How often do you check the value of your pension? And is contributing to a pension simply gambling?

dunstonh

"...selling when investments are down is nearly always a bad move." Do you mean this kind of investment only (run of the mill pension)? I'd imagine that with stocks and shares it's often a good move to sell when your investment is down depending on why it's down. But my knowledge of these things, if you can call it knowledge, extends to the odd Hollywood movie.

When it goes down, you typically should be looking to add more.  Not reduce it.  

People are generally happier when things are going up and will quite happily add money at that stage despite the unit prices being higher.    However, when it goes down, they think about stopping paying in or reducing it or even pull out despite it being the best time to buy.

CharlieC2210

JohnWinder said:

You’d need to choose your own definition of gambling, but at the casino you’re sure to lose on average because that’s how their business runs. You lose money, they provide some fun and make some profit with that money. If you invest sensibly you are very likely to get positive returns over a realistic period. They seem different.

Look at it often enough to guard against malfeasance.

Thanks, John. Interesting one. I agree with your take on the casino but I think investing is at least a gamble of sorts, although yes, it's far from being the same as roulette etc, where if you play long enough you will lose; a mathematical fact. You said if you invest 'sensibly'; that's also an interesting one. Sensible to one person, etc... Does anyone, in the UK, ever lose investing in the most conservative type of pension plan, when they invest for decades or more?

TadleyBaggie

About 8 years ago I put roughly £225K into a SIPP and started a drawdown. In that time I’ve taken in excess of £80K out of the pot and it’s still worth more than I started with. That’s my kind of gambling.

adindas

CharlieC2210 said:

Is it wise to stop looking at the value of your pension on a regular basis (several times a year, or more)?

Occasionally I have to log into my pension for something. The value of the pension is right there on the first page I come to. If it’s gone down, say a thousand pounds since I last looked, I get a shock. If it’s gone up I get a buzz.

A while back I was logging in a few times a week for a while, to check my messages (I was sorting something out with the company). Each time I logged in the value had gone down, often by several hundred pounds. In the space of a few weeks it had gone down over a thousand pounds. I reminded myself that these things do go up and down and it’s all about the long run. But it was still scary.

If the best advice is not to check the value on a regular basis, when is it wise to check? Once a year? When they send your annual statement?

What if it went down, and down, and down?

In what way is contributing to a pension like going to the casino. Do we need to accept that we’re gambling? That we might lose?

If it went down, and down, and down, to nothing would there be any compensation scheme to help us out? Or would it be tough luck; we took a punt; and we lost? Or at what point would it be wise to cash in, if it was going down, and down and down?

 

Pension is definitely not gambling. Getting top up for 25% for basic tax payer is definitely common sense, not gambling.

What might be gambling is the type of  investment you choose on your pension fund. Differentiate gambling with taking a calculated risk.

CharlieC2210

dunstonh said:

Is it wise to stop looking at the value of your pension on a regular basis (several times a year, or more)?

Yes.   You can drive yourself crazy if you check it too frequently.  When its going up you wont care but during negative periods, you are putting yourself at risk of making bad decisions.

Prior to 2018, statements were issued annually with most (some types of pensions still are but platforms are quarterly).  With annual statements, you miss most of the volatility and see smoother and reduced level of volatility.

I had a conversation recently with someone who said that he had never seen his pension lose money in a year before.  So, I asked him about 2020.  He said it didnt lose money.  It did but he never saw it as it was in between statement dates.    I asked him about 2018 but he missed that one too as again, it was between statements.  As was 2015/16.     I thought I may get better luck with 2008 or 2000-2001 but no, he missed those too because he didnt even bother looking at the statements back then.     

And it was a good job he didnt look as his 2022 was small compared to the 2000-2002, 2008 and 2020 losses.

Each time I logged in the value had gone down, often by several hundred pounds. In the space of a few weeks it had gone down over a thousand pounds. I reminded myself that these things do go up and down and it’s all about the long run. But it was still scary.

a few thousand isnt that scary. Wait until it gets big enough (as you get closer to retirement) and the fund can move tens of thousands or even over hundred thousand.

What if it went down, and down, and down?

What is your definition of down and down and down?
Armageddon is the scenario you are suggesting but its likely that the pension would go down much in a Nuclear war.  a) if there is nuclear war then investments become meaningless.  b) if it doesn't happen, then all you would have done is sold out for no reason.

In what way is contributing to a pension like going to the casino. Do we need to accept that we’re gambling? That we might lose?

Its not at all comparable as you are not buying an asset when you gamble.   With investments, you are buying assets that have a value.    Like most assets, values change.  

Global economies go through cycles.   Growth, steady and decline.      The value of your investments will change up and down through that cycle.   So, when you hit a decline period, you dont worry it because you know its just a short term issue.

If it went down, and down, and down, to nothing would there be any compensation scheme to help us out? 

If a nuclear war comes along or an asteroid hits the planet, or a plague wipes everyone out, do you really think a) you would still be alive and b) you would be worrying about some compensation?

Or at what point would it be wise to cash in, if it was going down, and down and down?

What use do you think electronic currency would be of any use if you are one of the minority of the human race still alive?

