Switching pension investments

jace_da_face

Hi all. I invest in a pension which has more than 20 years before it matures, and as such, the investment strategy is primarily equities and is high risk based. All the advice given around pension investments seems to all say the same thing; invest in higher risk funds when you are not close to retirement and consider moving your investments in to safer lower yield funds when nearing retirement. I don't really see any advice that says consider moving in to safer investments if you see any troubling signs in the economy or that you think the markets will fall.

Now consider me financially illiterate, but when I hear of 10 year bull markets, trade wars, Brexit, inverted yield curves ( I don't know what that is) etc., even I think maybe its time for another recession. Is there any reason why I might not want to move all my portfolio in to safer assets or cash and just keep it parked there for a while? Would that lock in the current value of my pension? Is there any down side to doing this? Is it a good strategy in the case of a downturn? The last question may sound a bit dumb, but I am nervous about making changes.

Dempsey

If you look at the markets, recessions seem disasterous at the time but are mere blips when talking 20-30 years and stocks have always gone up, in the long term.

Your adversion to risk is the issue, and its that what causes people to make mistakes with investments. i wouldnt look to move what you have into cash or bonds because that would be a mistake when you have that timeframe.

Still not sure, do some googling or get a financial adviser but do not rush into anything because of whats happening in the markets currently.

coylemj

Dempsey wrote: »

If you look at the markets, recessions seem disasterous at the time but are mere blips when talking 20-30 years and stocks have always gone up, in the long term.

+1 OP, the problem with trying to predict a fall in the stock market is that people who attempt it usually get out too early and go back in too late. You can afford to ride out any roller-coaster movement in share prices if you're 20 years off retiring. I'd stay put.

jace_da_face

Cheers for the replies guys. While the impulse to jump out of stocks for a while is there, instinctively you must be right in the long term. No doubt I would miss every bounce attempting to jump in or out.

Jim2007

jace_da_face wrote: »

Is there any reason why I might not want to move all my portfolio in to safer assets or cash and just keep it parked there for a while? Would that lock in the current value of my pension? Is there any down side to doing this? Is it a good strategy in the case of a downturn?

It would be a great strategy if they rang a bell when a recession starts, another when it ends and told you which stocks would be most impacted... but they don't. The high equity strategy for for long term funds is as good as it gets.

But even in a 20 year horizon, asset allocation plays a role, so you should have some application towards bonds etc as well:

https://www.vanguard.com/pdf/icradd.pdf