Bad pension advice on funds?

setmefree2

TH1878 wrote: »

With inflation running so high, that's a potentially dangerous strategy IMO. By all means have some cash exposure but 100% with 35 years to retirement??

Where is your pension with? It's fairly unusual for providers to still charge you for fund switching nowadays.

I don't intend to leave it in cash forever, just until the stock markets sort themselves out. Why would I leave my pot in the stock markets? IMHO inflation will not destroy my pension in the short term as much as the alternatives.
The only regret I have is that I didn't put it all in cash at Easter as I still managed to lose 4% - most of this was the rubbish "managed fund"....hindsight is a wonderful thing.

Retired_I.F.A.

Imagine Ladbrooks were to open a book on what'll be the best over the next 10 years and it offered odds akin to these...:

1:2 China
Evens. Asian markets excluding Japan
11/10 Russia and fomer soviet countries.
2/1 Uk Equities
10/1 Gilts and bonds

Would a cautious investor bet on gilts or china ?

TH1878

setmefree2 wrote: »

I don't intend to leave it in cash forever, just until the stock markets sort themselves out. Why would I leave my pot in the stock markets? IMHO inflation will not destroy my pension in the short term as much as the alternatives.
The only regret I have is that I didn't put it all in cash at Easter as I still managed to lose 4% - most of this was the rubbish "managed fund"....hindsight is a wonderful thing.

You can still make money on the stock market in falling markets (google shorting) and some fund managers are particularly adept at it. The trick is identifying which ones.

I'm not a particularly big fan of life offices' own managed funds as they invariably (not always) offer poor returns when compared to a well constructed (and re-balanced) portfolio.

MiserlyMartin

setmefree2 wrote: »

Hi Miserlymartin,

I'm no expert on pensions (by a mile!) so please don't shout at me everyone but I would like to put another view. The op sounds like a cautious investor to me too. I too am a cautious investor and I put half my pension into cash around Easter time and have now put the whole of my pension in cash. I know that everyone will scream in horror on here but I don't see how anyone can make money in the current market (what did Soros say - "a period of mass-destruction of wealth?") .:o I will review the situation again in the Autumn but I might even leave my pension in cash until next year. Do you have the option of cash?

All The Best

SMF2

PS I have a FP pension type that can be moved into different funds everyday (if I like) - costs just £10 for each move

I think I do have the option of a cash fund, according to the data on trustnet. I can switch as many times as i like for no charge. Heres a fund which caught my eye. Index Linked
http://www.trustnet.com/pen/funds/?fund=488
Yield to date 7.45% and did 37% over 5 years. Surely that is safe but better than a cash fund? I am new to this DIY pension stuff but it is seemingly better to follow this route than listening to my advisor. By the way I am 35 years from retirement if I retire at 70.

jamesd

MiserlyMartin, that's safer but at only 6.3% before inflation a year averaged over the last five years it's not going to do a decent job of providing a nice pension. It would be a good thing to have it as part of a selection of funds, though.

MiserlyMartin

Oh I don't plan to keep it in such safe funds for the reminder of the next 35 years, this is just a short term measure while I feel we are in a bear market and have depression/recession risks. Which leads me to ask the question.... is it a good idea to micro manage your pension funds in this way and switch to lower risk funds iin times like these providing the timing has been correct?

Of course in my current case my timing has been terrible:

Today the FP property fund is down 23% YoY, Armetis UK Special situations is down 17% YoY and my other 2 funds are down around 3% YoY. I used to have the Fidelity Special situations fund and that is not down by much at all, but i switched to Armetis under advice from the same IFA. Oh god sack the advisor!! But it is a dire day for the stock markets today. FTSE 100 down 122

jamesd

It's a good idea to micro-manage your pension funds and switch to lower risk funds providing the timing is correct.

It's already very late to be switching and there's a very high risk that you'll be selling near the lowest value, then buying back at a higher value. But high risk is not certainty and things could fall far enough to make it wise to sell now.

Ultimately, though, pension investing is long term. This happens and will happen again many times before you retire.

Jennifer_Jane

It may be a bit late to move funds esp. now, but I managed to move from my fairly high-risk funds into an Index gilt fund on 19th June and the fund is up 1.89%, whereas the fund I was in is down 7.78% and a UK Passive fund is down over 4% over that period.

Surely Miserly Martin is right in micro-managing and just keeping things ticking over until things begin to look brighter?

Could I ask, though, is it likely that if interest rates go up, then the gilt fund values will go down? Is that something to just be aware of?

We can make changes to our funds twice-yearly for free, and then there is a possible charge. As very few people make any changes, however, no-one knows what the charge is. I'm one of the few chasing sunbeams LOL.

Jennifer_Jane

jamesd wrote: »

It's a good idea to micro-manage your pension funds and switch to lower risk funds providing the timing is correct.

It's already very late to be switching and there's a very high risk that you'll be selling near the lowest value, then buying back at a higher value. But high risk is not certainty and things could fall far enough to make it wise to sell now.

Ultimately, though, pension investing is long term. This happens and will happen again many times before you retire.

jamesd: this is good news, it seems you think we are close to the bottom and it's not worth reassessing in Autumn, which Miserly Martin said he was going to do. Do you think that we are close to the bottom? My own feeling is that we have a year or even 18 months of decline, with the banks and retailers still feeling the pinch and only improving after the next set of annual results or even the ones after that. Could you let me know what your instincts tell you, please?

Thanks

jamesd

Jennifer_Jane, all I know is that they have already fallen a lot. This does not mean that I think that they will not drop a lot more.

Small investors are renowned for taking money out at the worst possible times, when prices are low, and buying at times when prices are high. It's a great way to lose a lot of money.

In the past, during severe drops in the UK the total drop has reached about 45%. No way to tell how far this one will go but the combination of lack of lending, property trouble and high oil price is a significant challenge. The less severe ones have gone down by about 20% and we're already there. I'm not pulling out money that I've already invested but my new money is either being drip fed or put into cautious investments.

Your 18 month schedule seems reasonable. My guess is that six months from now would be a decent time for serious drip feeding and now is not a bad time for it.

Don't expect expert comment from me, though. I'm definitely not an expert and even more certainly not a fortune teller. Closer to a complete beginner than an expert.

I do think that it's a bad time to switch out of equities and into only fixed interest. I'd go for absolute return funds and maybe a mixture of other types, not purely the most cautious. Something like BlackRock's UK Absolute Alpha fund could fall a lot but there's a good chance that it'll actually keep on making money. Same for CF Arch Cru Investment Portfolio. But no guarantee. Diversification beats fully pulling out, IMO.

For someone who's patient, now's a better time to buy than last year. Maybe not a better time than next year.

I don't think it's a good time to buy banks or property companies. When I do I'll probably use the PSigma Income Fund run by Bill Mott to get lots of diversification within that and consumer-facing sectors.