Pension fund performance - do you monitor yours, how is it doing, do you actively change it?

[krooton]

I only got started with a proper pension back in 2016

84% of portfolio - Blackrock Consensus 85 (+26%)
9% of portfolio - Vanguard LifeStrategy 80% Equity (+9%)
7% of portfolio - WS Lindsell Train UK Equity (+47%)

Currently my monthly contributions (+ company match) is split 80/20 for Blackrock/Vanguard, no idea if that is good or not, but given all my stuff is up in totality (plus the company contribution being free money), I think things are ok for now.

Just revisited:
84% of portfolio - Blackrock Consensus 85 (+31%)
7% of portfolio - Vanguard LifeStrategy 80% Equity (+14%)
9% of portfolio - WS Lindsell Train UK Equity (+48%)

Averaging up +31% since starting in 2016, which has essentially matches inflation since then too (boooo!), but as work is matching my contributions, I'm still actually up pretty much 100%.

 

[HungryHippos]

snip

A lot here to take in but thanks, I've had a read.

What is the distinction on DB/DC? I think DB is defined benefit, but am not sure what defined benefit actually means.

For DC it's not one I am aware of for meaning.

I doubt any of my pensions are anything special benefit wise, seems fairly run of the mill, though I will check.

Goal with the house overpaying is simply to see if I can get rid of it as a monthly cost, call it catharsis perhaps, but it's one less debt to worry about, even if pension/investments could in theory perform better on a % basis.

Once I get the balance to a reasonable point though I doubt I'll really push it vs other things, I just wanted £100K or so left, so that 3% interest is £3k per year etc.

 

[ChrisD.]

What is the distinction on DB/DC? I think DB is defined benefit, but am not sure what defined benefit actually means.

You are unlikely to have a defined benefit pension unless you have worked in public services such as the Police/NHS/Armed Forces etc.

 

[platinum87]

VHVG would be better, the accumulation version of VEVE.

Its not better its the same, you still need cash to pay fee's

Let's NOT be recommending funds to people.....

Everyone has their own risk profile, time to retirement and other considerations - Recommending/advising this fund and that fund should NOT be done.

The fund he is currently in is insane level trash.

I disagree entirely, your argument renders all forums in existence redundant. We should definitely recommend this, or that.

Being in that fund is a mistake, its also a mistake to anyone who is in that fund, doesn't matter if they are 20 or 60 years old.

 

[Narj]

Just revisited:
84% of portfolio - Blackrock Consensus 85 (+31%)
7% of portfolio - Vanguard LifeStrategy 80% Equity (+14%)
9% of portfolio - WS Lindsell Train UK Equity (+48%)

Averaging up +31% since starting in 2016, which has essentially matches inflation since then too (boooo!), but as work is matching my contributions, I'm still actually up pretty much 100%.

What I like about work salary sacrifice is the instant 40% gain and the warm feeling of sticking two fingers up to the government knowing they can't squander the tax money

 

[robj20]

Still hurts my head thinking about it all. Still not done anything with my Vanguard Target Retirement 2055.
I did change my Scottish Widows to a higher risk one though.

 

[booyaka]

The fund he is currently in is insane level trash.

I disagree entirely, your argument renders all forums in existence redundant. We should definitely recommend this, or that.

Being in that fund is a mistake, its also a mistake to anyone who is in that fund, doesn't matter if they are 20 or 60 years old.

I'm not questioning his fund choice/commenting on his existing fund.... But randomly throwing out fund recommendations to someone and telling them to invest in X or Y is not good.

People need do their own research, assess their own risk level, capacity for loss, what are their goals, time to retirement etc.

Telling someone to put everything into a single fund when you know nothing about their situation / goals / investment amounts etc is just silly.

Of course it matters whether someone is 20 or 60 - Why would a 60 year old who is close to retirement have all their money in a 8/10 risk rated fund with 70% of their money invested in US equities?? (VEVE fund)

 

[HungryHippos]

It was along the lines of what I was looking at anyway, Vanguard global trackers, so no harm in recommending it. I will always take responsibility for my own choices anyway!

I'm not a higher earner so don't need to use salary sacrifice yet to lower my tax rate, if I ever become one I will definitely do anything I can to prevent paying more than I need to.

 

[platinum87]

I'm not questioning his fund choice/commenting on his existing fund.... But randomly throwing out fund recommendations to someone and telling them to invest in X or Y is not good.

People need do their own research, assess their own risk level, capacity for loss, what are their goals, time to retirement etc.

Telling someone to put everything into a single fund when you know nothing about their situation / goals / investment amounts etc is just silly.

Of course it matters whether someone is 20 or 60 - Why would a 60 year old who is close to retirement have all their money in a 8/10 risk rated fund with 70% of their money invested in US equities?? (VEVE fund)

Its not his fund choice its the standard life fund manger criminals.

He explained pretty much everything about his situation.

Risk is volatility, not risk. Its developed world market weighted, so what US is 70%?

But seriously though, you cannot say dont make recommendations on threads where people ask for recommendations, its insane.

 

[200sols]

course it matters whether someone is 20 or 60 - Why would a 60 year old who is close to retirement

I'm curious if when rates were 0% you were recommending near retirees to go heavy into bond funds?

 

[Uther]

I'm curious if when rates were 0% you were recommending near retirees to go heavy into bond funds?

Financial advisors eh. Bonds and annuities, always a great idea. With heavy fees of course...

 

[booyaka]

I'm curious if when rates were 0% you were recommending near retirees to go heavy into bond funds?

why would someone do that?

 

[200sols]

why would someone do that?

