Realistic pension gains?

B0bbyEwing

Audaxer said:

I know that my portfolio was down 5.7% this year to the end of August and compared to what many other posters on here have said, that seems to be better than many portfolios. As another example, globally diversified multi assets funds like the Vanguard Life Strategy funds and the HSBC Global Strategy funds are all down this year to different extents depending on the risk level.

If your pension is up 1.45% this year, not including this year's total contributions and not including the tax relief added, then the investments in your pension have performed very well.

Hmm. I wonder if i've worked it out properly then. Probably not, I have a habit of missing something important - because that's exactly where my money is. 

So to give proper numbers, 

Oh damnit, I've just realised what I've done. Told you about my habit.

When I gave you that number earlier, I'd started with my entry for January. Thing is, my entry for January (29.9k) was taken as all month entries - on the final day of the month, so technically February in a way.
I really should've taken the end of December as the start of this year, which makes a fair difference - (31.2k). 

31.2k start of year - 31.9k end of Aug. £700 increase.
£200pm, 8 months, £1,600.
Take that off as a natural bump & it puts me at negative £900.

That probably makes more sense to you now. lol.

*facepalm*

billy2shots - I don't mind talking my banking figures but don't really want to start locating myself on a public forum that I know of others frequenting.
Talking about houses and wages - so I've already told you my annual wage. We bought our house at the 160k mark about 9 or so years ago. 3 bed semi. Houses in the area now selling around 220k. Not that it matters to me as I'm not selling.

I'd never live in the south anyway. Too busy, too many people, too much traffic, horrible roads, too expensive.

MallyGirl

Albermarle said:

So these people have an interest - I gather that, but you can still have interest yet no knowledge. How do they get their knowledge?In all honesty I think it's very likely going to be something I wouldn't be able to take on. I'd put a few quid on it being many long articles that would probably serve me best when I can't sleep at night - articles leaving me feel like my head's just been turned inside out so probably a step too far for me. Set it & forget it is probably the best thing for me

You can learn a lot just by reading this forum regularly !

There are lots of suggestions for reading material- starting with the basics from the likes of the John Edwards books which cover pensions, investments etc. Then there are chunkier books like the Tim Hale one but if that sort of book doesn't float your boat then there's the internet, there are some very good blogs with articles full of links. If something interests you then you can go on a journey following links and doing specific searches in bite size chunks. Don't try to do it all at once. 

bluenose1

I also think you are doing well on the savings front. When you do decide your budget requirements in retirement it may be worth looking at guiide.co.uk. To work my budget out  I have added up all our known "needs"  expenditure over a year and have then  added in our non essentials "wants" . I love my spreadsheets but I like guiide as a check of my calculations. 
If you enter how much you want in retirement and how much you are saving it will work out your potential income in retirement and the best way to minimise tax. I have messed about with it to take less/retire early and vice versa.  When you factor in you don't pay NI when you have retired you may need less than you think. 

Albermarle

When I gave you that number earlier, I'd started with my entry for January. Thing is, my entry for January (29.9k) was taken as all month entries - on the final day of the month, so technically February in a way.
I really should've taken the end of December as the start of this year, which makes a fair difference - (31.2k). 

MIght make you feel better if I say that confusion over time periods is a very common mistake made by many posters.

Often they will say something like ' my investments are down 20% this year, but my mates are up 10%' On further enquiry it turns out something like that one is talking about the last 12 months, and one is talking about 2021, or something like that. 

Rich1976

This is exactly the sort of thing which comes into my mindset too frequently. The problem with pensions and investing is the uncertainty. Peoples future retirements are dependent on the stock markets and I am not someone who likes uncertainty. Unfortunately it isn’t going to be clear what someone is going to get in retirement until much nearer the time and that is dependent on there not being any sort of crash or correction which would derail those plans and that doesn’t sit comfortably with me and never has done. 

I’ve been paying into a pension since 1997, am 46 now and for many of those years there was no employer scheme as employers were not required to offer a pension so much of what I have paid in is my own contributions. Since 2013 the contributions have been mostly employer but I have also added extra when affordability has allowed.
my total fund value is now around 84k. Much of the growth has come from the last few years where as only about 6 years ago the fund was only around 50k.

my other half’s pension fund is worth about 90k.

we both earn well below the national average at around 22k a year each and our employers only put in and match the minimum required and this has always been the case.

we would have liked to have retired at 60 but based on projections that isn’t going to happen and so like most people are likely to be dependent on the state pension for well over half of what we need. This is based on fund growth of 5% per year and charges of around 0.5% to 0.70%.

without the state pension our funds would only provide 12k between us at most based on 5% growth per year. We are both in medium risk lifestyle funds for our work pensions and our own sipps are invested in the Vanguard LS60 and HSBC Balanced Global Strategy funds respectively. We were heavily invested 100% in equity trackers until earlier this year but realised due to the downturn this was way above our risk tolerance.

so really it is all out of our control. All we can hope is things work out. Things have changed for us personally over the last couple of years and have had to rethink how we do our finances but we are doing the best we currently can.

but it still all plays on my mind like I said and maybe it doesn’t because everyone else I know just buries their head in the sand when it comes to pensions and have the attitude what will be will be.

