Pension Drops.

almost-bankrupt

Hi - I'm a nervous person when it comes to money, probably because I grew up in abject poverty. My accountant recommended I finally open a pension as a good way of getting money from my LTD company for the future.
My financial advisor recommended True Potential, the low risk pension category to start with, so i brought over 60k from my company to get it going. In the space of 2-3 weeks it's just dropped every day, and now it's around minus £500. This makes me very nervous. My advisor just tells me its 'futile' to check before the end of the next year, and doesn't seem to answer my questions on the workings of it all, and how I'm supposed make money on such a thing.

So my question is - is this normal or is it a poor starting pension with not much hope. I'm thinking about taking the money back out and investing in something more tangible like property.

Thanks in advance for your experiences.

Ayr_Rage

Pensions should be fire-and-forget, checking every day is pointless.

If you have 10+ years to retirement then over that time you are historically likely to be a winner.

Pat38493

Pension investing is generally for the long term and should be looked at over multiple years.  Whenever markets has gone down in the past, they have eventually gone up again.

You can't really judge anything by what happens in 2-3 weeks - in the last 2-3 weeks both equities and bonds have gone down significantly, partly due to geopolitical events and partly due to the receding prospect of interest rates cuts in the US.

However before that they had a very good rolling year up to then and are still above their level in early March (at least as of this morning).

If you look at your investments every single day you can be 100% sure there will be lots of days when they will go down - if you can't cope with that then maybe you should reconsider, but the better option is to simply not look because these investments are not designed to go up every day - they are expected to go up over periods of 10 years or more.

Also - often taking your money out is crystallising your losses - my pension pot went down by almost £6K yesterday but I won't be taking money out from loss positions any time soon.

almost-bankrupt

Ah thanks for the reassurance , that does help.

DillonTheCatMSE

I check my pot most days, and have done for a couple of years since I found out I just needed to look in an app. My massive insight over that time is that it goes up and it goes down, and whilst I can sometimes spot a logic to the changes, most days I cannot.

But just to try and reassure you (I have the same worries you for similar reasons), my pot dropped almost immediately on opening, was down 2.6% over the first year, has risen by 8.5% over the last 10 months and is currently 5.8% up since I first opened it. 

Like I said, it goes down and it goes up on a daily basis (it might be down £1k tomorrow as the various drops in global stocks take effect) but it will come back, and then grow, in time. Pensions have been running for decades for a reason - if they were a bad thing to do, no-one would invest in them ;-) 

Marcon

almost-bankrupt said:

Hi - I'm a nervous person when it comes to money, probably because I grew up in abject poverty. My accountant recommended I finally open a pension as a good way of getting money from my LTD company for the future.
My financial advisor recommended True Potential, the low risk pension category to start with, so i brought over 60k from my company to get it going. In the space of 2-3 weeks it's just dropped every day, and now it's around minus £500. This makes me very nervous. My advisor just tells me its 'futile' to check before the end of the next year, and doesn't seem to answer my questions on the workings of it all, and how I'm supposed make money on such a thing.

So my question is - is this normal or is it a poor starting pension with not much hope. I'm thinking about taking the money back out and investing in something more tangible like property.

Thanks in advance for your experiences.

Listen to your advisor (I trust they are an independent financial advisor?): stop this obsessive checking!

If you 'take the money back out' you (a) need to be at least 55 and (b) you'll pay tax at your marginal rate on 75% of it and (c) you're wrecking what appears to be your only pension provision for your old age...

Sometimes ignorance is bliss, but if you get a better grasp of pension fundamentals, it should do much to reassure you that your accountant's advice is extremely sensible, albeit such action is a bit late in the day if your company has been running for some time. Try https://www.moneyhelper.org.uk/en/pensions-and-retirement for some pension basics.

p00hsticks

almost-bankrupt said:

So my question is - is this normal or is it a poor starting pension with not much hope. I'm thinking about taking the money back out and investing in something more tangible like property.

Look at it this way... If you'd used your £60k to buy a property only two or three weeks ago you'd probably already have spent several thousand pounds in conveyancing, SDLT, buildings insurance etc so at this point you'd have been far more than 500 pounds down on your investment...

MEM62

almost-bankrupt said:

My financial advisor recommended True Potential, the low risk pension category to start with, so i brought over 60k from my company to get it going. In the space of 2-3 weeks it's just dropped every day, and now it's around minus £500. 

The documentation that you were given in respect of your pension will have pointed out that investments can go down as well as up.  The market moves in both directions.  Frankly, a movement of £500 on a pot of £60K is nothing.  I am not sure quite what you are expecting your advisor to explain.

Remember that investing is for the long term.  Checking it daily or weekly is pointless and you are only fueling you own insecurity.  Leave it alone.     

    

Albermarle

My financial advisor recommended True Potential, the low risk pension category to start with, 

Presumably the low risk category was chosen based on what you said in your OP 

- I'm a nervous person when it comes to money,

However in the long run you would almost certainly get a better result in a more high risk category.

Although as you do seem about anxious about investing maybe something more medium risk would be best.

LHW99

£500 on £60k is less than 1%. In the investment world that's just noise!

Stop looking, and keep investing every month / year and see how things are in 5, 10, 15 years time.

dunstonh

My financial advisor recommended True Potential, 

Most TP sales are from sales reps of TP.     

so i brought over 60k from my company to get it going. In the space of 2-3 weeks it's just dropped every day, and now it's around minus £500. 

A peanuts drop of 0.83%.     I think you need to go back to your adviser and get them to explain how investing works.

this makes me very nervous

How are you operating a limited company?   Don't you make business decisions?

You were no doubt told that investments will go down as well as up.   You may well have been shown charts doing this.  Even people who have never invested know that investments zig zag in value on a daily basis.    So, we are you finding a tiny tiny tiny drop a problem?

My advisor just tells me its 'futile' to check before the end of the next year, and doesn't seem to answer my questions on the workings of it all, and how I'm supposed make money on such a thing.

If you have used a TP sales rep then they operate different levels and one is little more than a guided process rather than a full advice process.     Your adviser, on the full advice process, is there to explain the process and how it works and indeed, should have done this before you signed up.   If you used the guided service, then its limited in detail.

 is this normal or is it a poor starting pension with not much hope. 

Doing nothing is the worst option. So, using TP is better than that.     But it is normal.     

I'm thinking about taking the money back out and investing in something more tangible like property.

If you think property is tangible, then you are wrong there as well.  When property values fall, what are you going to do then?       

Check the status of your adviser.  Are they an IFA or a TP agent/FA?   If TP agent/FA, did they use the guided process (which for the benefit of others is little more than a robo service) or was a it a full advice service?

If full advice, did the adviser show you charts showing negative periods and how much they went down by?  
Did they explain, in monetary terms the sort of losses you could see during negative periods?
If not, then go back to them and ask them to explain it to you.