Viewing 40 posts - 1 through 40 (of 46 total)
  • it's time to decide what to do with my (meagre) pension pot, any thoughts.
  • uphilla
    Free Member

    Nearly old enough to start taking my pension. Having been self employed the funds I have are small. Financial adviser had given choice between buying an annuity or looking at investments that will need regular reviews.
    I am in good health and well most likely continue working for the foreseeable future.
    Annuity seeks good if I live a good while, but don’t like the idea of the fact there will be nothing left when I die, so tending towards the investment route.
    Any wise thought welcome. Thanks 🙂

    tomhoward
    Full Member

    Hookers and blow, duuuh….

    scaredypants
    Full Member


    Fresh Goods Friday 696: The Middling Edition

    Fresh Goods Friday 696: The Middlin...
    Latest Singletrack Videos
    irc
    Full Member

    I am in good health and well most likely continue working for the foreseeable future.

    So that’s a 3rd choice then. Leave it invested where it is if you don’t need cash now. Depends how happy you are with wherever it is invested.

    This means that should you later take the annuity route you will get a higher amount as the annuity payout is higher if your life expectancy is lower.

    Macavity
    Free Member
    binners
    Full Member

    … would probably deliver better results than most financial advisers

    MrNutt
    Free Member

    I know of a nice little Bistro you could invest in?

    Dobbo
    Full Member

    Now is not the time to buy an annuity, you can get temp ones to bide you over until the rates get better. You could do the bucket approach but you need a fair lump, you hold a year or 2 in high interest account and current account to live off then invest the rest and filter off profits/dividends into the bucket.

    Investing in dividend funds will get you around 4% income but the funds will hopefully go up in value (above inflation) as well to give you a higher total return. Investing in value/growth funds will get you higher returns maybe 30% – 50% in good years.

    mudshark
    Free Member

    Investing in value/growth funds will get you higher returns maybe 30% – 50% in good years.

    Wow…not common! Citigroup are forecasting FTSE to be at 8000 by the end of 2014; often hear forecasts like that, rarely see them being right.

    Dobbo
    Full Member

    Cazenove UK Smaller Co. 1 year = 47%, 3 years = 114% & 5 years = 194%.

    Thats just 1 fund….

    mudshark
    Free Member

    Yes rare – as it happens I own some.

    Dobbo
    Full Member

    What do you mean buy rare? There’s a lot of good ones to choose from.

    Wow…not common!

    then you say you own some, strange posts if you really are in on the action.

    irc
    Full Member

    I’ve got a few K in Fundsmith. Invests in safe, big companies and holds long term. Has beaten average equities over the last 3 years. I’m not interested in having to manage/watch long term investments and I don’t have enough to pay an adviser so that seemed a decent place to stick some of my cash.

    https://www.fundsmith.co.uk/TheFund.aspx

    I’m a believer in the theory that short term trading is a zero sum game. One persons gains are another persons losses so long term most active funds won’t beat the average. So I’m happy to buy and hold good companies through a fund.

    Steve77
    Free Member

    I thought 30-50% was a typo … but you’re actually serious!?

    mudshark
    Free Member

    Yes – Cazenove UK Smaller Cos is probably the best performing Unit Trust of recent years and I bought some. I own quite a selection really so have a good feel for average returns and what the best and worst can return. Looking at Close Brothers the average for the last year is around 16%, which is close to FTSE’s return. If you get the best ones then you can do well for sure but performance tends to change relative to other funds.

    Anyway, all I’m getting at is that good performance isn’t easy to get so those coming close to retirement might not want that level of risk Beating FTSE is a reasonable target which many funds fail to match. Often prices fall of course – I’ve held some of my funds since ’96 so have seen what can happen in a variety of economic situations.

    Dobbo
    Full Member

    I’m a believer in the theory that short term trading is a zero sum game. One persons gains are another persons losses so long term most active funds won’t beat the average. So I’m happy to buy and hold good companies through a fund.

    None of that makes sense to me, what have funds (passive or active got to do with short term trading? Of course good active funds with top managers beat passive funds. Fundsmith is an active fund (IT).

    irc
    Full Member

    None of that makes sense to me, what have funds (passive or active got to do with short term trading? Of course good active funds with top managers beat passive funds. Fundsmith is an active fund (IT).

    Depends how you define active. Fundsmith say …

    The Company’s approach is to be a long-term investor in its chosen stocks. It will not adopt short-term trading strategies.

    Portfolio Comment for August 2013

    There were no outright sales or purchases made in the month. Daily cash flows were invested into the portfolio.

    Maybe it isn’t the usual definition but to me active is high volume short term trading chasing the best performers. Fundsmith aim to buy and hold though of course they will buy and sell now and then as their view of the market and their holdings changes.

    uphilla
    Free Member

    Thanks for the advice. Helpful I think. Of course there is the blow it all’ option. T5 and new bike. ..:-)

    Steve77
    Free Member

    Of course good active funds with top managers beat passive funds

    Not consistently they don’t. The majority of active funds underperform passive funds because of their additional management costs. Picking an active fund that outperforms the index is entirely down to luck and last year’s performance has literally zero correlation with next years which is why fund managers are forced to put that warning on all their adverts

    Dobbo
    Full Member

    IRC, I see what you mean, ‘active’ in fund investment is where there is a manager picking and managing stocks as opposed to ‘passive’ where the funds are computer driven, usually following indexes.

