Pension options

Blanco100

Currently paying into a pension scheme at work, AVC monthly contributions are 10% with employer contributing a further 10%

35 years old, its my first pension scheme (better late than never).

I was just wondering, should I be a little bit more adventurous with my fund choices? Currently playing it safe, made about €200 in 6 months I believe in terms of gains.

Not looking for professional advice obviously, but can anyone steer me in right direction as to how I should be leaning on this given my age and amount?

amcalester

I’m the same age as you and have it all going into high risk funds.

I’ll de-risk as I get older but may as well go for the high returns now.

coylemj

If you're in your 30s then you should be in funds which are heavily geared towards equities (shares). As poster amcalester says, you should consider gradually reducing risk as retirement age approaches but for the best long-term returns, shares are the only game in town as they have historically produced the best returns over the long term. Just remember that there will be ups and downs so whatever you do, do not panic and move your money into 'safe' funds during the next stock market crash because if you do, you will miss the rebound. Because after every crash, there is always a rebound.

daheff

it depends on your risk profile. The pension provider should have done a risk profile with you on setting the pension up. That would dictate how they invest for you -basically it figures out your appetite for risk and invests into a fund rated 1-7 on risk.


as you will have about 30-35 years left to retirement, i would think it would be more appropriate for you to look at higher risk investments. Equity cycles generally go in about 6-10 years from bust to boom to bust. If you take 2008 as the last bust, we're a little overdue a bust.

so take from that what you will. More conservative now will preserve capital if/when the next bust comes. Too conservative will lose out on possible gains...too risk will lead to capital loss.

its not easy!

Blanco100

coylemj wrote: »

If you're in your 30s then you should be in funds which are heavily geared towards equities (shares). As poster amcalester says, you should consider gradually reducing risk as retirement age approaches but for the best long-term returns, shares are the only game in town as they have historically produced the best returns over the long term. Just remember that there will be ups and downs so whatever you do, do not panic and move your money into 'safe' funds during the next stock market crash because if you do, you will miss the rebound. Because after every crash, there is always a rebound.

I have been directed to a fund factsheet but to be honest cannot make head nor tail of it.

Would love to get my contributions into more shares/equities based fund, my current elections are the following

Hedged Global Equity Fund 58.12%
High Growth Diversified Assets Fund (2) 18.75%
High Growth Diversified Assets Fund (3) 23.13%

Does any of that make any sense?

dennyk

Impossible to say without seeing the actual fact sheets to get an idea of the asset composition; one man's "growth" fund might well be another's "income" fund.

Once concern I'd have would be that those sound like potentially expensive funds; what are the expense ratios and fees on those? Does your pension plan offer any low-cost index fund options? High expense ratios can really eat into your overall rate of return, and expensive managed funds rarely (if ever) outperform comparable passive index funds over the long term.

domrush

Blanco100 wrote: »

I have been directed to a fund factsheet but to be honest cannot make head nor tail of it.

Would love to get my contributions into more shares/equities based fund, my current elections are the following

Hedged Global Equity Fund 58.12%
High Growth Diversified Assets Fund (2) 18.75%
High Growth Diversified Assets Fund (3) 23.13%

Does any of that make any sense?

Sounds like Irish Life. First fund looks ok, the other two you could do better by going higher risk.

Blanco100

dennyk wrote: »

Impossible to say without seeing the actual fact sheets to get an idea of the asset composition; one man's "growth" fund might well be another's "income" fund.

Once concern I'd have would be that those sound like potentially expensive funds; what are the expense ratios and fees on those? Does your pension plan offer any low-cost index fund options? High expense ratios can really eat into your overall rate of return, and expensive managed funds rarely (if ever) outperform comparable passive index funds over the long term.

Anyway I could get the fact sheet to you?

coylemj

domrush wrote: »

Sounds like Irish Life. First fund looks ok, the other two you could do better by going higher risk.

Those two funds have 'high growth' in their titles, that would involve sufficient risk for me if it was my pension fund.

domrush

coylemj wrote: »

Those two funds have 'high growth' in their titles, that would involve sufficient risk for me if it was my pension fund.

You need to look past the title when choosing a pension fund.

I'm not sure what age you are, but the OP has 30 years to retirement. At that kind of term no asset class is likely to outperform equities. The OP should go into an all equity fund for the next 20 years before moving to a fund like this with about 10 years to retirement.

At 30 years you want to make use of risk. Higher risk = higher return is the general rule.

OP's fund has returned about 30% total over the past 9 years, most all equity funds have more than doubled in the same time frame.

Blanco100

domrush wrote: »

You need to look past the title when choosing a pension fund.

I'm not sure what age you are, but the OP has 30 years to retirement. At that kind of term no asset class is likely to outperform equities. The OP should go into an all equity fund for the next 20 years before moving to a fund like this with about 10 years to retirement.

At 30 years you want to make use of risk. Higher risk = higher return is the general rule.

OP's fund has returned about 30% total over the past 9 years, most all equity funds have more than doubled in the same time frame.

But could you advise which specific funds to choose?

coylemj

domrush wrote: »

You need to look past the title when choosing a pension fund.

I'm not sure what age you are, but the OP has 30 years to retirement. At that kind of term no asset class is likely to outperform equities. The OP should go into an all equity fund for the next 20 years before moving to a fund like this with about 10 years to retirement.

What class of assets do you suppose those 'high growth' funds are invested in? If not equities?

domrush

Blanco100 wrote: »

But could you advise which specific funds to choose?

Pm me your list of funds and I'll tell what I would do, I work in the industry.

coylemj wrote: »

What class of assets do you suppose those 'high growth' funds are invested in? If not equities?

Diversified assets means there's going to be some corporate bonds, gov bonds and property mixed in with equities. I would go for an all equity approach with this kind of term to retirement.