Bad pension advice on funds?

dunstonh

In the past, during severe drops in the UK the total drop has reached about 45%.

Just to add to that, here is some factual data. I have used the UK all companies sector average here.

Between 1/9/2000 and 21/03/2003 the sector dropped by just over 43%. That was a three year decline.

However, just 12 months later to 1/3/2004 the market went up from that point by 39.57%. The following 12 months went up just over 14%.

If you had fully pulled out and waited for the bottom you may have got a false dawn in October 2001 when the markets went up just over 19% in 3 months. Some may have re-entered then thinking things were better only to find it drop 30%. Some may have pulled out again after losing another 10 or 15% only to miss the 12 months that followed with that 39% recovery.

At what point do you pull out and what point do you go back in? How much do you lose by pulling out that you wouldn't have lost if you had stayed back in and caught the recovery that you didn't benefit from by not having the money there.

You may get lucky and time it right. You may not. However, generally people tend to lose more when making large swings around the asset classes than just tweaking periodically by rebalancing and protecting profits.

setmefree2

MiserlyMartin wrote: »

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.

Hi

This is what I have done (put my pension into cash and guilts)and my work colleagues too. IMHO the stock markets still have some way to fall yet - the only markets that I would have personally have a a punt on would be Russia or Latin America but these weren't offered to me in my fund. In the end it's up to you.

If we are entering a peroid of "wealth destruction", then for me it becomes a question of where am I going to lose the least:rolleyes:

Whatever you do make your own decisions. What I have found over the years is that you need to keep your eye on the ball and not let other people make your decisions.;) Oh and I like to sleep soundly at night too!

purch

the sector dropped by just over 43%

Of course you must remember that the 43% drop from the higher high is not made up in any way by the subsequent 39.5 % and 14 % rises

If you held put throughout from September 2000 to March 2005 you would still have been looking at a loss.



If we assume those % for the actual All Share Index


FTSE All Share Index was about 3250 so 43% takes it to 1850 (actually 1805)

the market went up from that point by 39.57%

From 1850 that takes it to 2580 (actually 2240)

The following 12 months went up just over 14%

Takes it from 2580 to 2945 (actually 2495)


Bottom line ...... % Growth or Drop numbers can easily 'mask' true performance