Pension Investments

MIZZ12

Hi, I have a pension pot that is heavily invested in equities , a chunk of which is US (c30% US- centric, 40% Global, 12% Diversified Asset, 17% Global Bonds) and this has taken a real hit in the last month or so thanks to Mr T's shenanigans!  My question is, (and yes, I am panicking!) do I leave it invested as it is and ride things out, or do I switch more of my current holding into Bonds - but then this means I am in effect crystallising losses I guess?  Not sure what to do or how I can find out.  I know that no-one can say what the markets will do, but I just wanted to get a sense from some financially savvy people what would make most financial sense in this situation.  Thank you !

Labtebricolist

Assuming you’re not about to go into drawdown then generally it is sensible to ride out market turbulence and leave stuff well alone.

A global equity tracker fund may be about 5 or 6 percent down year to date but is still 7 or 8 per cent up on where it was 12 months ago.  Of course, the orange occupant of the White House has the power to cause a lot of havoc in global markets over the next few years, but he’s unlikely to completely destroy the productive capacity of the global economy over the long term, and if you’re well diversified it will all turn out OK.

dunstonh

My question is, (and yes, I am panicking!) 

Just picking on that bit first.....  why are you panicking over what is a relatively small drop?

do I leave it invested as it is and ride things out, or do I switch more of my current holding into Bonds - but then this means I am in effect crystallising losses I guess?

What did you do in 2022 when it went down?
What did you do in 2020 when it went down three times as much?
What did you do in 2018 when it went down in quarter 4?
What did you do in 2015/16 when there was a larger fall?
What did you do in 2008 with the credit crunch when stockmarket fell around 45%?
What did you do over 2000, 2001 and 2002 when markets fell almost three years in a row by around 43%?

I am going to guess you did nothing.  So, why do you want to do something now?

Markets are just doing what they always do and will do again and again and again.  And don't forget that bonds dropped by more than this over Dec 2021 to October 2023.

There is nothing going on at the moment that is scary or unusual that you haven't seen many times before.

DRS1

You may need to spell out your time horizon.

If you have 30 years to go to retirement that is one thing.  If you have 30 days that is another.

Hoenir

Now the never ending bull market seems to be over.  The question to ask yourself is whether you are still comfortable in managing your own portfolio. When investors stampede for the exits. There's not the security and reassurance of investing with the herd. Making informed decisions is far from easy. With no end of conflicting views. 

Bostonerimus1

How many years are you from retirement? How much do you have in your DC pension relative to the amount you want to drawdown?

poseidon1

MIZZ12 said:

Hi, I have a pension pot that is heavily invested in equities , a chunk of which is US (c30% US- centric, 40% Global, 12% Diversified Asset, 17% Global Bonds) and this has taken a real hit in the last month or so thanks to Mr T's shenanigans!  My question is, (and yes, I am panicking!) do I leave it invested as it is and ride things out, or do I switch more of my current holding into Bonds - but then this means I am in effect crystallising losses I guess?  Not sure what to do or how I can find out.  I know that no-one can say what the markets will do, but I just wanted to get a sense from some financially savvy people what would make most financial sense in this situation.  Thank you !

OP the people trying to give you helpful or reassuring comment, need context and  background here.

In a previous post back in October 2023 you indicated your bank employer sponsored  DC pension pot was worth £480,000.

What is it worth now? Has it actually diminished compared to the October 2023 baseline value, ie would you actually be realising losses or merely diminishing the quantum of overall  gains that hopefully  accrued  since 2023?

You were 53 in 2023. What is your target retirement date, and do you plan to fully or partly retire at that point? 

Back in 2023 there was a suggestion that your pension pot may have lifestyling aspects which (unless you intervened) would be gradually moving you across to less volatile investments. Is this still the case, or did you turn off lifestyling?

Fill in the above gaps in your narrative and perhaps the various respondents can provide more targeted comments.

