Pension dropping suddenly

eskbanker

kinger101 said:

He's about 20 years away from state retirement age, so a high equity allocation makes sense.  It would be unreasonable to expect two or three drops of greater than 20 % in that time, but over the long term, the stock market is likely likely to offer better returns than gilts and bonds.

Typo or missing word perhaps?  An expectation of several 20+% drops in equity holdings over 20 years seems reasonable to me....

Ibrahim5

Your IFA may have just glanced at the investments and then taken his fee for looking at them.

Confusedlad

I would echo most responses here. The drop is within tolerance/expected given the investments are in stocks which fluctuate within a normal range. Recently the trend has been generally upwards, with recent drops or adjustments. Nothing to worry about. You are far from having to realise the investment/pension and some companies will offer you the option to move the investments into 'safer' (i.e. less volatile but typically lower risk and lower return options as you near retirement).  If you are freaked out by a 2% drop you would be horrified at the week COVID hit in 2020 when markets dropped by a LOT more. Of course, covid2 could hit next week or another Ukraine or North Korea could test a nuclear weapon or......Look at a chart of the last 10 years and see the movements in the value of your fund.  

Risk and return are inversely related, so lower risk typically means lower return and higher risk means (potentially) higher return (actually alongside higher volatility).  You have to decide what you are able to live with. Personally, I like to be able to sleep at night, but like most people also want a decent return. It's all about finding what suits you...

vacheron

He should relax. My investments have dropped almost £40K in the last month, it's just part of the game.

Also, if your hubby is still contributing, a dip is a good thing as he is buying through it. You want your fund to be lower while you are still contributing to it. He also may not need the pension for almost 20 years, so plenty time to ups and downs (and this is barely a down to be honest). 



 

Aretnap

vacheron said:

He should relax. My investments have dropped almost £40K in the last month, it's just part of the game.

Also, if your hubby is still contributing, a dip is a good thing as he is buying through it. You want your fund to be lower while you are still contributing to it. He also may not need the pension for almost 20 years, so plenty time to ups and downs (and this is barely a down to be honest). 



 

This. As Warren Buffet put it

"A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.

But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the "hamburgers" they will soon be buying".

Pat38493

The other point that hasn’t been mentioned yet - has your husband recently started looking more regularly at the value of his pension?  

There will have been times in the past that it dropped a heck of a lot more than that, and then recovered, and he didn’t even notice because he wasn’t looking at that time.

Beyond that though, if he is planning to start taking the funds out within the next 10 years or so, it’s probably time to get a bit more education.

Also, depending on his salary if he is coming up to 50, saving extra money into pensions is almost always advisable due to the tax breaks involved - if he can afford to contribute a bit more it will always help.  

Also - if markets drop while he is still contributing to those funds, as others have pointed out, that’s actually good news as he is buying more units for his money.

kinger101

eskbanker said:

kinger101 said:

He's about 20 years away from state retirement age, so a high equity allocation makes sense.  It would be unreasonable to expect two or three drops of greater than 20 % in that time, but over the long term, the stock market is likely likely to offer better returns than gilts and bonds.

Typo or missing word perhaps?  An expectation of several 20+% drops in equity holdings over 20 years seems reasonable to me....

Typo, now corrected.  Thanks

Mr.Generous

Mine's dropped £14k since end of November, still leaves it £30k up over 12 months.

bjorn_toby_wilde

Tell him to relax.

My Aviva pot has dropped from £215k to £212k in the last week.  It’s still well up from £190k at the beginning of the year.

This kind of fluctuation is normal. Don’t look at it so often, or if you do, learn to accept that this will happen periodically.

german_keeper

Ibrahim5 said:

Your IFA may have just glanced at the investments and then taken his fee for looking at them.

I can't see any mention of an IFA. OP quotes "we decided" I take that to be her and husband. You do seem to have a very unhealthy obsession, maybe you should try and get out more.