Pensions Pots - How much do you need?

[JohnD]

No, I only get an annual statement of the value - Sept 2019 was Bond value on 24 September 2019 £15,814.01

Interesting that it has gone up since late 2019, which was quite a high spot before the pandemic crash.

I wonder what it's invested in.

For example, FTSE100 (green) went down a few points over that period but the 250 (orange) went up 15%. It was a bit of a tumultuous period wih a lot of luck involved.

 

[Notch7]

IIRC their charges are very high.

I had a quick goggle and found a page saying for pensions "There will be an initial product charge of 1.5% of your investment. There will also be an annual product management charge of 1% but this will be waived...." And another for ISAs saying "The total of these charges is therefore a charge of 5% of the initial investment and an ongoing charge that for a typical portfolio will be between 1.6% and 1.9 ..."

When your growth (after inflation) is a few percent a year, this takes a big chunk out of it.

The salesmen will say that their company's skill and knowledge give you such big returns that it compensates for the high charges, but numerous studies find that no fund consistently bears the index, and high charges lead to lower returns.

Interactive Investor charges £10 a month and some Vanguard funds have charges of 0.1% a year with no initial charge. There are other good value companies around but those are examples I use.

In my case I also have shares in particular companies. This adds the risk that you make a bad call, or stick with someone going downhill. I once had shares in RBS

An account at Interactive means I am not tied to any one fund management company. I do everything online.

Best advice is probably to go for low-cost trackers. You will not get the services of a salesman. Sorry, I mean "adviser"

You can diversify by having, say, a UK fund, a European fund, a Far East fund, an International fund. Some people think that since Brexit, UK is bound to lag Europe. So far they have been right. If you think that Healthcare is a coming growth industry, you can invest in a Healthcare fund. No stock picking, so no highly paid guesswork, they just invest in the wide market.

Probably unwise to put everything into one sector.

I generally buy the Income version of funds, there are usually Accumulation or non-distributing ones which are otherwise the same. I set mine to "income reinvestment" but when there have been hard times, I just change it to have the income paid to me. No need to sell holdings or close the account. I also have shares in Investment Trusts, and in a "Fund of Investment Trusts" which has been one of my best.

My main pension has six constituents, which is enough because each has hundreds of holdings.

thats interesting as I have a £120k I need to use to put towards a pension and at the moment its just sitting in a Lloyds ban account -you mentioned Vanguard a while back and Ive been thinking of dipping my toe int he water with one of those.

how do you manage you portfolio -spreadsheet or special portfolio software?

 

[JohnD]

I use Microsoft Money which is a very old program, no longer supported. It does reports and graphs. Mine has a lot of history of prices and transactions. I also graph off the FT portfolio. E.g. the comparison graph above.

The platform operators have tools that can produce reports showing, say, valuation, price change today, price change since purchase. I find it useful to keep a folder of annual valuations and investment performance, and, for the last year, monthly ones. Paper is quite old-fashioned but I like it.

I have not compared tools available per platform, but IIRC Vanguard is well rated. It doesn't suit me because I don't want to be limited to Vanguard funds.

 

[Harry Bloomfield]

Interesting that it has gone up since late 2019, which was quite a high spot before the pandemic crash.

I wonder what it's invested in.

Reading the Aviva web site, they have it well spread in lots of different investments, in the UK, the US and around the world. It gives a percentage figure, for each area of investment.

It has gone up substantially since 2019, but took a big dive in 2020 during the height of the pandemic.

 

[Notch7]

I use Microsoft Money which is a very old program, no longer supported. It does reports and graphs. Mine has a lot of history of prices and transactions. I also graph off the FT portfolio. E.g. the comparison graph above.

The platform operators have tools that can produce reports showing, say, valuation, price change today, price change since purchase. I find it useful to keep a folder of annual valuations and investment performance, and, for the last year, monthly ones. Paper is quite old-fashioned but I like it.

I have not compared tools available per platform, but IIRC Vanguard is well rated. It doesn't suit me because I don't want to be limited to Vanguard funds.

many thanks for that advice -I did wonder about just keeping it on paper, its easy to get sidetracked by the technology of doing stuff on the computer.

