Private DC pension, where to put it? What are others doing?
Discussion
I'm not a firm believer in pensions.
But my previous employer paid one for me so I have a DC fund with the Scotch Widows.
It's a relatively small amount but it's quite nice to see what I can do to make it grow, rather than just run with the default funds (25% global equity, 75% uk equity iirc) which admittedly worked fairly ok since the 2008 dip but not so well in the last 18 months where things have now levelled off generally.
What kind of portfolios are other people suggesting for medium term investment right now?
I know that classically the best approach is to just play the long-term game and get growth that way, but part of me feels that currency and/or equities are currently over-valued or bubbly.
But if you subscribe to one or the other being that way then which way do you go?
Cash is great but if you are in an economy that is deflating debt then cash is getting deflated too.
But stocks trends for the last 12 months are hardly going up more than a good spread of cash ISA/savings accounts.
Is cash in a pension fund even protected like a bank deposit?
Ultimately defaults are ok, but making some active choices may prove better... and there is no way to make better choices than to ask for advice and see what fits with your personal views on risk vs reward.
So thanks for any help/advice people are willing to share!
Dave
But my previous employer paid one for me so I have a DC fund with the Scotch Widows.
It's a relatively small amount but it's quite nice to see what I can do to make it grow, rather than just run with the default funds (25% global equity, 75% uk equity iirc) which admittedly worked fairly ok since the 2008 dip but not so well in the last 18 months where things have now levelled off generally.
What kind of portfolios are other people suggesting for medium term investment right now?
I know that classically the best approach is to just play the long-term game and get growth that way, but part of me feels that currency and/or equities are currently over-valued or bubbly.
But if you subscribe to one or the other being that way then which way do you go?
Cash is great but if you are in an economy that is deflating debt then cash is getting deflated too.
But stocks trends for the last 12 months are hardly going up more than a good spread of cash ISA/savings accounts.
Is cash in a pension fund even protected like a bank deposit?
Ultimately defaults are ok, but making some active choices may prove better... and there is no way to make better choices than to ask for advice and see what fits with your personal views on risk vs reward.
So thanks for any help/advice people are willing to share!
Dave
Hi, thanks for the reply.
I'm not sure how good/bad Scottish Widows are. Ironically it was the pension provider my previous employer, a leading pension comms provider, provided for us. I'd assumed it might be fairly good.
I'll admit they've got better over time. I can now do fund swaps over the phone and have web-access to data, rather than having to meet with their representative and write a letter of intent.
Yes, having funds in a wrapper isn't ideal. Ie, will fund managers (ie, the actual funds, not the people at scottish widows) be likely to dump stocks in a bear market, or are they happy to ride the wave down and back up the other side? Ie, they don't panic sell knowing their investors are in the run for the long haul?
I've been reading through all the funds over the last few days.
http://webfund6.financialexpress.net/clientsv21/sc...
Yes cash is dropping, and I think it still attracts the 1% AMC, so about a 2-3% per annum drop currently if you're in cash.
Really I need a crystal ball
When you say pricing what do you mean exactly? A current low appearing price to buy vs historical trend, or does it mean something else?
Historically it's quite hard to gauge because most of their data goes back just 5 years, and the last 5 years have been rather anomalous given the underlying economic drivers of the rather good growth over that period.
I suppose I can't go too far wrong just investing in what I believe in and what I feel is ethical. It's just a matter of going through all the fund descriptions and figuring out which are the ones for me.
But for now it's all in cash while I decide.
Thanks
Dave
I'm not sure how good/bad Scottish Widows are. Ironically it was the pension provider my previous employer, a leading pension comms provider, provided for us. I'd assumed it might be fairly good.
I'll admit they've got better over time. I can now do fund swaps over the phone and have web-access to data, rather than having to meet with their representative and write a letter of intent.
Yes, having funds in a wrapper isn't ideal. Ie, will fund managers (ie, the actual funds, not the people at scottish widows) be likely to dump stocks in a bear market, or are they happy to ride the wave down and back up the other side? Ie, they don't panic sell knowing their investors are in the run for the long haul?
I've been reading through all the funds over the last few days.
http://webfund6.financialexpress.net/clientsv21/sc...
Yes cash is dropping, and I think it still attracts the 1% AMC, so about a 2-3% per annum drop currently if you're in cash.
Really I need a crystal ball
When you say pricing what do you mean exactly? A current low appearing price to buy vs historical trend, or does it mean something else?
Historically it's quite hard to gauge because most of their data goes back just 5 years, and the last 5 years have been rather anomalous given the underlying economic drivers of the rather good growth over that period.
I suppose I can't go too far wrong just investing in what I believe in and what I feel is ethical. It's just a matter of going through all the fund descriptions and figuring out which are the ones for me.
But for now it's all in cash while I decide.
Thanks
Dave
Well I'm ~ 35yrs old, so a good 30-40yrs to "retirement"
There is about £10,000 there, which if you throw into an annuity calculator at the projected rates for ~ 2040 then it's a nothing pension.
Even if I pay quite handsomely into it, the expected growth rates on accumulated pensions today are dire, no nice fat compounding effects.
So even paying in a handsome sum today, locked away till I retire, and then risking the annuity market in 2040, the outcome is just pants. Even if I can just cash the lot for free by then, the projected growth rates from pension calculators seem rather poor as of today.
So personally this pot is something I'd like to try maximise the value of, and happy to take some risks with.
Whatever I do for my income in retirement, it won't be based around a 'pension'. I'm very tempted to use cash ISA compounding for a chunk of my needs at this point. At least that way I can move it around and if I do invest (stock ISA) it'll only attract the fund charges, not an AMC of 1% on top, further crippling potential growth in a low growth economy.
Anyway, going a bit off track there.
My main motivation isn't to plan for retirement with this money, but just see it as something to grow and if it works out then great. If it doesn't, and I lose 50%, it's 50% of bugger all rather than 100% of bugger all in future money terms.
Dave
There is about £10,000 there, which if you throw into an annuity calculator at the projected rates for ~ 2040 then it's a nothing pension.
Even if I pay quite handsomely into it, the expected growth rates on accumulated pensions today are dire, no nice fat compounding effects.
So even paying in a handsome sum today, locked away till I retire, and then risking the annuity market in 2040, the outcome is just pants. Even if I can just cash the lot for free by then, the projected growth rates from pension calculators seem rather poor as of today.
So personally this pot is something I'd like to try maximise the value of, and happy to take some risks with.
Whatever I do for my income in retirement, it won't be based around a 'pension'. I'm very tempted to use cash ISA compounding for a chunk of my needs at this point. At least that way I can move it around and if I do invest (stock ISA) it'll only attract the fund charges, not an AMC of 1% on top, further crippling potential growth in a low growth economy.
Anyway, going a bit off track there.
My main motivation isn't to plan for retirement with this money, but just see it as something to grow and if it works out then great. If it doesn't, and I lose 50%, it's 50% of bugger all rather than 100% of bugger all in future money terms.
Dave
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