Why I will not contribute to a pension (yet). THREAD BANS IN FIRST POST

Jim2007

https://www.boards.ie/discussion/comment/121673858#Comment_121673858

This is a complete misrepresentation of the facts. When you are making investment decisions you need to park attitude, opinions and the views of the talking heads at the doorstep because if you don't, you may end up making a expensive decision.

Jim2007

https://www.boards.ie/discussion/comment/121673869#Comment_121673869

It does not matter that I was not in the room, every post you have put up here tells me you don't understand this game. And of course it is much easier to claim they lied to you rather than learning the lesson - you did not understand the product, you did not do your research and you did not manage the investment and you paid the price. This is the same approach may of the people who go badly burned back in the last crash come up with - it was banks, it was the government, the bond holders and the IMF, never the fact that they went against every investing principle out there by borrowing to invest, investing in a high risk asset class (property), failed to diversify the risk and so on. And now having not learned the lesson, many will repeat the experience.

You are doing the exact same now with pensions as you did with that "principle guaranteed" stuff and you can expect the same outcome unless you press the pause button and go learn properly about investing and that includes not only instrument selection, but portfolio construction, performance and attribution and risk analysis and so on.

Jim2007

https://www.boards.ie/discussion/comment/121673971#Comment_121673971

Please do post the links to your research that led to this conclusion...

Jim2007

https://www.boards.ie/discussion/comment/121674068#Comment_121674068

Yah, in my experience that is not going to happen... I only post here in the hope that at least a few of those stumbling in to the topic will be motivated to either put the time into learning about investing themselves or will decide to consult a professional instead.

Hawkeye123

https://www.boards.ie/discussion/comment/121674113#Comment_121674113

Not investing is nearly impossible. Merely leaving money on deposit in a bank is an investment. Admittedly that is both bad and risky as an investment but there are safe alternatives to pensions, until the pensions themselves are worth the risk.

Hawkeye123

https://www.boards.ie/discussion/comment/121674145#Comment_121674145

But in saying that, you are basically saying it is not stupid to invest in government bonds if you are close to retirement and you do have knowledge of an impending economic catastrophe. My concern is inflation. If it rises higher than the low rates of interest being paid on bonds, the purchasing power of the fund will diminish. Institutional investors are still buying government bonds. This puts the pensions industry itself in jeopardy.

Jim2007

https://www.boards.ie/discussion/comment/121674490#Comment_121674490

So lets have your examples of investments at are "safe alternatives to pensions" then? Because up to now you have been arguing for timing the market...

Hawkeye123

https://www.boards.ie/discussion/comment/121674257#Comment_121674257

They did let slip a year or so after I made this investment that the principle could go down. At the time, I was up about about 5%. I exited the investment immediately. The fact that it was up was not a reason to continue with it. I did not want to risk my original investment.

Jim2007

https://www.boards.ie/discussion/comment/121674643#Comment_121674643

This is stated in the documentation. Mod warning: We are now done with the conspiracy theory stuff, do not post any more of it.

This thread seems to have run it's course. I will leave it open for awhile, to allow you to post links to the statements up made up above, if you feel like doing that.

AndrewJRenko

https://www.boards.ie/discussion/comment/121673869#Comment_121673869

So you got a verbal promise that wasn't in the contract?

Geuze

https://www.boards.ie/discussion/2058333013/why-i-will-not-contribute-to-a-pension-yet

Auto-enrolment is happening soon, so you might be automatically enrolled in a pension plan.

Of course, within the plan, you can choose to avoid bonds.

Jim2007

https://www.boards.ie/discussion/comment/121675026#Comment_121675026

I would hope that when it does come it will be very strictly regulated and people will not be allowed to play around with the investment strategy. Saving for retirement is a shared social responsibility, if we don't ensure people save enough for retirement, they will want a slice of our savings when the time comes. And as the population ages there may well be enough voters in that situation for it go through. For instance in March we (Switzerland) will vote on an initiative to make pensioners a 1"3th month" pension payment. They found the required 100k signatures to kick this off and now it looks like about 61% of the voters support it. So social tax rates are likely to go up next year.

Hawkeye123

https://www.boards.ie/discussion/comment/121675026#Comment_121675026

Indeed but it would not surprise me if the true purpose of the auto enrolment plan was not concern for tomorrows pensioners but for today`s day to day spending by the government. In fact, it may well be stipulated that a certain percentage of these contributions must be invested in government bonds and that money will be promptly squandered, just like everything else the government spends our money on.

Geuze

https://www.boards.ie/discussion/comment/121679102#Comment_121679102

https://www.gov.ie/pdf/?file=https://assets.gov.ie/219768/4aada71d-2731-4522-b218-9184a699652f.pdf#page=null

Your fears are unfounded.

purpleshoe

https://www.boards.ie/discussion/comment/121673971#Comment_121673971

Have not gone through the thread from start to finish, bet others have flagged this.

if you are in the higher tax bracket (40%) this is most certainly the wrong train of though…a big misstep.

if you are contributing in the higher tax bracket, every contribution made immediately sees a 66.66% return. That is before your pension does anything. Markets would need to implode for you to only break even.

Note: in the higher tax bracket, for every 100e you add to your pension, it only costs you 60e. So a 60e investment results in an immediate 40e return. Please pause to understand this, and if you don’t understand (no problem there) just please please ask to clarify.

Jim_Hodge

https://www.boards.ie/discussion/comment/121708995#Comment_121708995

He can't ask. See post #1

purpleshoe

^ Post more so for others reading through the thread.

Happyhouse22

https://www.boards.ie/discussion/comment/121708995#Comment_121708995

Thanks, never thought of it as an immediate 66.6% return- but your logic makes sense.

The J Stands for Jay

If a person did believe it wasn't a good time to invest, a pension can still provide a cash fund or deposit options to at least benefit from the tax relief.

amacca

https://www.boards.ie/discussion/comment/121715551#Comment_121715551

And it's a persuasive argument in fairness

However there is potential opportunity cost at certain points in life for some people....in this country not securing a house to live in due to funding pension could well be more costly than the return you get...

Similarly some investment options could be out of reach later in life if the money you might have used to fund them earlier in life is in a pension...even if you get compounded gains on top of your 66% return the way some assets have been appreciating.....by the same token your pension lump sum could buy you a lot more of those assets if they drop in price...as long as you are OK with buying them later in life

All things being equal, once the PPR is secured then funding a pension seems a no brainer for the majority of people......if homes were more available and rental less mental then it would be true even earlier in life.