The FTSE

[ChicagoBlue]

Munger and Buffet were both massive encourages of taking advantage of long term compounding, which will see you with ridiculous returns if you start investing early in life

You'd have to be monitoring your portfolio almost as your full time job in order to get significantly greater than average returns

I doubt the vast majority of people on here fall into that category!

Completely agree that DCA & index investing is good for those not willing to spend the time trying to maximize their returns.

What I would emphasize, as you stated, is that while compounding is the key…it is TIME that is the greatest advantage…in addition to average annual returns.

From the first buck they earned from a job as a kid, we have fully funded our kids’ Roth IRAs, which allows for them to use very tax efficient money to grow tax free and be taken out tax free later.

I won’t say how much money they have, but they are above the median retirement savings of an American 65 year old. They’re 26 & 28 yo. Do NOTHING from here and the ~ 40 years (TIME) to retirement takes care of itself!!

FWIW, they each own an S&P 500 type fund and their personal choice of favorite stock for the future. My son chose AAPL, my daughter chose QQQ (not a stock, but her choice!).

There are a million ways to skin the cat, but I agree that for someone who works hard and is just looking to save a few quid for his golden years without doing 10-40 hrs reading a week, a FTSE/S&P fund is an excellent, broadly diversified, way to invest for the long term.

 

[Stockton Heath Blue]

I'm 57.

TBH I haven't taken a lot of interest in my pension since I started working. I'm an idiot. Full stop. Too late now. I've been in and out of my pension all my life. Putting in the maximum, and then the minimum. Etc. I've only started taking an interest in my pension in the last year. Mad, isn't it.

I'm resigned to hopefully getting my pension pot to x over the next 10 years before I retire. That will have to do me, plus my state pension, plus the equity from my house when I downsize in the future. I won't ever be pension rich. I might be comfortable. I won't struggle financially in my latter years. I might die tomorrow? Hopefully not. :-)

Just a quick update on my 3 new funds. In the last 24 hours I'm down about £280. Which is much better than my previous 3 funds where I was down £1000's in a day. As shares keep on falling because of Trump, I can at least stomach losses of £100's now instead of £1000's. Hopefully the bounce back in share prices across pension funds will come sooner rather than later?

Any plain and simple advice would be welcomed. I've still got 10 years before I retire, so I can still make some money towards my pension and retirement. Thanks.

I leave most to my advisor, but I always look at any fund relative to its peers. I won't consider any fund that's outside the top quartile in terms of performance. Citywire can be a good source for research tools (funds & managers) if you're going DIY.

 

[SWP's back]

I leave most to my advisor, but I always look at any fund relative to its peers. I won't consider any fund that's outside the top quartile in terms of performance. Citywire can be a good source for research tools (funds & managers) if you're going DIY.

FWIW I’d take a fund/manager that was top two quartile for fifteen to twenty years than top quartile for the last 3-5.

 

[jrb]

I leave most to my advisor, but I always look at any fund relative to its peers. I won't consider any fund that's outside the top quartile in terms of performance. Citywire can be a good source for research tools (funds & managers) if you're going DIY.

Thanks.

I'll have a look at that tonight.

On a side note.

A friend of mine lost £12K from his pension funds in 24 hours.

He's still in the funds I bailed out off.

He's holding firm and staying in waiting for an upturn.

It's brutal ATM.

 

[jrb]

I appreciate I've only got another 10 years before I retire.

Is it still worth getting a financial advisor or not?

I have thought about it previously, but you hear some right horror stories about financial advisors. I appreciate all financial advisors are not like that.

 

[Stockton Heath Blue]

Thanks.

I'll have a look at that tonight.

On a side note.

A friend of mine lost £12K from his pension funds in 24 hours.

He's still in the funds I bailed out off.

He's holding firm and staying in waiting for an upturn.

It's brutal ATM.

Yep, this is a side of Trump that the electorate don't think about. He's creating carnage in the markets.

 

[Stockton Heath Blue]

I appreciate I've only got another 10 years before I retire.

Is it still worth getting a financial advisor or not?

