Medium Risk Investment

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berbatov10
berbatov10 Posts: 372 Forumite
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in Pensions, annuities & retirement planning
I am about to receive a lump sum of £130K as part of my pension. What can I realsitically expect as a % return from a medium risk investment
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  • Albermarle
    Albermarle Posts: 22,179 Forumite
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    During the last few years , where markets have been on the up, especially in the US , you could maybe have seen around 7%pa. After taking inflation into account 4.5/5% .
    The general consensus is that the next decade will not be as fruitful and a better guesstimate could be 2% + inflation .
    They can only be ball park figures as 'medium risk' could mean a range of products and in any case predicting financial markets with any accuracy is well nigh impossible.
  • Audaxer
    Audaxer Posts: 3,508 Forumite
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    I am hoping medium risk would give a minimum average 4% return over the long term, but maybe over 20 years rather than 10 years.
  • SonOf
    SonOf Posts: 2,631 Forumite
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    What can I realsitically expect as a % return from a medium risk investment

    What is your definition of medium risk?
    Maybe state how much loss you could tolerate and/or afford to have in a 12 month period
  • Alexland
    Alexland Posts: 9,653 Forumite
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    I would expect a balanced 60/40 asset allocation to deliver around inflation after fees over the medium term.

    https://www.vanguardinvestor.co.uk/articles/latest-thoughts/markets-economy/why-investors-prepare-for-lower-returns
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Alexland wrote: »
    I would expect a balanced 60/40 asset allocation to deliver around inflation after fees over the medium term.

    Did you mean to quote a figure?
  • Audaxer
    Audaxer Posts: 3,508 Forumite
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    Alexland wrote: »
    I would expect a balanced 60/40 asset allocation to deliver around inflation after fees over the medium term.
    Alex, I have read various investors mention they expect returns to match inflation or return x% plus inflation. I was wondering, do equity values tend to rise in line with inflation? If UK inflation was to reach say, 5% or more, would UK equity fund values rise at around the same rate?
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Audaxer wrote: »
    Alex, I have read various investors mention they expect returns to match inflation or return x% plus inflation. I was wondering, do equity values tend to rise in line with inflation? If UK inflation was to reach say, 5% or more, would UK equity fund values rise at around the same rate?

    If the rise were due to wage settlements then result could be to depress domestic stock prices (in the short term), as would hit profitability.
  • Alexland
    Alexland Posts: 9,653 Forumite
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    Thrugelmir wrote: »
    Did you mean to quote a figure?

    No over the medium term just inflation after fees. Over the long term I would expect a balanced investment to do a percent or two higher than inflation after fees. Asset values seem to eventually follow inflation but there may be some unwinding of current valuations first. Still much depends on what happens with interest rates.
  • berbatov10
    berbatov10 Posts: 372 Forumite
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    I have been offered some free Investment advice with PMAS who gave some figures during a seminar, I was just wondering how realistic that might be
  • SonOf
    SonOf Posts: 2,631 Forumite
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    berbatov10 wrote: »
    I have been offered some free Investment advice with PMAS who gave some figures during a seminar, I was just wondering how realistic that might be

    Advice is never free. More likely you got information rather than advice.

    And without knowing the figures, we cannot say how realistic they are.
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