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SIPP Performance

I have been reviewing my SIPP (balanced) and have concerns regarding performance over the last 5 years, looking at the funds none are on a 'dog' listing and I'm unsure as to what I should do.

Putting my figures into a compound interest rate calculator (what the pension was worth 5 yrs ago (£254K), what it is now (£419K), total contributions over 60 months (£147K)) I’ve made 1% interest, which I consider poor, but others may have made a loss.

Speaking to my IFA he has explained the struggles of the last 5 yrs, Covid, Ukraine, Inflation etc which I understand, and has stated on numerous occasions that my investments are in a very, very good position for when markets recover.

My concerns are I’m 60 and intend to contribute another £200K over the next 5 yrs prior to retirement, and I was hoping for a pot of £750K at 65 which would mean I require a growth rate of 5%, which up until the last few yrs wasn’t unreasonable, just feel I’m throwing good money after bad

 


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Comments

  • Gary1984
    Gary1984 Posts: 362 Forumite
    Tenth Anniversary 100 Posts Name Dropper
    I think you'll need to tell us what you're invested in? I expect you hold quite a lot of bonds as global equities are well up over the last 5 years.

    What did your IFA suggest that you do?
  • tony4147
    tony4147 Posts: 343 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    IFA says sit tight, SIPP is in a good position for when markets pickup.


  • Albermarle
    Albermarle Posts: 25,936 Forumite
    10,000 Posts Sixth Anniversary Name Dropper
    Speaking to my IFA he has explained the struggles of the last 5 yrs, Covid, Ukraine, Inflation etc which I understand, and has stated on numerous occasions that my investments are in a very, very good position for when markets recover.

    Covid was three years ago and only caused a relatively short downturn. Most investments peaked around November 2021, before Ukraine war started, although it has not helped since. Main issue for many investors has been the unwinding of the bubble in bonds and gilts, since 2008 crash, over the last 18 months.

    The more bonds/gilts in your investments the bigger the negative result. Ironically investors in higher risk, higher % equity have done better.

  • dunstonh
    dunstonh Posts: 118,554 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
     have concerns regarding performance over the last 5 years
    What are you concerns?

    The last 5 years have been the highly volatile part of the economic cycle. Some asset classes have suffered their worst declines in over 100 years.   Some have been doing in line with their long term average and some have not.

    So, are you concerns relative to the asset class or in general?

    It is actually amazing that with the events that have occurred, investments are not actually a lot worse.

    2022 was a strange year as it turned the conventional risk scale upside down.  i.e. those with lower volatility investments lost more than those with higher volatility investments.  i.e. the lower you were down the risk scale, the greater your losses were.

    My concerns are I’m 60 and intend to contribute another £200K over the next 5 yrs prior to retirement, and I was hoping for a pot of £750K at 65 which would mean I require a growth rate of 5%, which up until the last few yrs wasn’t unreasonable, just feel I’m throwing good money after bad
    Others may feel you have got lucky by being able to contribute during a periods when markets fell.   

    IFA says sit tight, SIPP is in a good position for when markets pickup.
    Which, from a generic point of view, sounds right.

    You are likely going to remain invested for another 30 years.   You are going to see many more periods like this just as you have done over the last 20-30 years.     You never look at a year in isolation, whether that is a good year like 2020 or a bad year like 2022.  You average out the ups the downs.

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • tony4147
    tony4147 Posts: 343 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    dunstonh said:
     have concerns regarding performance over the last 5 years
    What are you concerns?

    The last 5 years have been the highly volatile part of the economic cycle. Some asset classes have suffered their worst declines in over 100 years.   Some have been doing in line with their long term average and some have not.

    So, are you concerns relative to the asset class or in general?

    It is actually amazing that with the events that have occurred, investments are not actually a lot worse.

    2022 was a strange year as it turned the conventional risk scale upside down.  i.e. those with lower volatility investments lost more than those with higher volatility investments.  i.e. the lower you were down the risk scale, the greater your losses were.

    My concerns are I’m 60 and intend to contribute another £200K over the next 5 yrs prior to retirement, and I was hoping for a pot of £750K at 65 which would mean I require a growth rate of 5%, which up until the last few yrs wasn’t unreasonable, just feel I’m throwing good money after bad
    Others may feel you have got lucky by being able to contribute during a periods when markets fell.   

    IFA says sit tight, SIPP is in a good position for when markets pickup.
    Which, from a generic point of view, sounds right.

    You are likely going to remain invested for another 30 years.   You are going to see many more periods like this just as you have done over the last 20-30 years.     You never look at a year in isolation, whether that is a good year like 2020 or a bad year like 2022.  You average out the ups the downs.

