Pension providers, costs and funds - Opinions please

Forever_Red

dunstonh said:

Just remember that the drop on those can be up to 50% in less frequent loss periods and even more in 1 in 100 year events (that the bonds have gone through recently).

But if there was a massive loss, doesn’t it tend to recover quickly? Maybe over a year or two and then go back to normal levels?

If I invested say £400k and only needed to crystallise £8k p.a if the fund returned only 4% it would more than cover my needs.

And if the worst was to happen and I lose £40k for two consecutive years, I’d just reign in my spending till it recovered.

incus432

Forever_Red said:

dunstonh said:

Just remember that the drop on those can be up to 50% in less frequent loss periods and even more in 1 in 100 year events (that the bonds have gone through recently).

But if there was a massive loss, doesn’t it tend to recover quickly? Maybe over a year or two and then go back to normal levels?

No not always - sometimes takes much longer

dunstonh

But if there was a massive loss, doesn’t it tend to recover quickly? Maybe over a year or two and then go back to normal levels?

If you invested on 1st Jan 2000 and then went through the dot.com crash period then despite the five years that followed doubling in value, 9 years later you were still 40% down.       That was a series of event in a decade.

Most crashes recover within a year but there are crashes that take much longer.   Less common but do happen.  

If I invested say £400k and only needed to crystallise £8k p.a if the fund returned only 4% it would more than cover my needs.
And if the worst was to happen and I lose £40k for two consecutive years, I’d just reign in my spending till it recovered.

Ok, lets look at that for the first decade of this millennium with 100% equities (S&P500) .....



You would be left with £243,082 if you continued drawing it.

You probably would have changed something long before then as dropping by half by 2003 would have panicked you.   How long would you give before it recovers?

Forever_Red

So during that period where the S&P 500 dropped, how did bonds do over that period?
Is it a case of equities do bad and bonds do good and vice versa?

dunstonh

Forever_Red said:

So during that period where the S&P 500 dropped, how did bonds do over that period?
Is it a case of equities do bad and bonds do good and vice versa?

Bonds went up in that period.   A mixed equity, global inc US and mixed bonds at around 50-60% equities was a better option.

And no, its not a case that they act vice versa.  Both can have periods when they both rise and both fall.      Although more often than not, its at different times.

Forever_Red

So maybe I’ll do the vanguard 100 equities for a bit of a bigger UK bias, the Vanguard 60/40 and the Fidelity world index.

At this rate I’ll be ending up with everything put in the Vanguard 20% equity 🤣

NithyaH

Forever_Red said:

So maybe I’ll do the vanguard 100 equities for a bit of a bigger UK bias, the Vanguard 60/40 and the Fidelity world index.

At this rate I’ll be ending up with everything put in the Vanguard 20% equity 🤣

Why overcomplicate?  Just stick it in one fund that broadly does what you want and leave it.  Otherwise, you will tinker endlessly for an unattainable ‘perfect’ mix.

Forever_Red

NithyaH said:

Why overcomplicate?  Just stick it in one fund that broadly does what you want and leave it.  Otherwise, you will tinker endlessly for an unattainable ‘perfect’ mix.

It’s just with all the talk of bonds and gilts that could do well in certain circumstances. I had the plan of putting my money in a global index tracker and just let it do its thing but then doubt creeps in and I start to overthink it.

Its just a lot of money to invest and as my target retirement date gets closer, the fear factor starts to rear its ugly head 🤣

barnstar2077

Forever_Red said:

NithyaH said:

Why overcomplicate?  Just stick it in one fund that broadly does what you want and leave it.  Otherwise, you will tinker endlessly for an unattainable ‘perfect’ mix.

It’s just with all the talk of bonds and gilts that could do well in certain circumstances. I had the plan of putting my money in a global index tracker and just let it do its thing but then doubt creeps in and I start to overthink it.

Its just a lot of money to invest and as my target retirement date gets closer, the fear factor starts to rear its ugly head 🤣

Without a doubt, the hardest thing about a retirement/investment plan is sticking to it! :  )

Putting away money every month into one or two funds, over years and years.  It is hard to not skip the odd month, or to not see something new and think to yourself about switching.

I just keep reminding myself that my plan is sound, it  was sound when I made it, and it still is.  If I chase growth all I am doing is introducing lots of potential failure points (as in human error.)

I don't need the best returns, I just need good enough for a reasonable retirement.

Forever_Red

barnstar2077 said:

Without a doubt, the hardest thing about a retirement/investment plan is sticking to it! :  )

Putting away money every month into one or two funds, over years and years.  It is hard to not skip the odd month, or to not see something new and think to yourself about switching.

I just keep reminding myself that my plan is sound, it  was sound when I made it, and it still is.  If I chase growth all I am doing is introducing lots of potential failure points (as in human error.)

I don't need the best returns, I just need good enough for a reasonable retirement.

Yeah, I think I’ll stick with what I was planning to do. Global index tracker like Fidelity and a Vanguard Equity either 80% or 60%. Then just let it run and see what returns I get and that will determine how much I take out to top up my other income 👍

It won’t stop me from bricking my pants when the time comes to retire in about 12months, but hey ho 😆