Pension pot falling again

Callum_J

After last year’s fall in my ( and many other people’s) pension pot value, I saw an improvement in the last few weeks. However, on checking today, the value is down a bit again. I don’t know what exactly is happening in the markets to cause this just now?

What’s the opinion of experienced people on here as to what is likely to transpire this year in relation to pension pots and their values. Are we likely to see a period of growth anytime soon? My funds are mostly invested in Vanguard Life Strategy 20 Equity Fund GBP and Life Strategy 40 Equity Acc.

dunstonh

Pension pot falling again

Investments go up and down on a daily basis.   

After last year’s fall in my ( and many other people’s) pension pot value, I saw an improvement in the last few weeks.

The low point of the 2022 fall was in October.  You should have seen improvements from then.

 However, on checking today, the value is down a bit again. I don’t know what exactly is happening in the markets to cause this just now?

mixed data out over the last week or two. However, movements are relatively small and within the usual range of daily activity.  Gilts and bonds have been falling again.

What’s the opinion of experienced people on here as to what is likely to transpire this year in relation to pension pots and their values.

Impossible to say.   Most of 2022 events were not predictable, and that applies to things that will happen in 2023.  Markets price in what they know or what they expect.   Its the unknown and unexpected that causes things to swing.

 My funds are mostly invested in Vanguard Life Strategy 20 Equity Fund GBP and Life Strategy 40 Equity Acc.

Being heavy in gilts and bonds is probably the main cause of your losses in the last week.

However, you should stop looking at performance over a week or two.   You will go insane.  Investments zig zag.  After every zig, you get a zag.

retiringtoosoon

I think most investors are expecting a 90% fall in all equities before the end of the fiscal year end. Time to buy cheap!

Callum_J

Thanks for the replies.
If I’m heavy in gilts   and bonds; and that is causing losses, what alternatives should I consider, or should i just stick it out with  Vanguard?

JohnWinder

Your investments in those funds, and most others’, are longer term investments so they’re more likely to deliver anticipated returns over periods of several years, not weeks or months. That’s a good reason not to fuss over how they behave over periods of weeks or months, and an even better reason to not look at what they’re doing if it’s going to make you fuss. If one is not comfortable with short term value fluctuations then you’re in the wrong investments; one should be holding savings deposit accounts and short term bonds/funds.

Always good to remember that risk and reward are closely linked. A common and useful measure of risk is the frequent variations in value that you have commented on, and it’s only when you accept that sort of risk can you expect to get the higher returns that most of us are invested for. So take your pick: take the risk and hope for the reward, or forgo the reward and have little risk.

So, the VLS40 type rewards you’re seeking, but not getting at the moment, come with the risks you’re experiencing. To change to a different investment now would be to have suffered the consequences of the risk (value that fluctuates downward) without getting the reward you could expect.  Sounds like a bad idea, but plenty of people do it, and the effect has been measured in the ‘mind the gap’ research which shows fund holders get lower returns that their funds provide because they chop and change at the wrong times more commonly than the right times presumably.

Who was it who said ‘investing is simple, it just isn’t easy’?

enthusiasticsaver

Investments are up and down all the time.  You will drive yourself mad checking it daily or weekly.  We have an IFA review tomorrow and tonight was the first time I have looked at our portfolio for almost a year. Unless you are planning to draw the whole lot out it doesn't matter although you may want to review what you  are invested in if it does not suit your needs.  VLS20 and VLS40 are obviously invested mainly in fixed bonds and gilts.  I think inflation worries are affecting the price of them. 

Albermarle

What’s the opinion of experienced people on here as to what is likely to transpire this year in relation to pension pots and their values

Experienced or not, nobody can see into the future. I read yesterday an article about expectations for the US stock market ( which tends to drive global stock markets ) . As usual it listed some reasons why the market should get better this year, and then a number of reasons why it might do the opposite.

If I’m heavy in gilts   and bonds; and that is causing losses, what alternatives should I consider, or should i just stick it out with  Vanguard?  my current asset allocation

Vanguard is just a provider of investments, along with many others. So investing in Vanguard is not an actual investment strategy, just a choice of provider.

snowlaser

Callum_J said:

What’s the opinion of experienced people on here as to what is likely to transpire this year in relation to pension pots and their values. Are we likely to see a period of growth anytime soon? My funds are mostly invested in Vanguard Life Strategy 20 Equity Fund GBP and Life Strategy 40 Equity Acc.

No-one can predict the future, and it would be unwise to try and do so.

Others have said your pension fund has a high proportion of gilts and bonds.  If so, then these move roughly in line with the cost of buying an annuity, so although your fund value goes up and down the actual annuity you could buy with it won't change much (that, in fact, is the point in investing in them).

R_P_W

Like others have said, things change daily and no one can predict what is going to happen over the rest of 2023, and if anyone did why would you believe them?

How old are you?  Are you close to retirement or do you have 10+ years to go before starting to draw on the funds?  The funds you have mentioned are both quite heavy in bonds Vs equities - what was your investment objective when you chose those ones?

bostonerimus

Callum_J said:

After last year’s fall in my ( and many other people’s) pension pot value, I saw an improvement in the last few weeks. However, on checking today, the value is down a bit again. I don’t know what exactly is happening in the markets to cause this just now?

What’s the opinion of experienced people on here as to what is likely to transpire this year in relation to pension pots and their values. Are we likely to see a period of growth anytime soon? My funds are mostly invested in Vanguard Life Strategy 20 Equity Fund GBP and Life Strategy 40 Equity Acc.

Make sure your pension is invested appropriately for your circumstances; put in as much as you can; stop looking at it.

kinger101

Callum_J said:

Thanks for the replies.
If I’m heavy in gilts   and bonds; and that is causing losses, what alternatives should I consider, or should i just stick it out with  Vanguard?

What was the basis of the funds you originally selected?  Knee-jerk reactions to short-term movements isn't a good strategy.  Selecting the right funds based on your age, attitude to risk, and capacity for it is a better idea.  Work that out and pick allocations accordingly.