    My concern is average of the 1% growth each year over the last 5 yrs, and if that were to continue for the next 5 my pension wouldn't be where I would like it to be 
  • Albermarle
    Albermarle Posts: 25,936 Forumite
    10,000 Posts Sixth Anniversary Name Dropper
    tony4147 said:
    dunstonh said:
     have concerns regarding performance over the last 5 years
    What are you concerns?

    The last 5 years have been the highly volatile part of the economic cycle. Some asset classes have suffered their worst declines in over 100 years.   Some have been doing in line with their long term average and some have not.

    So, are you concerns relative to the asset class or in general?

    It is actually amazing that with the events that have occurred, investments are not actually a lot worse.

    2022 was a strange year as it turned the conventional risk scale upside down.  i.e. those with lower volatility investments lost more than those with higher volatility investments.  i.e. the lower you were down the risk scale, the greater your losses were.

    My concerns are I’m 60 and intend to contribute another £200K over the next 5 yrs prior to retirement, and I was hoping for a pot of £750K at 65 which would mean I require a growth rate of 5%, which up until the last few yrs wasn’t unreasonable, just feel I’m throwing good money after bad
    Others may feel you have got lucky by being able to contribute during a periods when markets fell.   

    IFA says sit tight, SIPP is in a good position for when markets pickup.
    Which, from a generic point of view, sounds right.

    You are likely going to remain invested for another 30 years.   You are going to see many more periods like this just as you have done over the last 20-30 years.     You never look at a year in isolation, whether that is a good year like 2020 or a bad year like 2022.  You average out the ups the downs.

    My concern is average of the 1% growth each year over the last 5 yrs, and if that were to continue for the next 5 my pension wouldn't be where I would like it to be 
    It does seem a bit lower than average, but without knowing the detail of the investments it is very difficult to make any sensible comments.
  • dunstonh
    dunstonh Posts: 118,554 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    tony4147 said:
    dunstonh said:
     have concerns regarding performance over the last 5 years
    What are you concerns?

    The last 5 years have been the highly volatile part of the economic cycle. Some asset classes have suffered their worst declines in over 100 years.   Some have been doing in line with their long term average and some have not.

    So, are you concerns relative to the asset class or in general?

    It is actually amazing that with the events that have occurred, investments are not actually a lot worse.

    2022 was a strange year as it turned the conventional risk scale upside down.  i.e. those with lower volatility investments lost more than those with higher volatility investments.  i.e. the lower you were down the risk scale, the greater your losses were.

    My concerns are I’m 60 and intend to contribute another £200K over the next 5 yrs prior to retirement, and I was hoping for a pot of £750K at 65 which would mean I require a growth rate of 5%, which up until the last few yrs wasn’t unreasonable, just feel I’m throwing good money after bad
    Others may feel you have got lucky by being able to contribute during a periods when markets fell.   

    IFA says sit tight, SIPP is in a good position for when markets pickup.
    Which, from a generic point of view, sounds right.

    You are likely going to remain invested for another 30 years.   You are going to see many more periods like this just as you have done over the last 20-30 years.     You never look at a year in isolation, whether that is a good year like 2020 or a bad year like 2022.  You average out the ups the downs.

    My concern is average of the 1% growth each year over the last 5 yrs, and if that were to continue for the next 5 my pension wouldn't be where I would like it to be 
    Negative decades happen.    Just look at 2000-2009.   However, that was largely by picking the peak at one end and the trough at the other.  And ignores the boom that followed.

    An economic cycle is closer to 15 years nowadays.   You can often break them down into the boom, the average and the bust.   2022 was the bust.  

    the low point was October 2022.  Since then, things have been going up again.  Not recovered year but that's expected.  So, why are you worrying about it 10 months after the low point?
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • tony4147
    tony4147 Posts: 343 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    dunstonh said:
    tony4147 said:
    dunstonh said:
     have concerns regarding performance over the last 5 years
    What are you concerns?

    The last 5 years have been the highly volatile part of the economic cycle. Some asset classes have suffered their worst declines in over 100 years.   Some have been doing in line with their long term average and some have not.

    So, are you concerns relative to the asset class or in general?

    It is actually amazing that with the events that have occurred, investments are not actually a lot worse.

    2022 was a strange year as it turned the conventional risk scale upside down.  i.e. those with lower volatility investments lost more than those with higher volatility investments.  i.e. the lower you were down the risk scale, the greater your losses were.