 

[JohnD]

It has gone up substantially since 2019, but took a big dive in 2020 during the height of the pandemic.

With luck it will continue improving while (if) the world economy continues to improve.

See if you can find mention of the charges and costs applied to your account.

 

[Harry Bloomfield]

With luck it will continue improving while (if) the world economy continues to improve.

See if you can find mention of the charges and costs applied to your account.

Annual management charge £124.71 Covers the cost of managing your funds and to cover the cost of running your bind. That is for the £16,826.00.

It says there are no charges for withdrawing from the fund, after they have had it for five years. I really ought to add more funds to it..

 

[Deleted member 18243]

I'm no expert in financial chicanery, but the FTSE 100 index is barely higher than it was 20 years ago, or even 30 years ago.

If that's the case, your money would have been better off earning interest in a bank or building society.

Or am I missing something?

 

[Doug99]

I'm no expert in financial chicanery, but the FTSE 100 index is barely higher than it was 20 years ago, or even 30 years ago.

If that's the case, your money would have been better off earning interest in a bank or building society.

Or am I missing something?

They say investing in shares is a long game but as you say the FTSE is at the same level now as it was 20yrs ago. It has spiked considerably during that time and the difficulty is knowing when to cash in. Many blue chip companies pay dividends which can offset the gloom somewhat.

 

[JohnD]

Or am I missing something?

1) No it isn't

2) Reinvested dividends. Compound growth.

3) Some would say it also helps to avoid investing in a country that votes to damage its economy and growth.

 

[JohnD]

I'm no expert in financial chicanery, but the FTSE 100 index is barely higher than it was 20 years ago, or even 30 years ago.

as you say the FTSE is at the same level now as it was 20yrs ago.

Nope.

1) No it isn't

FTSE 100 Index
Monday, October 14, 1991 Close 2,574.50
Monday, October 15, 2001 Close 5,067.26
Thursday, October 14, 2021 Close 7,207.71

https://markets.ft.com/data/indices/tearsheet/historical?s=FTSE:FSI

 

[IT Minion]

Nope.


FTSE 100 Index
Monday, October 14, 1991 Close 2,574.50
Monday, October 15, 2001 Close 5,067.26
Thursday, October 14, 2021 Close 7,207.71

https://markets.ft.com/data/indices/tearsheet/historical?s=FTSE:FSI

God, how can you not understand, Andy's just saying that it hasn't grown as there's still only 100 companies in it.

 

[JohnD]

3) Some would say it also helps to avoid investing in a country that votes to damage its economy and growth.

warning:

Brexers must not click on this graph showing relative growth UK and Europe since referendum day.



DJ EuroSTOXX 50 SX5E:STX

FTSE 100 Index FTSE:FSI

 

[Deleted member 18243]

FTSE 100 Index
Monday, October 14, 1991 Close 2,574.50
Monday, October 15, 2001 Close 5,067.26
Thursday, October 14, 2021 Close 7,207.71

So in the ten years from 1991 to 2001 it increased by (roughly) 100%, which I'd say is pretty good. Then in the subsequent twenty years it only increased by 50%, which is not so good, in fact it's greatly reduced growth.

In the past 20 years it has fluctuated between (roughly) the 5000 and 7000 levels. Some will have made money gambling on the various peaks and troughs, but overall doesn't appear to be growing.

The index is supposed to show the value of the country's top 100 companies, and therefore it looks like those companies have stagnated for 20 years. Or am I missing something??

 

[JohnD]

In the past 20 years... overall doesn't appear to be growing.

except that it's gone up 42%, plus reinvested dividends, even though in recent years it has been badly damaged by the Brexit catastrophe, and the Pandemic crash.

that's what you call "doesn't appear to be growing?"

If you had bought a Premium Bond for £1 twenty years ago, today it would be worth £1. That's "not growing." Though with luck you might have received some prize money.

let's suppose you invested £100 twenty years ago.

And received 4% dividends which you reinvested to achieve compound growth.

and for some reason the price of your investment did not change

What would it be worth today?