I have thought about it previously, but you hear some right horror stories about financial advisors. I appreciate all financial advisors are not like that.

Depends on the size of your pension pot and if you can stomach the commissions

 

[Blue Maverick]

Yep, this is a side of Trump that the electorate don't think about. He's creating carnage in the markets.

Whilst no doubt making a fortune in insider trading

 

[west didsblue]

The other side of that coin, of course, is where would you be if you missed the 10 WORST days of the S&P 500 over the last 30 years?

Answer: Over the last 30 years, the average annual return of the S&P 500 was approximately 10.4% using a buy-and-hold strategy. If you successfully avoided the 10 worst days, your annualized return would have increased to about 13.2%, significantly outperforming the average return.

That’s over a 25% INCREASE in your return!!

The trick, of course, is avoiding them! ;-)

Bought into a couple of US funds about 30 years ago. Average annualised returns have been 11.6% and 13.6% - both have done far better than the non-US funds I invested in at the same time.

By the way your calculation was a bit out. The difference between 10.4% and 13.2% over 30 years is 112% not 25%.

 

[Bournemouth Blue]

I don’t panic, because my stocks and shares ISA has grown over 100% in ten years, despite major corrections during Covid etc. I might reconsider if war breaks out, but my rule of thumb is save in cash ISAs, invest in stocks and share ISAs if you can afford to lose in the short term, and think of gold or premium bonds if things get scary.

 

[ChicagoBlue]

By the way your calculation was a bit out. The difference between 10.4% and 13.2% over 30 years is 112% not 25%.

Help me out…unless you’re carrying it through the 30 yrs.

 

[west didsblue]

Help me out…unless you’re carrying it through the 30 yrs.

Yes, I compounded it over 30 years. An extra 2.6% each year makes a huge difference.

 

[Kompany Car]

Thanks.

I'll have a look at that tonight.

On a side note.

A friend of mine lost £12K from his pension funds in 24 hours.

He's still in the funds I bailed out off.

He's holding firm and staying in waiting for an upturn.

It's brutal ATM.

The worst thing you can do is panic. Last few weeks one of my pension funds has dropped more than 30K but it was up significantly more than that over the previous 6 months. Trump was always gonna cause waves, but eventually the markets will settle, particularly with ETFs. Where individual share prices with the likes of Tesla are heading is anybody's guess which demonstrates why picking individual equities is very high risk.

Note that ETFs do a rebalance every so often to adjust exposure and reweight their portfolio.

 

[ChicagoBlue]

Yes, I compounded it over 30 years. An extra 2.6% each year makes a huge difference.

Thanks! I was pointing out the ANNUAL average difference was 25%. ;-)

 

[Johnny Mars Bar]

The worst thing you can do is panic. Last few weeks one of my pension funds has dropped more than 30K but it was up significantly more than that over the previous 6 months. Trump was always gonna cause waves, but eventually the markets will settle, particularly with ETFs. Where individual share prices with the likes of Tesla are heading is anybody's guess which demonstrates why picking individual equities is very high risk.

Note that ETFs do a rebalance every so often to adjust exposure and reweight their portfolio.

Exactly.

Why people are losing their shit over day to day fluctuations on pensions makes no sense at all.

For my long term / retirement savings it’s all in ETFs. Yes they’re down now but I doubt they’ll be down in 30 years when I need to take the money out!

If you’re close to retirement age you shouldn’t be in a position where you’re still exposed to short term market fluctuations anyway.

 

[hampshireblue]

Exactly.

Why people are losing their shit over day to day fluctuations on pensions makes no sense at all.

For my long term / retirement savings it’s all in ETFs. Yes they’re down now but I doubt they’ll be down in 30 years when I need to take the money out!

