Work Pension

langer91

Hi,

I have to sign up to a pension in work having recently been made permanent, and there are a number of options there for choosing what fund to invest in.

Option 1: ‘Steps’ - starts off risky and then as you get older moves to more conservative assets. I won’t be in this job for more than 5 years i imagine so not sure if this is the approach (due to plans to move back home).

Option 2: Variation of ‘Steps’ above where the choices are Diversified Moderate Fund, Diversified Growth Fund, or Diversified High Growth Fund.

Option 3: Hands on approach and can choose funds with a risk rating of 1 - 5.
Just wondering if a risky fund should be chosen with Brexit and a potential recession in the coming months/years.

Any thoughts on the above on which would offer the highest optimal return for lowest risk, or can anyone point me in the direction of where i could do some more research on the above?

Many thanks in advance.

gwalk

speak to a financial advisor or your employee benefits consultant for the scheme

coylemj

langer91 wrote: »

Option 1: ‘Steps’ - starts off risky and then as you get older moves to more conservative assets. I won’t be in this job for more than 5 years i imagine so not sure if this is the approach (due to plans to move back home).

You're clearly at the start of your working life so for the next 20 years or so, you should have your pension invested primarily in equities (shares) because that is the only way you will see decent growth.

As long as the word 'risky' in Option 1 is a relative term and doesn't involve oil exploration or African mines, that is the one to go for.

langer91 wrote: »

Any thoughts on the above on which would offer the highest optimal return for lowest risk......

There is no such thing. Risk and return go hand in hand, you can't have one without the other.

And asking that question suggests that the last fund you should be investing is Option 3 - the 'hands on' one. Because you're likely to panic when the market drops and make bad decisions.