Albermarle

This is exactly the sort of thing which comes into my mindset too frequently. The problem with pensions and investing is the uncertainty. Peoples future retirements are dependent on the stock markets and I am not someone who likes uncertainty. Unfortunately it isn’t going to be clear what someone is going to get in retirement until much nearer the time and that is dependent on there not being any sort of crash or correction which would derail those plans and that doesn’t sit comfortably with me and never has done. I’ve been paying into a pension since 1997, am 46 

The uncertainty/risk is what brings the returns. If you do not want the uncertainty, put it all in cash. It will almost certainly be the worst financial decision you will ever make.

At age 46, if you live until the average age of about 84, then you will see a number of crashes and corrections, it comes with the territory, as does the long term growth trend. True that ideally it is better not to see a very big crash around about the time you retire, but it can be managed.

Rich1976

Albermarle said:

This is exactly the sort of thing which comes into my mindset too frequently. The problem with pensions and investing is the uncertainty. Peoples future retirements are dependent on the stock markets and I am not someone who likes uncertainty. Unfortunately it isn’t going to be clear what someone is going to get in retirement until much nearer the time and that is dependent on there not being any sort of crash or correction which would derail those plans and that doesn’t sit comfortably with me and never has done. I’ve been paying into a pension since 1997, am 46 

The uncertainty/risk is what brings the returns. If you do not want the uncertainty, put it all in cash. It will almost certainly be the worst financial decision you will ever make.

At age 46, if you live until the average age of about 84, then you will see a number of crashes and corrections, it comes with the territory, as does the long term growth trend. True that ideally it is better not to see a very big crash around about the time you retire, but it can be managed.

That’s true it does bring the returns as I’ve discovered and hopefully will continue to see and would certainly have never kept it all as cash but I don’t have the nerve if it plummeted massively again hence why we have changed what we hold this year 

Audaxer

Rich1976 said:

Albermarle said:

This is exactly the sort of thing which comes into my mindset too frequently. The problem with pensions and investing is the uncertainty. Peoples future retirements are dependent on the stock markets and I am not someone who likes uncertainty. Unfortunately it isn’t going to be clear what someone is going to get in retirement until much nearer the time and that is dependent on there not being any sort of crash or correction which would derail those plans and that doesn’t sit comfortably with me and never has done. I’ve been paying into a pension since 1997, am 46 

The uncertainty/risk is what brings the returns. If you do not want the uncertainty, put it all in cash. It will almost certainly be the worst financial decision you will ever make.

At age 46, if you live until the average age of about 84, then you will see a number of crashes and corrections, it comes with the territory, as does the long term growth trend. True that ideally it is better not to see a very big crash around about the time you retire, but it can be managed.

That’s true it does bring the returns as I’ve discovered and hopefully will continue to see and would certainly have never kept it all as cash but I don’t have the nerve if it plummeted massively again hence why we have changed what we hold this year 

As there are likely to be at least a few more equity crashes before you retire, that is actually a good thing while you are contributing to your pension, as you will be buying fund units at cheaper prices at these times. I know it can be difficult to see 20% falls in value, but that is the best way to look at it when equity crashes happen.

Albermarle

Plus a 20% drop in stock markets is not really massive in historical terms, although if you had a diversified medium risk portfolio, a 20% drop would be quite a lot.

B0bbyEwing

What bothers me is say for example, the VLS range is quite popular. Often gets brought up in set-&-forget approaches but has the grumble of home bias. Not really an accurate home tracker. Another similar option could be the HSBC Global Strategy line. 

Now after reading the limited literature I've read (Tim Hale, Lars Kroijer) I'm in agreement about the passive side of investing, the global tracker funds. 

Yet I saw a website recently listing off other possibilities to the VLS range (as I don't want to be blinkered towards VLS or HSBC) - and it mentioned HSBC as a managed fund but VLS as passive.

Whereas I've read articles in the past which claim them both passive & others argue managed for both.

Brain = frazzled.

Albermarle said:

The uncertainty/risk is what brings the returns. If you do not want the uncertainty, put it all in cash. It will almost certainly be the worst financial decision you will ever make.

Fair way of looking at it tbh.

Albermarle said:
At age 46, if you live until the average age of about 84, then you will see a number of crashes and corrections, it comes with the territory, as does the long term growth trend. True that ideally it is better not to see a very big crash around about the time you retire, but it can be managed.

I've been invested in a fairly aggressive/adventurous approach for a fair few years now. 
I've read people like dunstonh say this is much higher than the average Joe. 

Maybe I'd crap myself if I saw my 30k pot at 5k this time next week. Time will tell. 

I've seen some minor dropping & periods of no/low growth. I just think well I've 30 years to go so even if it did drop to 5k, it should right itself in my favour.

Unless we end up with a what situation was it? Japan from the 90s? You guys will know what I'm trying to remember anyway. 

But I suppose that's the risk you take.