch of convoluted portfolios which are quite expensive by modern standards  and sometimes contain illiquid assets. 

The best thing for a young person is to
1. Invest whatever they can afford
2. set up a low cost SIPP 
3. Buy a simple, low cost all-equity, internationally diversified mutual fund or ETF. 

Presumably it is a workplace pension, so she can not just move out, or she will not get the employer contribution.

QrizB

Congratulations OP!

Albermarle said:

Presumably it is a workplace pension, so she can not just move out, or she will not get the employer contribution.

Equally presumably, she isn't expecting to stay with this employer for the next 40+ years so she can put up with the fees for now and transfer out when she leaves?

[Deleted User]

Albermarle said:

Deleted_User said:

She should read a couple of books on the subject. This is good to start with: https://www.amazon.co.uk/DIY-Pensions-Simple-Retirement-Planning/dp/1520782683

A quick read, very simple.

Personally, not a fan of calculators.  As modellers say, “s-t in, s-t out”. Future returns are unknown, so a calculator can predict absolutely anything and it will be equally baseless.  In general, returns are “a random walk” (unpredictable) with an upward trend. 

Royal London offers a bunch of convoluted portfolios which are quite expensive by modern standards  and sometimes contain illiquid assets. 

The best thing for a young person is to
1. Invest whatever they can afford
2. set up a low cost SIPP 
3. Buy a simple, low cost all-equity, internationally diversified mutual fund or ETF. 

Presumably it is a workplace pension, so she can not just move out, or she will not get the employer contribution.

Good point… Perhaps the OP can clarify.