Which Pension Fund
Which Pension Fund
Author
Discussion

Orchid1

Original Poster:

906 posts

138 months

Wednesday 10th October 2018
quotequote all
If you were in your early 30's and were going to start putting decent monthly amounts into a pension which type would most people say is best;

Low cost tracker funds,

Funds that are heavily EU/UK weighted,

Funds weighted towards US equities

or

One spread around the world as much as possible??

AllyM

534 posts

206 months

Wednesday 10th October 2018
quotequote all
Vanguard FTSE Global All Cap Index Fund.


mikeiow

8,162 posts

160 months

Thursday 11th October 2018
quotequote all
AllyM said:
Vanguard FTSE Global All Cap Index Fund.
^^^^
THIS
I’d definitely look at lowest cost “world tracker” options.
http://kroijer.com perhaps worth a skim to get some reasoning behind this approach!

Croutons

13,363 posts

196 months

Thursday 11th October 2018
quotequote all
AllyM said:
Vanguard FTSE Global All Cap Index Fund.
Is this what FIRE advocates are all in?

sidicks

25,218 posts

251 months

Thursday 11th October 2018
quotequote all
Orchid1 said:
If you were in your early 30's and were going to start putting decent monthly amounts into a pension which type would most people say is best;

Low cost tracker funds,

Funds that are heavily EU/UK weighted,

Funds weighted towards US equities

or

One spread around the world as much as possible??
‘Best’ in what way?

Chris Type R

8,945 posts

279 months

Thursday 11th October 2018
quotequote all
I think it depends on your circumstances - if you run your own business there's a very tax efficient option - https://www.thisismoney.co.uk/money/smallbusiness/...

xeny

5,482 posts

108 months

Thursday 11th October 2018
quotequote all
Orchid1 said:
If you were in your early 30's and were going to start putting decent monthly amounts into a pension which type would most people say is best;

Low cost tracker funds,

Funds that are heavily EU/UK weighted,

Funds weighted towards US equities

or

One spread around the world as much as possible??
Don't forget the low cost tracker can track any of those other options. Personally I'd lean towards a cheap global tracker

Derek Chevalier

4,667 posts

203 months

Thursday 11th October 2018
quotequote all
Croutons said:
AllyM said:
Vanguard FTSE Global All Cap Index Fund.
Is this what FIRE advocates are all in?
I'd assume they weren't 100% equities

mikeiow

8,162 posts

160 months

Thursday 11th October 2018
quotequote all
sidicks said:
Orchid1 said:
If you were in your early 30's and were going to start putting decent monthly amounts into a pension which type would most people say is best;
Low cost tracker funds,
Funds that are heavily EU/UK weighted,
Funds weighted towards US equities

or

One spread around the world as much as possible??
‘Best’ in what way?
I imagine in the way that is likely to yield the best return over a period over several decades! What other measure would you recommend?

Derek Chevalier said:
Croutons said:
AllyM said:
Vanguard FTSE Global All Cap Index Fund.
Is this what FIRE advocates are all in?
I'd assume they weren't 100% equities
If I were in my 30's, I'd assume they were......what would you suggest?

Derek Chevalier

4,667 posts

203 months

Thursday 11th October 2018
quotequote all
mikeiow said:
If I were in my 30's, I'd assume they were......what would you suggest?
It would be interesting to know for those that were 100% equities during the 2009 shocka how many still choose to stay 100% in equities today.

100% equities may be the "optimal" solution but in the real world, when your portfolio has fallen 30-40% from the peak, I reckon a fair number would throw in the towel.

mikeiow

8,162 posts

160 months

Thursday 11th October 2018
quotequote all
Derek Chevalier said:
It would be interesting to know for those that were 100% equities during the 2009 shocka how many still choose to stay 100% in equities today.

100% equities may be the "optimal" solution but in the real world, when your portfolio has fallen 30-40% from the peak, I reckon a fair number would throw in the towel.
Well, that is always possible - no-one wants to invest at the top, of course....but "throwing in the towel" isn't likely to help things! I've been saving in funds through that period: I didn't suddenly convert things - indeed, I would believe that to do so at the bottom must certainly be the wrong thing to do!
Surely if you keep investing a lump every month, you bounce on the highs and ride out the lows over a multi-year, even multi-decade, scenario?

I come back to "what do you suggest?" (fully cognisant that any ideas on a forum like this is NOT financial advice but just some thoughts!)

mart73

62 posts

171 months

Thursday 11th October 2018
quotequote all
With the return on bonds/gilts being so woeful, it's difficult to know where to go to stay ahead of inflation!

sidicks

25,218 posts

251 months

Thursday 11th October 2018
quotequote all
mart73 said:
With the return on bonds/gilts being so woeful, it's difficult to know where to go to stay ahead of inflation!
I think you’re confusing current gilt yields and the return on gilts!

sidicks

25,218 posts

251 months

Thursday 11th October 2018
quotequote all
mikeiow said:
I imagine in the way that is likely to yield the best return over a period over several decades! What other measure would you recommend?
It would be somewhat naïve to look at expected returns but on ignore the distribution of returns, volatility, drawdown risks, investment costs, liquidity (or lack thereof) etc.

Derek Chevalier

4,667 posts

203 months

Thursday 11th October 2018
quotequote all
mikeiow said:
Derek Chevalier said:
It would be interesting to know for those that were 100% equities during the 2009 shocka how many still choose to stay 100% in equities today.

100% equities may be the "optimal" solution but in the real world, when your portfolio has fallen 30-40% from the peak, I reckon a fair number would throw in the towel.
Well, that is always possible - no-one wants to invest at the top, of course....but "throwing in the towel" isn't likely to help things! I've been saving in funds through that period: I didn't suddenly convert things - indeed, I would believe that to do so at the bottom must certainly be the wrong thing to do!
Surely if you keep investing a lump every month, you bounce on the highs and ride out the lows over a multi-year, even multi-decade, scenario?

I come back to "what do you suggest?" (fully cognisant that any ideas on a forum like this is NOT financial advice but just some thoughts!)
It boils down to how much risk an individual is willing to take, how much risk they need to take to give themselves the best chance of achieving their goals, and capacity for loss - if the market falls by x what impact does that have on you, short, medium and long term.

All of the above in context of your personal objectives, without which the above would be a pointless discussion.

Edited by Derek Chevalier on Thursday 11th October 19:53

Derek Chevalier

4,667 posts

203 months

Thursday 11th October 2018
quotequote all
mart73 said:
With the return on bonds/gilts being so woeful, it's difficult to know where to go to stay ahead of inflation!
One could argue (the right type of) bonds are to dampen down the volatility of a portfolio, not to provide returns. It's worth a study of the various types of bonds in the GFC to see which did the job they were supposed to - which leads me on to sidick's post....

Derek Chevalier

4,667 posts

203 months

Thursday 11th October 2018
quotequote all
sidicks said:
mikeiow said:
I imagine in the way that is likely to yield the best return over a period over several decades! What other measure would you recommend?
It would be somewhat naïve to look at expected returns but on ignore the distribution of returns, volatility, drawdown risks, investment costs, liquidity (or lack thereof) etc.
A very important point. Certain asset classes (or subtypes of asset classes) can show great risk adjusted returns during calm times, but when a crisis happens, they sh!t the bed exhibiting much greater drawdown than would be assumed given their volatility - fat tails at work.

AllyM

534 posts

206 months

Thursday 11th October 2018
quotequote all
Croutons said:
Is this what FIRE advocates are all in?

It’s where I am.

28 and going for FIRE.