    My concerns are I’m 60 and intend to contribute another £200K over the next 5 yrs prior to retirement, and I was hoping for a pot of £750K at 65 which would mean I require a growth rate of 5%, which up until the last few yrs wasn’t unreasonable, just feel I’m throwing good money after bad
    Others may feel you have got lucky by being able to contribute during a periods when markets fell.   

    IFA says sit tight, SIPP is in a good position for when markets pickup.
    Which, from a generic point of view, sounds right.

    You are likely going to remain invested for another 30 years.   You are going to see many more periods like this just as you have done over the last 20-30 years.     You never look at a year in isolation, whether that is a good year like 2020 or a bad year like 2022.  You average out the ups the downs.

    My concern is average of the 1% growth each year over the last 5 yrs, and if that were to continue for the next 5 my pension wouldn't be where I would like it to be 
    Negative decades happen.    Just look at 2000-2009.   However, that was largely by picking the peak at one end and the trough at the other.  And ignores the boom that followed.

    An economic cycle is closer to 15 years nowadays.   You can often break them down into the boom, the average and the bust.   2022 was the bust.  

    the low point was October 2022.  Since then, things have been going up again.  Not recovered year but that's expected.  So, why are you worrying about it 10 months after the low point?
    Because I've just had the yearly review with my IFA and I took a deeper look at what gains I've made over the last 5 yrs, which currently is 1% / year
  • dunstonh
    dunstonh Posts: 118,554 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Because I've just had the yearly review with my IFA and I took a deeper look at what gains I've made over the last 5 yrs, which currently is 1% / year
    In all probability, the bulk of your negative assets is likely to be gilts and bonds.  The defensive side of the portfolio.  Although tech stocks also took a hammering late 21/early 22.      The stockmarket side would have done much better.   

    Sometimes, being too cautious/Defensive can be damaging.   You do not invest in gilts and bonds to make money.  You invest in them to reduce the volatility.    They reduce your long term returns.      In theory they smooth would smooth out the zig zagging compared to 100% stockmarket.    However, in 2022, they suffered a loss not seen in over 100 years previous (which was effectively the final throes of the 2008 credit crunch -  the actions from that point effectively kicked this event down the road with the hope for a soft landing over the coming decades.  However, Russian invasion of Ukraine and the energy crisis caused it to unwind quickly)

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • tony4147 said:
    dunstonh said:
    tony4147 said:
    dunstonh said:
     have concerns regarding performance over the last 5 years
    What are you concerns?

    The last 5 years have been the highly volatile part of the economic cycle. Some asset classes have suffered their worst declines in over 100 years.   Some have been doing in line with their long term average and some have not.

    So, are you concerns relative to the asset class or in general?

    It is actually amazing that with the events that have occurred, investments are not actually a lot worse.

    2022 was a strange year as it turned the conventional risk scale upside down.  i.e. those with lower volatility investments lost more than those with higher volatility investments.  i.e. the lower you were down the risk scale, the greater your losses were.

    My concerns are I’m 60 and intend to contribute another £200K over the next 5 yrs prior to retirement, and I was hoping for a pot of £750K at 65 which would mean I require a growth rate of 5%, which up until the last few yrs wasn’t unreasonable, just feel I’m throwing good money after bad
    Others may feel you have got lucky by being able to contribute during a periods when markets fell.   

    IFA says sit tight, SIPP is in a good position for when markets pickup.
    Which, from a generic point of view, sounds right.

    You are likely going to remain invested for another 30 years.   You are going to see many more periods like this just as you have done over the last 20-30 years.     You never look at a year in isolation, whether that is a good year like 2020 or a bad year like 2022.  You average out the ups the downs.

    My concern is average of the 1% growth each year over the last 5 yrs, and if that were to continue for the next 5 my pension wouldn't be where I would like it to be 
    Negative decades happen.    Just look at 2000-2009.   However, that was largely by picking the peak at one end and the trough at the other.  And ignores the boom that followed.

    An economic cycle is closer to 15 years nowadays.   You can often break them down into the boom, the average and the bust.   2022 was the bust.  

    the low point was October 2022.  Since then, things have been going up again.  Not recovered year but that's expected.  So, why are you worrying about it 10 months after the low point?
    Because I've just had the yearly review with my IFA and I took a deeper look at what gains I've made over the last 5 yrs, which currently is 1% / year
    Can you advise all charges you are paying?

    A guy I know is just talking a withdrawal of only 2% as its a big pot, unfortunately total charges on his account is 2.25%, so after longish bull market, his pot has been draining away and his IFA is just saying sit tight whilst selling and buying different units in the pot trying to outperform the market, I hope his IFA is getting better at his job because, to me a novic he's not so good and charges really showing out these last few years.
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