Pension value diving

roadweary

As I seem to recall the last time Trump was in power and causing trade wars my pension has dived steeply in value.  Of course I hope it will recover again, but who knows, there are mutterings about Trump trying to change US law to serve a third term.

Anyhow, it's too late for me to do much now, but hoping that the pension will recover somewhat in the future.....and without expecting people to have a crystal ball, how do I safeguard the value of my pension?

I've heard all the spiel from Standard Life about how they gradually move your investments to less risky ones as you near retirement age....but what are those?

For argument's sake, imagine I wanted to do it now.....how would I instruct them to use my pension pot if I were looking for the safest investments for say 80% of my pot, but that I'm happy for them to continue as is with the remaining 20% and anything else I put in?

And, if it makes the answer simpler......forget how Standard Life operate....if I chose to take charge of how my pension were managed, what are the safest investments?  I appreciate that safety probably reduces the opportunity for growth.

Thanks

Voyager2002

Pension investments are usually divided mainly between equities (shares in companies) and bonds (receipts for money that has been loaned to governments). Conventional wisdom is that while shares deliver the most growth over the long term, their value may fall sharply and if this happens just before you retire, the result is unfortunate. Bonds are seen as safer, since their value is conventionally expected not to fall much (although this did happen relatively recently). They are expected to hold their value but not to grow much. They are therefore seen as appropriate for an increasingly large share of your pension pot as you get closer to retirement.

So: you could instruct your pension managers to move a larger share of your 'pot' into Bonds, or simply tell them that your risk profile has changed.

As you can probably tell, personally I am sceptical about Bonds and I would not advise relying on them.

400ixl

Typically they increase the proportions towards bonds and cash rather than shares. Like shares, there are good and bad times to buy bonds, or hold cash so it all needs consideration.

Until you sell the shares you have, you haven't actually made a loss.

Probably best to speak to and IFA as people on here shouldn't be giving financial advice.

dunstonh

Anyhow, it's too late for me to do much now, but hoping that the pension will recover somewhat in the future.....and without expecting people to have a crystal ball, how do I safeguard the value of my pension?

What did you do in 2022 when markets fell? 
What did you do in 2020 when there was a larger fall than now?
What did you do in 2018 when there was a similar sized fall?
What did you do in 2015/16 when there was a similar sized fall?
What did you do in 2008 when there was a much larger fall?
What did you do over 2000-2002 when ther was a larger fall?

roadweary

dunstonh said:

Anyhow, it's too late for me to do much now, but hoping that the pension will recover somewhat in the future.....and without expecting people to have a crystal ball, how do I safeguard the value of my pension?

What did you do in 2022 when markets fell? 
What did you do in 2020 when there was a larger fall than now?
What did you do in 2018 when there was a similar sized fall?
What did you do in 2015/16 when there was a similar sized fall?
What did you do in 2008 when there was a much larger fall?
What did you do over 2000-2002 when ther was a larger fall?

I had almost no pension 2000 - 2002.  Up to 2016 I didn't really look at my pension much, retirement seemed so far off. 

In Trump's first term (so your 2018 / 20 examples) I looked at my pension falling with dismay but it picked up roughly after his term finished.

And this time I am also looking at my pension in dismay, hoping it will recover, but also hoping that in 5 years' time I might be able to semi-retire.

So I imagine I won't do anything much and hope that things improve in the next 2- 3 years.....however, I do have a material worry what will happen politically that could have a longer term impact on my pension.

I guess that's why I'm wondering what I might do if in say 3 years' time, my pension is back on a level and I want to try to insulate it from the next fallout.

Of course, no investment is certain so there may be little I can do.

And as I've read and mentioned here, until I sell my shares....I haven't made a loss.  But of course seeing the fall 'on paper' isn't a happy experience

barnstar2077

I wouldn't move anything into bonds at the moment, equities are down and you will just be cementing the loss.  Just wait a while, it will all sort itself out soon enough.

Hoenir

barnstar2077 said:

 Just wait a while, it will all sort itself out soon enough.

Then you know more than most. 

QrizB

roadweary said:

And this time I am also looking at my pension in dismay, hoping it will recover, but also hoping that in 5 years' time I might be able to semi-retire.

In your first post you said:

roadweary said:

I've heard all the spiel from Standard Life about how they gradually move your investments to less risky ones as you near retirement age....but what are those?

Do Standard Life know that you might want to retire in five years time? If they do, and you're in a lifestyling scheme where they de-risk as you approach retirement, they should already be doing it.

Do you know what funds you are currently invested in, and what risk level they offer? Are you comfortable with that?

roadweary

QrizB said:

roadweary said:

And this time I am also looking at my pension in dismay, hoping it will recover, but also hoping that in 5 years' time I might be able to semi-retire.

In your first post you said:

roadweary said:

I've heard all the spiel from Standard Life about how they gradually move your investments to less risky ones as you near retirement age....but what are those?

Do Standard Life know that you might want to retire in five years time? If they do, and you're in a lifestyling scheme where they de-risk as you approach retirement, they should already be doing it.

Do you know what funds you are currently invested in, and what risk level they offer? Are you comfortable with that?

I was due to contact them shortly, although the last time I looked into this - admittedly quite a while ago, the percentage change in performance between the different schemes they had was very small.

Also, in 5 years' time I'm looking to start cutting back my hours....and that potentially could mean that I work 4 then 3 days a weeks for a few years.....and in one version of my planning, because I'll be putting much less (possibly nothing) into my pension, I'll have enough cash to live on.  Which is a very long way of saying that my actual need to access my retirement funds could be 8 or more years away.

The other thing is, it might be sensible to leave things as they are for a couple of years as the current investment mix, might also benefit from a bigger bounce back then the other funds.

Tbh, I've been skeptical of taking advice from an IFA as I see no 'league table' or proof of how good their advice is.  

At this stage with the volatility of everything, I'm not sure it's a good time to make changes....I guess time will tell....but I think I'm hearing that to change my investment mix, they'd effectively selling some of what I have now, so that would realise the current drop in value.

Of course, if things keep dropping and don't bounce back in 5+ years, then I'd wish I'd have cut my losses....but as I say, barring a 3rd term from Trump hopefully things will start to recover soon.

crv1963

roadweary- I am no expert but until you sell you haven't lost a penny. Cutting losses is simply another way of locking in the hypothetical loss. Yes markets rise and fall all the time, some of both are larger than others. Some suggestions are that when the market falls it is the ideal time to invest more, as even if it falls further when it recovers you actually gain more. Falls recover, historically in less than your 5 year timescale.

Either do nothing or invest more is my thoughts on this current hiccup! I am not an expert or an advisor.

dunstonh

Tbh, I've been skeptical of taking advice from an IFA as I see no 'league table' or proof of how good their advice is.  

How would you league table advice?  It's either good or bad, and you get consumer protection against the bad.