Thanks, great, thorough answer, and you made me chuckle. Having read your reply, and the other ones above you, I'm thinking I won't even open my statement come the end of the year. If the value has gone up, I'll be cheered for a bit. If it has gone down, I'll be gutted for a bit, and might even ruminate on it over the course of the following year, even though the rational part of my brain will remind me of the ups and downs of the markets, the long run, etc, etc. Although JohnWinder (see above) did suggest looking at it often enough to guard against malfeasance (although I'm with Standard Life; I can't imagine anything dodgy happening with them; or was he alluding to being hacked or something, or an acquaintence doing the dirty on you or whatever?)

CharlieC2210

adindas said:

CharlieC2210 said:

Is it wise to stop looking at the value of your pension on a regular basis (several times a year, or more)?

Occasionally I have to log into my pension for something. The value of the pension is right there on the first page I come to. If it’s gone down, say a thousand pounds since I last looked, I get a shock. If it’s gone up I get a buzz.

A while back I was logging in a few times a week for a while, to check my messages (I was sorting something out with the company). Each time I logged in the value had gone down, often by several hundred pounds. In the space of a few weeks it had gone down over a thousand pounds. I reminded myself that these things do go up and down and it’s all about the long run. But it was still scary.

If the best advice is not to check the value on a regular basis, when is it wise to check? Once a year? When they send your annual statement?

What if it went down, and down, and down?

In what way is contributing to a pension like going to the casino. Do we need to accept that we’re gambling? That we might lose?

If it went down, and down, and down, to nothing would there be any compensation scheme to help us out? Or would it be tough luck; we took a punt; and we lost? Or at what point would it be wise to cash in, if it was going down, and down and down?

 

Pension is definitely not gambling. Getting top up for 25% for basic tax payer is definitely common sense, not gambling.

What might be gambling is the type of  investment you choose on your pension fund. Differentiate gambling with taking a calculated risk.

But the top up of 25% is temporary, yeah? You pay most of it back in tax when you start withdrawing, no?

westv

CharlieC2210 said:

adindas said:

CharlieC2210 said:

Is it wise to stop looking at the value of your pension on a regular basis (several times a year, or more)?

Occasionally I have to log into my pension for something. The value of the pension is right there on the first page I come to. If it’s gone down, say a thousand pounds since I last looked, I get a shock. If it’s gone up I get a buzz.

A while back I was logging in a few times a week for a while, to check my messages (I was sorting something out with the company). Each time I logged in the value had gone down, often by several hundred pounds. In the space of a few weeks it had gone down over a thousand pounds. I reminded myself that these things do go up and down and it’s all about the long run. But it was still scary.

If the best advice is not to check the value on a regular basis, when is it wise to check? Once a year? When they send your annual statement?

What if it went down, and down, and down?

In what way is contributing to a pension like going to the casino. Do we need to accept that we’re gambling? That we might lose?

If it went down, and down, and down, to nothing would there be any compensation scheme to help us out? Or would it be tough luck; we took a punt; and we lost? Or at what point would it be wise to cash in, if it was going down, and down and down?

 

Pension is definitely not gambling. Getting top up for 25% for basic tax payer is definitely common sense, not gambling.

What might be gambling is the type of  investment you choose on your pension fund. Differentiate gambling with taking a calculated risk.

But the top up of 25% is temporary, yeah? You pay most of it back in tax when you start withdrawing, no?

25% of it is tax free so you only pay tax on 75%.

dunstonh

CharlieC2210 said:

adindas said:

CharlieC2210 said:

Is it wise to stop looking at the value of your pension on a regular basis (several times a year, or more)?

Occasionally I have to log into my pension for something. The value of the pension is right there on the first page I come to. If it’s gone down, say a thousand pounds since I last looked, I get a shock. If it’s gone up I get a buzz.

A while back I was logging in a few times a week for a while, to check my messages (I was sorting something out with the company). Each time I logged in the value had gone down, often by several hundred pounds. In the space of a few weeks it had gone down over a thousand pounds. I reminded myself that these things do go up and down and it’s all about the long run. But it was still scary.

If the best advice is not to check the value on a regular basis, when is it wise to check? Once a year? When they send your annual statement?

What if it went down, and down, and down?

In what way is contributing to a pension like going to the casino. Do we need to accept that we’re gambling? That we might lose?

If it went down, and down, and down, to nothing would there be any compensation scheme to help us out? Or would it be tough luck; we took a punt; and we lost? Or at what point would it be wise to cash in, if it was going down, and down and down?

 

Pension is definitely not gambling. Getting top up for 25% for basic tax payer is definitely common sense, not gambling.

What might be gambling is the type of  investment you choose on your pension fund. Differentiate gambling with taking a calculated risk.

But the top up of 25% is temporary, yeah? You pay most of it back in tax when you start withdrawing, no?

A) if you retire prior to state pension, you can earn £12,570 tax free.    That means you can take over £16k from the pension each year without paying tax.
b) if you draw after the state pension, then most people will have a small amount of personal allowance left over.
c) As a basic rate taxpayer in retirement and working, you are still better of by 6.25% (ignoring personal allowance)
d) the investments within the pension are not subject to CGT, dividend tax or income tax.   And the pension is outside of your estate and not subject to IHT.

So, there is a bit more to it overall. 

michaels

AS above, a pension is just a taxed advantage savings wrapper.  It is slightly more tax efficient than an ISA but that comes at the expanse of access limitations.

p00hsticks

I think perhaps the better question would not be how often you check a pension's value, but how often you review the underlying investments to see if they are still appropriate to your situation......