Cobbler_tone

I think (during dips like this) you have to take a pragmatic view. Starting in 2021 on Feb 11th my (top up DC pot) was around £92,500, on the 20th Feb I added £2,100 and the high was around £95,000. Today it is £92,126.
I have made a contribution this month of £2,800 which will be invested in a cash plan and the £92,126 will do its thing.
My total contributions since 2021 have been £87,080, 6.01% growth. I haven't worked out how much this has cost me in my pocket but it will be a fraction of that, factoring in tax savings and company contributions. On top of that, over the past 20 years I have sold company shares for £120k which cost me c£20k net.
I figure there is only so much damage that can be done with the £92,126 and my future contributions are protected (as much as they can be) over the final couple of years.
With anyone finishing work and market performance, there are elements down to timing and luck.

I appreciate that it must create more uncertainty if you are seeing tens of thousands wiped off (at any time) if you are fully reliant on a DC pot, although with a bigger pot I would say there is more opportunity for recovery. It is all relative.

MIZZ12

poseidon1 said:

MIZZ12 said:

Hi, I have a pension pot that is heavily invested in equities , a chunk of which is US (c30% US- centric, 40% Global, 12% Diversified Asset, 17% Global Bonds) and this has taken a real hit in the last month or so thanks to Mr T's shenanigans!  My question is, (and yes, I am panicking!) do I leave it invested as it is and ride things out, or do I switch more of my current holding into Bonds - but then this means I am in effect crystallising losses I guess?  Not sure what to do or how I can find out.  I know that no-one can say what the markets will do, but I just wanted to get a sense from some financially savvy people what would make most financial sense in this situation.  Thank you !

OP the people trying to give you helpful or reassuring comment, need context and  background here.

In a previous post back in October 2023 you indicated your bank employer sponsored  DC pension pot was worth £480,000.

What is it worth now? Has it actually diminished compared to the October 2023 baseline value, ie would you actually be realising losses or merely diminishing the quantum of overall  gains that hopefully  accrued  since 2023?

You were 53 in 2023. What is your target retirement date, and do you plan to fully or partly retire at that point? 

Back in 2023 there was a suggestion that your pension pot may have lifestyling aspects which (unless you intervened) would be gradually moving you across to less volatile investments. Is this still the case, or did you turn off lifestyling?

Fill in the above gaps in your narrative and perhaps the various respondents can provide more targeted comments.

Thanks poseidon1, you are absolutely right, some context would help but I just wanted an initial reaction before I added more context and thanks for referencing my previous posts.  So my pension pot had grown to c600k although this is shrinking by the day - this growth has also come from myself maxing out on contributions plus generous employer contributions.  I haven't decided on a retirement date but in any case I would choose to stay invested for as long as possible.  I did move my investments from the lifestyling into a Freechoice option which means they will not automatically move to less volatile investments; it's up to me to decide which funds to invest in and hence I have gone with those listed in my original comment (although I have chopped and changed a bit in the interim).  I hope this helps give some additional context and thanks for your comments.

Albermarle

Cobbler_tone said:

I think (during dips like this) you have to take a pragmatic view. Starting in 2021 on Feb 11th my (top up DC pot) was around £92,500, on the 20th Feb I added £2,100 and the high was around £95,000. Today it is £92,126.
I have made a contribution this month of £2,800 which will be invested in a cash plan and the £92,126 will do its thing.
My total contributions since 2021 have been £87,080, 6.01% growth. I haven't worked out how much this has cost me in my pocket but it will be a fraction of that, factoring in tax savings and company contributions. On top of that, over the past 20 years I have sold company shares for £120k which cost me c£20k net.
I figure there is only so much damage that can be done with the £92,126 and my future contributions are protected (as much as they can be) over the final couple of years.
With anyone finishing work and market performance, there are elements down to timing and luck.

I appreciate that it must create more uncertainty if you are seeing tens of thousands wiped off (at any time) if you are fully reliant on a DC pot, although with a bigger pot I would say there is more opportunity for recovery. It is all relative.

Regarding the detail in bold. However £92K does not buy today what it bought in Feb 2011. Probably about 20% less.

Personally I have been sanguine about my SIPP/ISA moving down and up and then down a bit over the last 4 years, but the 20% inflation has been the real problem.

Hoenir

Cobbler_tone said:

I think (during dips like this) you have to take a pragmatic view.

Reading this reminded me of a quote I read earlier today by the CEO of a US investment house. 

“Buying the dip now is like buying discounted tickets to a show without knowing who’s performing.”