    Maybe look at Finsbury Growth & Income Trust PLC, and Fidelity Special Values PLC, the later has only had the manger running it since Sept 2012 so look back to that limit for past performance.

    Yeah OK Steve77, you keep believing that…..thats why the market for active funds is so massive. The charges on closed ended funds isn’t that high, see above. Chart good funds against index passive funds. Of course you have to keep an eye for under performing funds or if the managers situations change.

    irc
    Full Member

    IRC, I see what you mean, ‘active’ in fund investment is where there is a manager picking and managing stocks as opposed to ‘passive’ where the funds are computer driven, usually following indexes.

    Yeah, Fundsmith is active in that sense. I see Fundsmith as a halfway house between low cost index trackers (which I also hold) and expensive/high risk short term trading funds. Maybe sort of semi active.

    Plus although I’m very much an investment novice I like the ideas of Terry Smith, the Fundsmith manager so I’m happy to have a bit of cash with his fund.

    http://www.terrysmithblog.com/

    loddrik
    Free Member

    Pension?! I wish I had a pension. Its a very poor retirement for me. Luckily the wife has one.

    jambalaya
    Free Member

    OP a could of points some as made above

    At the moment annuity rates are really low, thisis because they are tied closely to interest rates and those are low and will stay like that for a while.

    Funds with high returns can have big falls too, I can show you some funds which are up 200% over 3years but are actually worthily half if what they were 5 years ago

    Given your proximity to retirement I wouldn’t advise taking big risks, modest returns and avoiding big losses are what you want

    You should look at what the max tax free lump sums are, taking a lump sum and investing that in something outside the pension could give you the most flexibility

    I’m 50 and some of my pensions are “drawable” now, I’m looking at tax free lump sums and redeploying them outside (in property FWIW)

    Steve77
    Free Member

    Yeah OK Steve77, you keep believing that…..thats why the market for active funds is so massive. The charges on closed ended funds isn’t that high, see above. Chart good funds against index passive funds. Of course you have to keep an eye for under performing funds or if the managers situations change

    The market for active funds is so large because the fees pay for the marketing of them. I’ve worked in the industry and seen the impact IFA commission rates have on investments for example. There is a huge amount of research that shows active fund managers can’t consistently beat the market. I’m actually amazed anyone believes otherwise

    Dobbo
    Full Member

    I’ve worked in the industry and seen the impact IFA commission rates have on investments for example.

    What have IFA’s got to do with fund fees, you don’t need to go though a IFA to buy a fund active or passive. And since RDR IFA’s can’t get commission from fund providers.

    Go for clean funds with no trail, or IT’s.

    As for funds not beating indexes compare Caz UK smaller Co. and Fidelity Smaller Co. To there index, 1,3 & 5 years, cumulative, discrete and annualised figures, they win every time. You,re on a looser with this one. 258% and 201% compared to 99% over 5 years, lol get real.

    uphilla
    Free Member

    Jambalaya – thanks, appreciate the advice.

    Steve77
    Free Member

    They have won. That unfortunately has no bearing on whether they will continue to win. If 1000 people toss a coin 10 times one will manage to get heads 10 times in a row. You are doing the equivalent of picking that one lucky person and claiming they’re so good at coin tossing it’s worth paying them a significant amount of money to toss coins for you

    It’s not like there aren’t literally 100s of studies repeatedly confirming this:

    In 2012, 63% of large-cap domestic funds, 80% of mid-cap funds and 67% of small-cap funds underperformed their benchmark indexes – link

    Only 27% of actively managed domestic stock funds outperformed their benchmark index in the 15 years ending December 31, 2011 – link

    colp
    Full Member

    I know of a nice little Bistro you could invest in?

    Interesting, tell me more…

    mudshark
    Free Member

    They have won. That unfortunately has no bearing on whether they will continue to win.

    Not no bearing but not guaranteed. These guys do a lot of research, talk to company management – it’s not just drawing graphs and using formula to decide when to buy and sell. Many funds have never been much good and no idea how they keep going – lethargic investors I suppose who don’t switch their money out. My average annualized return over the time I’ve held UTs is 8%, FTSE is 3.5%.

    Dobbo
    Full Member

    If you think that consistent over performance and solid proven track records over a various time periods has no bearing on a managers ability then fair enough, there’s nothing more to say on it.

    The link you have is to the American Markets, very different to the UK. The only tracker I’ve had was S&P500 for that reason.

    There are over 2000 active funds, I’d only ever go for a handfull of them, and as I said further up the thread, you pick the best Alpha managers with proven track records, they have large teams of analysts, the funds and managers have been vetted and rated by Morning Start, FE, etc, you get what you pay for. I’d never go for the low performing funds with no track record or low ratings, sure you’ll be on a looser, but do you research you’re on to a winner.