If you’re close to retirement age you shouldn’t be in a position where you’re still exposed to short term market fluctuations anyway.

you're right to a degree. I've been in drawdown for the last 8 years and being still exposed to the markets means, fortunately the portfolio has more now than when I started. The real key is a decent IFA whose charges are sensible and real diversification. As it is, the portfolio is down around 3% but this is nothing compared to 2020/21 and the markets came back strongly. As the saying goes "Don't Panic Mr Mainwaring"-look it up!! lol

 

[jrb]

The worst thing you can do is panic. Last few weeks one of my pension funds has dropped more than 30K but it was up significantly more than that over the previous 6 months. Trump was always gonna cause waves, but eventually the markets will settle, particularly with ETFs. Where individual share prices with the likes of Tesla are heading is anybody's guess which demonstrates why picking individual equities is very high risk.

Note that ETFs do a rebalance every so often to adjust exposure and reweight their portfolio.

Thanks for the advice.

I'm not panicking.(yet!)

My pension has also dropped by £14K.

I appreciate shares will go up and down, especially when Trump is causing economic turmoil globally.

Saying that, it is disappointing to lose such a large amount money from my pension in such a short period of time after increasing the value of my pension by a considerable amount over the last 6 months.

You've got to feel sorry for the people who are about to collect their pension funds and the losses they have recently suffered.

 

[jrb]

Exactly.

Why people are losing their shit over day to day fluctuations on pensions makes no sense at all.

For my long term / retirement savings it’s all in ETFs. Yes they’re down now but I doubt they’ll be down in 30 years when I need to take the money out!

If you’re close to retirement age you shouldn’t be in a position where you’re still exposed to short term market fluctuations anyway.

The thing is Johnny, the average person doesn't really understand what is happening to their pension, and what they can do about it. They just let their pension ride and leave it with the Work place pension company. So when people see the value of their pension dropping daily, like now, they are obviously concerned. There's nothing wrong with that. It's human nature. People are seeing their pension savings disappearing daily atm, with no upturn insight. Or certainly not whilst Trump continues his trade wars globally.

 

[Lost for words]

Exactly.

Why people are losing their shit over day to day fluctuations on pensions makes no sense at all.

For my long term / retirement savings it’s all in ETFs. Yes they’re down now but I doubt they’ll be down in 30 years when I need to take the money out!

If you’re close to retirement age you shouldn’t be in a position where you’re still exposed to short term market fluctuations anyway.

I don't follow the markets so much these days as I've been retired 16 years and my pension was locked in and with annual cost of living increases, but how the system used to work, and maybe still does, is for the early years of the plan to be aggressively managed whereby losses would be low but gains could be higher percentage wise. As the years passed the portfolio would gradually move to safer investments such as Government securities which would be low interest but at least these securities were 100% safe in the shape of their returns. The danger to investors at this stage of life is in the form of inflation and that's something that few of us can feel comfortable about.
Maybe a small part of a portfolio could be held in gold, not the actual holding of it in the form of jewellery which couldn't be valued by us folk in the streets, but in its bullion form. Us folk couldn't do that in its physical form but instead by investing in an ETC. I put a grand into one such fund about 3 months ago and its the only investment of mine that is rising!

 

[Kompany Car]

Thanks for the advice.

I'm not panicking.(yet!)

My pension has also dropped by £14K.

I appreciate shares will go up and down, especially when Trump is causing economic turmoil globally.

Saying that, it is disappointing to lose such a large amount money from my pension in such a short period of time after increasing the value of my pension by a considerable amount over the last 6 months.

You've got to feel sorry for the people who are about to collect their pension funds and the losses they have recently suffered.

Its all about tolerance to risk. If you look at most funds they say they are volatile, particularly those with the better long term returns. What we are seeing at the moment is the volatility that can occur.

I understand the disappointment but thats why you really dont want to be looking at your portfolio every day, is just causes unnecessary stress.

Bonds can be used to limit the volatility but it wont stop your portfolio reducing at times like this. You could just put it in the money markets but its unlikely to grow sufficiently and will probably, just about, beat inflation but little more.

Its really a sobering thought that if you are needing the money soon, you need to move a chunk into cash rather than leaving it in equities.
It also demonstrates why at retirement you also need to have a few years of basic income held in instant access ISAs and the like to provide liquidity and prevent you having to draw money from your pension in a falling market, by doing so you buy time for the market to recover.