pension funds

ZygOte

Ive been paying into a pension since my early twenties, so for nearly 10 years now ive been blindly putting money away assuming is all safe and cosy for later in life.

now with markets the way they are i fear ive have lost money on my pension, im not sure how much yet i intend to find out tomorrow.

basically im wondering should i pull my money from the pension fund, are there likley to be penalties? is it worth the hit to take whats left of my money now? does anyone know if there are any other implactions to consider such as the loss of tax relief if i do, or if reinvesting later on in another pension i presume ill take a hit then to?

has anyone else considered this situation or already taken action
any advise is welcome, thanks.

bosscat

Firstly Im no expert but if i think if youve paid into it for more than 2 years , you cannot cash it in.You could consider moving your fund to a safer choice like cash as opposed to stocks.

stepbar

ZygOte wrote: »

Ive been paying into a pension since my early twenties, so for nearly 10 years now ive been blindly putting money away assuming is all safe and cosy for later in life.

now with markets the way they are i fear ive have lost money on my pension, im not sure how much yet i intend to find out tomorrow.

basically im wondering should i pull my money from the pension fund, are there likley to be penalties? is it worth the hit to take whats left of my money now? does anyone know if there are any other implactions to consider such as the loss of tax relief if i do, or if reinvesting later on in another pension i presume ill take a hit then to?

has anyone else considered this situation or already taken action
any advise is welcome, thanks.

You should certainly get in touch with your pension provider and check out how your pension is doing with a view to moving same if the pension is underperforming. A pension is a long term investment and as such over it's life can experience ups and downs just like any investment. However they tend to average out because of the nature of the investment (i.e monthly contributions). At the minute it's a good time to be putting in money to a pension.

sofireland

If you've been paying in for 10 years of so you should have a nice fund. Seeing as you've 30 ish years left to retirement i wouldn't look at moving it as you seriously run the chance of missing the bounce when it happens, stock markets never return in a straight line, here's a good explanation of pound cost averaging and how it helps pension investors.
I would recommend you review your pension regularly to make sure it still meets your long term objectives

Pound cost averaging is a fancy term which describes how you can build up a capital sum by investing a fixed amount of money in a particular investment vehicle (shares or fund) on a regular, usually monthly, basis.

It is most often used with equity-based investments rather than bonds or fixed income assets that tend to be less volatile.

The key point about pound cost averaging is that you invest small amounts on a regular basis. This means that when prices are high your monthly contribution may buy fewer shares or fund units but that when prices are low your investment buys more shares or fund units.

This continuous drip-feed method of purchasing your investment means that the average purchase price paid over any given period is going to be lower than the arithmetical average of the market price. It also instills a useful discipline in the investor, creating the saving habit.

Pound cost averaging takes the worry out of investment decision-making - you do not need to panic when the price falls because you will merely be buying more of your chosen investment and because you are committing funds on a regular basis you need not worry about investing all your savings at the top of the market either.

While pound cost averaging can reduce your risk, it is a strategy that does benefit from volatile markets. The more the market swings the greater the benefit to somebody using pound cost averaging.

For example, if the market swings down every other month then on each downturn you would buy more shares or units, which would be worth yet more on each upturn. In a bear market, pound cost averaging allows you to build up an investment poised to benefit from a recovery without having to worry about trying to work out when the bottom of the market will occur. However, the strategy will mean you would lose out on the best of the growth in a rising market, although this is a small price to pay for the added security that pound cost averaging brings to investment decision-making

You should also have a good hard look at the charges that are applied to your pension and how these are affecting the relative performance of the funds.

High charges will have an adverse effect on the potential growth and value of the fund.