    If you want to target a area like income or smaller companies or Asia then go active, it’s a no brainer.

    Edit: the 10 year figure for Caz Uk Smaller is 381% to the index with 194% if you were wanting longer time frames to prove the point even more!

    Steve77
    Free Member

    It’s exactly the same for UK markets – link

    Go read ‘A Random Walk Down Wall Street’. Investing in active funds is a bad strategy for virtually all investors

    Ro5ey
    Free Member

    The thread has been hi-jacked somewhat OP, sorry about that.

    But passive funds … really ??

    How are you not using ETFs ?

    DrJ
    Full Member

    You have to ask yourself, what makes a manager’s valuation of a stock better than the market’s valuation? All the data about a company is public, and (in theory at least) factored in to the price. So it seems to come down to a personal prediction about the company’s product, like “I really believe that jet cars are the future, so I will invest in Jet Cars Ltd”. I exaggerate, of course, but you get the point.

    Not claiming to know the answer, but puzzled by the idea that “analysts” can pick stocks better than the market.

    Ro5ey
    Free Member

    “Not claiming to know the answer, but puzzled by the idea that “analysts” can pick stocks better than the market.”

    That presumes that markets are perfect … and as you probably know… they are far from that.

    Steve77
    Free Member

    The thread has been hi-jacked somewhat OP, sorry about that.

    But passive funds … really ??

    How are you not using ETFs ?

    Yup, sorry OP but it’s a good illustration of why you shouldn’t ask forums for financial or legal advice!

    As for ETFs vs. a traditional fund a low cost tracker fund may be better than a low cost tracker ETF for a regular monthly investor as they won’t incur trading costs every month. There really isn’t much difference though

    Dobbo
    Full Member

    Steve77, you seem to miss a lot of key points I make.

    There are over 2000 active funds, I’d only ever go for a handfull of them, and as I said further up the thread, you pick the best Alpha managers with proven track records

    I know there are a lot of funds that under perform, but there are funds that over perform by a large margin do research and go for them.

    Of course you have to keep an eye for under performing funds or if the managers situations change.

    You need to keep an eye on your funds to make sure they keep doing what you expect of them. The reason I say about ‘managers situations change’ is that I have a large amount under Alex Wright in Fid UK Smaller Co and Fid Special Values IT. Now he has been given the role of running a large £2.5bn fund, so I’ll keep an eye on my existing funds to make sure they don’t suffer. He’ll have massive resources behind him and FSV IT is the closed ended version of his new fund he took over from the same manager, so the new role may benefit that. FSV has risen 60% over the last year. If it starts to falter, I’ll move out. The only problem is CGT when moving as joint allowance is only £21k a year, my Fid UK Smaller Co is in an ISA so no probs.

    You don’t have to stick with a fund for a set time!

    Go for clean funds with no trail, or IT’s.

    Keep your cost down.

    I have an amount in higher risk funds then i take profits and move it to 3 Absolute funds i have, a bit like the bucket approach in my first post.

    Because I have a lot invested I spend a lot of time on Trustnet and other finance sites like that. Heres an article from yesterday, I also hold Cazenove UK Opportunities, the graph and figures speak for its self compare to the index. Julie Deans situation has also changed with Cazenove being bought by Schroders so I’ll be watching that fund.

    I’d never go for the low performing funds with no track record or low ratings, sure you’ll be on a looser, but do you research you’re on to a winner.

    Steve77
    Free Member

    No, I get your points. You think you can predict which funds will do well in the future by looking at their past performance, and that good performance that has happened in the past is worth paying a premium for now. You can’t provide any broad studies that show this approach works and perhaps think those who pick poorly performing funds just haven’t done their research or aren’t as astute as yourself, whereas in reality they’re just not as lucky. There’s a roughly one third chance your approach will outperform a low cost index tracker over the next 10-20 years so best of luck!

    Dobbo
    Full Member

    I pretty much give up going over this with you!

    Our data shows that Dean’s fund sits in the top quartile of the IMA UK All Companies sector over one, three, five and 10 years.

    There’s a fair chance she knows what she and her team know what they’re doing, same with other funds. If you think past performance of short medium and long term has no bearing on the quality of funds/managers then more fool you. You can sit on the red index line at the bottom of the graph, I’ll wave at you from the blue.

    As for the 1/3 chance you quote, that assumes i invest in all funds good and bad and don’t react to performance, crazy.

    Steve77
    Free Member

    I think we’ll just have to give up on each other. All the research on this, of which there’s a huge volume, shows regardless of what has happened in the past Dean has a slightly worse than 50:50 chance of beating the market next year

    When you apply hindsight you will have a 100% chance of picking funds that have beaten the market over a long period and can pick out examples all day becaues by defintion some must be above the average, even over 10 or 20 years. When you try and do it for real though you have a much less than 50% chance due to the high management fees and the increased trading costs active funds incur

Viewing 40 posts - 1 through 40 (of 46 total)

The topic ‘it's time to decide what to do with my (meagre) pension pot, any thoughts.’ is closed to new replies.