Retirement

[safcsafc]

Hi all

I have had a bit of an awakening over the last few days and am extremely worried I have completely screwed myself over.

Years ago when I started in my current place I picked a couple of low risk investments on Aviva and didn't think much of it. I pay the max percentage in and get a decent contribution from my employer but have had literally zero growth in that time. It is effectively within £200 of what I have ever paid in. Naively I always thought everyone was in the same boat especially over the last six years since covid, wars, cost of living etc. Only when I mentioned this in passing to someone I work with were they incredulous about it and got up their pension pot to show me about £10,000 of growth (in a genuine way, certainly not meant as a brag)

Just not sure where to go from here. I'd say half my pension pot has been added over the last 5 years, How do I get it into a fund that is going to work for me on this basis? I don't know where to start naively. I have read mixed things on funds, mixed things on using an advisor which takes 1.5% a year but does very little. Have I totally fucked myself over?

For context I have approx 30 odd years working ahead of me. Feel incredibly stupid to have assumed all along this was the norm as I am actually quite on top of my pension and have paid in the max percentage despite being under a cost of living crisis for a long time in a bit to actually retire at a normal age once older. Have I fucked myself right up?

you’ve been adding to a pension pot for years and still have 30 years to go so it sounds like you’re in a good place with it.

Not advising but I chose the highest risk they offered and said I’d just see what happens. People can overthink these things imo. Putting anything away is better than nothing. The main benefit for me is its salary sacrifice, so I’d need to see a 40% loss before really losing out. At the minute the returns have been well above that and what I’ve put in.

 

[Darlo1973]

Risk in the next 2-3 years, certainly. Risk over 20 years, never in the history of the stock market.
Things can always change, but if they do be assured we'll all be in that very same boat!

Have a chat with an AI tool too, they can explain things better than me.

The main problem is that people don't understand "risk" in the context of financial investments. It really means "uncertainty" - you don't know what the return will be compared to fixed rate accounts.

8% per year is a good rule of thumb for the long term but no investment account will advertise or guarantee this. In some years it can up up over 20% in others in can do down by that much in a few months (especilly if Trump opens his mouth) but over the long term there will be more good days than bad ones. Putting your money in a 2% cash account is virtually zero risk as you know what you will get but you are almost sure to lose money in real terms with respect to inflation.

When offered the choice of pension products a lot of people gravitate to "low risk" funds when they should be doing exactly the opposite.

 

[PTR]

One more q if I could - would you be happy putting 100% of your pension into one fund or would you always split across a couple?

The point of the funds I use is that they are blended funds of funds. And some of those funds will be funds of funds too. Its essentially a pre-hedged fund which should limit my risk at least to a reasonable level.

Av MyM BlackRock (60:40) Global Equity Index Tracker
Av MyM BlackRock (50:50) Global Equity Index Tracker
Av MyM BlackRock (40:60) Global Equity Index Tracker
Av MyM BlackRock (30:70) Currency Hdgd Global Equity Tracker

All up between 18% and 23% over the last year and at the 6-8% mark previous year, 12-19% year before then at a minimal loss year before that

Yes, those numbers sound familiar with the 2 similar products I'm invested in (for 2 different reasons)

The main problem is that people don't understand "risk" in the context of financial investments. It really means "uncertainty" - you don't know what the return will be compared to fixed rate accounts.

8% per year is a good rule of thumb for the long term but no investment account will advertise or guarantee this. In some years it can up up over 20% in others in can do down by that much in a few months (especilly if Trump opens his mouth) but over the long term there will be more good days than bad ones. Putting your money in a 2% cash account is virtually zero risk as you know what you will get but you are almost sure to lose money in real terms with respect to inflation.

When offered the choice of pension products a lot of people gravitate to "low risk" funds when they should be doing exactly the opposite.

Completely this.

 

[Copacabana]

Yeah, I've just logged in and have 106 funds to select from

Yeah, this is it.

14 funds with Global in the name that have been around for more than 3 years - would it be beneficial for me to post them here or should I be taking them to a financial adviser?

An example of some of them

Av MyM BlackRock (60:40) Global Equity Index Tracker - this one appears about 3 times with different splits - have done very well in recent years by the looks
Av MyM Legal & General (PMC) Global Real Estate Equity Index
Av MyM HSBC Islamic Global Equity Index
Av MyM BlackRock (10:80:10) Currency Hedged Global Eq (Aq C) (seems to have flown in recent years this one)
Av MyM BNY Mellon Long-Term Global Equity

Thanks again for all your help

That HSBC islamic global equity index has done me well over the past 10 or so years
Anualised at the moment is showing over 30 percent

 

[ozz]

Thanks again and don't worry won't take anything as financial advice - just really appreciate the help as feels like a bit of minefield and financial advice looks fairly costly. That one is not on the list unfortunately.

Av MyM BlackRock Consensus - is but not quite the same. Looks to have done quite well in recent years though.

One more q if I could - would you be happy putting 100% of your pension into one fund or would you always split across a couple?

Good financial advice is not costly. I wish I had realised this earlier. They have to make a living so they have to charge. However , their knowledge is worth paying for. They want to make you more money so they get more money.
I found word and mouth was the best bet. It’s surprising though how many people don’t take professional advice.