You seem to be against world trackers so im interested in what you actually recommend.

You also mentioned risk rating, bond funds typically have a lower risk rating than equity funds.

 

[booyaka]

You seem to be against world trackers so im interested in what you actually recommend.

You also mentioned risk rating, bond funds typically have a lower risk rating than equity funds.

absolutely not against any fund....trackers/active/passive etc - whatever suits your circumstances....

I just dislike the "invest everything you have" into a single fund (EFT or otherwise)....

Active / passive / different management styles.... a little bit of a spread will suit most people....

 

[booyaka]

Financial advisors eh. Bonds and annuities, always a great idea. With heavy fees of course...

Annuities - a rare thing these days despite the improvement in rates in the last couple of years.... Lots of "hybrid" products now that offer bit part annuity/bit part drawdown.

But again - suitable for certain people who wish security in their income stream despite the potential downsides of not keeping pace with inflation, poor death benefits compare to drawdown, lack of flexibility etc

 

[platinum87]

You seem to be against world trackers so im interested in what you actually recommend.

You also mentioned risk rating, bond funds typically have a lower risk rating than equity funds.

The most important thing we should discuss here is risk, risk ratings keep popping up in these types of threads and it is wrong.

Risk in investing is volatility, most people don't seem to understand it is not risk in the normal meaning of the word

It only applies to the short term. Over the long term there is no risk, infact its the opposite.

absolutely not against any fund....trackers/active/passive etc - whatever suits your circumstances....

I just dislike the "invest everything you have" into a single fund (EFT or otherwise)....

Active / passive / different management styles.... a little bit of a spread will suit most people....

What you are saying is what multi-asset managers are saying, and the way you are talking is how they trick people into paying them high fee's to 100% underperform the market

You'd be right if i said put 100% into microsoft, but veve is a developed world index fund, the point of those funds is so you only have one.

 

[slinxy]

Thing is volatility doesn't matter while you are accumulating, only when you retire. 'Slow n steady' is another way of saying lower returns. Anyone with 20+ years to retirement doesn't need to worry about volatility. Also when you do approach retirement age the situation at that time matters a lot. If you retire with a portfolio of bond funds when interest rates are at 0% then this is not 'low risk, low volatility' its the exact opposite and many people have just been burnt badly by it.

I do plan to retire or at least no longer work like I am at the moment within 15 years. No one is advocating 100% bonds portfolio, the days of buying a bond everytime you get paid and eventually living of the returns, which was what the original FIRE movement was based on is long gone. The bonds market has stuffered since the banking crisis and central banks lowering interest rates then forgetting to put them up until now.

Portofolio managers normally start switching between shares to bonds and other money markets 10 years before retirement, that's ideal if you plan to buy an annuity. For me, I rather the most of my funds in shares, some in bonds and some in other sources of income then withdraw down on the one that is most profitable. Having 100% into a pension then having all that pension in just the stock market is a risk level that I'm not willing to take.

 

[Mercenary Keyboard Warrior]

Its not better its the same, you still need cash to pay fee's

Best with vanguard is to pay fees from your bank and keep 100% of the profits in an ISA
Not sure if they allow the same with a SIPP?

I'm curious if when rates were 0% you were recommending near retirees to go heavy into bond funds?

Historically when people were pretty much guaranteed to take an annuity then moving to a position of certainty towards the end made a lot of sense. It still does under normal market conditions.
Its all risk / reward but imagine you were going to have to convert a fund to an annuity and then the COVID crash happened.

Now with more and more taking drawdown the position is slightly different.

The most important thing we should discuss here is risk, risk ratings keep popping up in these types of threads and it is wrong.

Risk in investing is volatility, most people don't seem to understand it is not risk in the normal meaning of the word

It only applies to the short term. Over the long term there is no risk, infact its the opposite.

Partly true. There is more risk inherent in some countries/businesses/regions etc than others.
You need to, as the investor, find the balance that will come from volatility your happy with and the risk your willing to take in regards geography etc.

Do like VEVE though from the perspective of risk reward for sure. Personally I prefer developed markets as opposed to full blown global. although many full blown global hold small fractions in stuff thats properly risky.

 

[200sols]

The most important thing we should discuss here is risk, risk ratings keep popping up in these types of threads and it is wrong.

Risk in investing is volatility, most people don't seem to understand it is not risk in the normal meaning of the word

It only applies to the short term. Over the long term there is no risk, infact its the opposite.

We were discussing retirement. Meaning of risk is very different when you dont have time to recover from a protracted drawdown. They do happen, even in US equity markets and you dont have to go back far in history to see one.

 

[Mercenary Keyboard Warrior]

I do plan to retire or at least no longer work like I am at the moment within 15 years. No one is advocating 100% bonds portfolio, the days of buying a bond everytime you get paid and eventually living of the returns, which was what the original FIRE movement was based on is long gone. The bonds market has stuffered since the banking crisis and central banks lowering interest rates then forgetting to put them up until now.

Portofolio managers normally start switching between shares to bonds and other money markets 10 years before retirement, that's ideal if you plan to buy an annuity. For me, I rather the most of my funds in shares, some in bonds and some in other sources of income then withdraw down on the one that is most profitable. Having 100% into a pension then having all that pension in just the stock market is a risk level that I'm not willing to take.

Similar to me, plan is that within my pension at least I will have buckets. Some left in high risk and some in medium. Each time I need to draw some more down I will look to pull from the best recent performance (or least worst drop).
Have to remember currency risk as well. You don't want it all held in foreign currency when the UK pound for some reason tanks against foreign currency.