 

[42]

Good financial advice is not costly. I wish I had realised this earlier. They have to make a living so they have to charge. However , their knowledge is worth paying for. They want to make you more money so they get more money.
I found word and mouth was the best bet. It’s surprising though how many people don’t take professional advice.

Its only really worth it if you have lots & can save from doing some tax jiggerypokery. If you're a basic rate payer with a modest pot (which is basically the mass majority), theres not that much they can do that you cant do yourself if youve got a good head for numbers. Now you can run stuff through AI aswell.

 

[ozz]

Its only really worth it if you have lots & can save from doing some tax jiggerypokery. If you're a basic rate payer with a modest pot (which is basically the mass majority), theres not that much they can do that you cant do yourself if youve got a good head for numbers. Now you can run stuff through AI aswell.

What’s this tax jiggery pokerey ? My accountant and my FA haven’t given me any guidance on that. I hear about it plenty in pubs but nothing from the professionals.
The only time I ever did some tax avoidance I got caught and i got fined.and , it was a genuine mistake.
I would love to legitimately pay less tax.

 

[You can call me Al]

What’s this tax jiggery pokerey ? My accountant and my FA haven’t given me any guidance on that. I hear about it plenty in pubs but nothing from the professionals.
The only time I ever did some tax avoidance I got caught and i got fined.and , it was a genuine mistake.
I would love to legitimately pay less tax.

It’s to do with stuff like being a higher rate tax payer and how and when to take withdrawals, especially around the 25% tax free lump sum. Don’t take it all at once is the general advice and take it as and when needed. There are loads of experts on YouTube. I put most of my faith in James Shack, explains stuff really well and worth watching if you care about this kind of stuff which I guess you do reading a retirement thread.

 

[42]

What’s this tax jiggery pokerey ? My accountant and my FA haven’t given me any guidance on that. I hear about it plenty in pubs but nothing from the professionals.
The only time I ever did some tax avoidance I got caught and i got fined.and , it was a genuine mistake.
I would love to legitimately pay less tax.

Watch James Shack videos on youtube. Hes a financial planner & gives examples of his more affluent clients. It usually involves spouses with different tax rates & doing stuff in certain orders.

 

[Fletch]

Mist be a few retired posters livin
The dream in this heatwave

 

[Canister]

What’s this tax jiggery pokerey ? My accountant and my FA haven’t given me any guidance on that. I hear about it plenty in pubs but nothing from the professionals.
The only time I ever did some tax avoidance I got caught and i got fined.and , it was a genuine mistake.
I would love to legitimately pay less tax.

The jiggery pokery will involve showing you the best ways to AVOID paying more tax than you absolutely have to (which is perfectly legal and would not get you a fine) but not EVADE paying the tax you have to (which is illegal and will definitely get you at least a fine).

 

[You can call me Al]

Anar I’ve downloaded it a bit early but my retirement countdown calculator tells me 2 years, 10 months and 20 days.

Deffo going to enjoy it, no rush but the finish line is counting down.

 

[Matt Hopkins]

Good financial advice is not costly. I wish I had realised this earlier. They have to make a living so they have to charge. However , their knowledge is worth paying for. They want to make you more money so they get more money.
I found word and mouth was the best bet. It’s surprising though how many people don’t take professional advice.

Genuine question as I never used an FA but how does that work? @EiffelTower money seems to be tied up in his works pension so the FA couldn't get any benefit from any increase in the pot could he? Unless he transferred money out each year, if that was allowed. He just wants someone to tell him which fund to choose, do they do one offs? Wouldn't seem worth the hassle for them

Mist be a few retired posters livin
The dream in this heatwave

Too hot, pedalled down to Roker, came back looking like a strawberry

 

[Darlo1973]

Mist be a few retired posters livin
The dream in this heatwave

Certainly no fun working from home when it's 34C inside. I'm going into the office tomorrow for the air con.

 

[Fletch]

one for the retirees with SIPPs/DC Pension pots

do you take you pension annually or monthly ?
do you use flexi drawdown or do you use UFPLS (where it just hits your bank, 25% tax free and the rest taxed)

 

[Matt Hopkins]

Monthly flexi drawdown

 

[archiesdad]

one for the retirees with SIPPs/DC Pension pots

do you take you pension annually or monthly ?
do you use flexi drawdown or do you use UFPLS (where it just hits your bank, 25% tax free and the rest taxed)

This is where I'm at right now I dont need the tax free lump so looking to take a mthly payment like a salary.

 

[Fletch]

This is where I'm at right now I dont need the tax free lump so looking to take a mthly payment like a salary.

That’s likely what we will do also (or my missus ), just used cash last 2 month until decide for sure and trying to determine which route is best

 

[Darlo1973]

This is where I'm at right now I dont need the tax free lump so looking to take a mthly payment like a salary.

That's my current thinking. Don't need the lumper so I think it will be best to keep it invested and hope continued investment and a sensible withdrawal rate will give me enough for another 25 years. After then blow the lot.

 

[archiesdad]

That’s likely what we will do also (or my missus ), just used cash last 2 month until decide for sure and trying to determine which route is best

I've also an idea to take it in buckets. If I took 80 into drawdown 20k would be tax free so I could put that into an isa then live off the 60k until it was gone and repeat. I read that if you drip it out you actually get a smaller tax free amount vs in one go or in larger amounts. It's the only thing I need to decide on. We are using savings for a few mths also plus a couple of smaller DB pensions.