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Anyone adjusting their pension funds?

  • 04-06-2020 8:26pm
    #1
    Registered Users Posts: 217 ✭✭ DM1983


    Hi all, I'm 15 years minimum to retirement. Taked to my pension advisor today to look at performance of my fund, Zurich dynamic, risk rating 6 out of 7, 95% equities. It's ok, down about 10% from peak, 6% down ytd. He advised against any move towards cash and said I should just completely forget about the pension. I'm unsure. When I ask myself do I expect the market to be down 6 months from now, the answer is yes. I feel reasonably (75%?) Sure of this. I'm thinking of hedging against this by moving at least partially towards cash, perhaps a fund with a risk rating of 3 or 4. Not necessarily trying to time the market but why give up gains to date when I strongly feel we are headed down? Any instruction to change has a one day lag to take effect.

    Anyone else toying with this idea?

    Btw he's an independent financial advisor, not employed by Zurich.


Comments

  • Registered Users Posts: 41 ✭✭✭ tamova


    With 15 years left to retirement, shouldn't your pension investments be in a more moderate risk rating bracket? Like say, 3/4 out of 7?


  • Registered Users Posts: 807 ✭✭✭ Jimbobjoeyman


    I think if you start moving things to cash inflation is going to eat you alive over he next while.

    Thinking about whats unfolded YTD I think we're going to see massive rounds of QE and similar open market operations in order to maintain liquidity in the markets and governments worldwide will co-ordinate to try encourage growth. The recession we will see as a result of this virus or more accurately lockdown is going to be very different to what we have seen previously as it will hit hard globally rather than a few countries which will be left to the IMF to prop up.
    I will say the desk I work on has a bullish view of equity markets and feel the worst is behind us. Although looking at unemployment numbers I'm not as personally confident short term.

    Although I would possibly consider moving some of it into investment grade bonds if you are worried about equity markets short term,
    I would expect duration exposure will provide positive return in the main markets as rates continue to be depressed especially in the states which is only starting to see the low interest rates we've had at this side of the world for the last number of years.
    And at investment grade the credit spread shouldn't become too bad unless there is a major liquidity rush worldwide as we had in March with spreads widening massively as rates decreased thus causing losses in bonds.

    All my opinion though -


  • Registered Users Posts: 11,155 ✭✭✭✭ Geuze


    I think if you start moving things to cash inflation is going to eat you alive over he next while.

    Thinking about whats unfolded YTD I think we're going to see massive rounds of QE and similar open market operations in order to maintain liquidity in the markets and governments worldwide will co-ordinate to try encourage growth.

    QE started in October 2014.

    https://www.ecb.europa.eu/mopo/implement/omt/html/index.en.html

    Has it caused much inflation since?

    The CPI has barely moved.

    (OK, you can argue it may have caused property price inflation)

    The stock of Eurosystem APP bonds stood at €2860 billion at the end of May 2020. The cumulative net purchases are illustrated below.

    Has this caused inflation?

    app_cumulative_net_purchases-620px.png?qwer


  • Registered Users Posts: 451 ✭✭ sonyvision


    I am in the same fund as you with Zurich, only started mine on 1 Jan 2017 (40 years to retirement) lumping 15% of my salary plus employers 10%.

    I wouldn't move anything for that fund. My value dropped to - 8% in March and is now back to +10%, you must have only went in recently? Some companies will go down, some up but overall I would be happy to let Zurich move those shares around (isn't that fund actively managed?)

    Inflation will just chip away at your pension value in cash. If you go onto their site you can see the past performance of all funds they offer (this fund has performed reasonably well).


  • Registered Users Posts: 807 ✭✭✭ Jimbobjoeyman


    Geuze wrote: »
    QE started in October 2014.

    https://www.ecb.europa.eu/mopo/implement/omt/html/index.en.html

    Has it caused much inflation since?

    The CPI has barely moved.

    (OK, you can argue it may have caused property price inflation)

    The stock of Eurosystem APP bonds stood at €2860 billion at the end of May 2020. The cumulative net purchases are illustrated below.

    Has this caused inflation?

    app_cumulative_net_purchases-620px.png?qwer

    Fair point,
    In the past it hasn't.

    But we're going to be in a very different enviroment to what we have seen in the past with the cost of products increasing due to social distancing guidelines and so forth. How long this lasts and how much the effect is is debatable. I think I saw a figure of approx 20k being added to the cost of a new home build on one interview. I can only assume that building is not the only industry that will suffer from this unless there's a change in direction.
    QE may have a very different result in this environment.

    At the very least it'll prop up asset prices.


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  • Registered Users Posts: 11,155 ✭✭✭✭ Geuze


    OK, cost increases may lead to upward price pressures, yes.

    But the huge drop in demand may leading to downward pressure on prices.

    This is what the ECB say, today:

    https://www.ecb.europa.eu/press/pressconf/2020/html/ecb.is200604~b479b8cfff.en.html

    "While headline inflation is suppressed by lower energy prices, price pressures are expected to remain subdued on account of the sharp decline in real GDP and the associated significant increase in economic slack.


    According to Eurostat’s flash estimate, euro area annual HICP inflation decreased to 0.1% in May, down from 0.3% in April, mainly on account of lower energy price inflation. On the basis of current and futures prices for oil, headline inflation is likely to decline somewhat further over the coming months and to remain subdued until the end of the year.

    Over the medium term, weaker demand will put downward pressure on inflation, which will be only partially offset by upward pressures related to supply constraints. Market-based indicators of longer-term inflation expectations have remained at depressed levels. While survey-based indicators of inflation expectations have declined over the short and medium term, longer-term expectations have been less affected.

    This assessment is also reflected in the June 2020 Eurosystem staff macroeconomic projections for the euro area, which foresee annual HICP inflation in the baseline scenario at 0.3% in 2020, 0.8% in 2021 and 1.3% in 2022. Compared with the March 2020 ECB staff macroeconomic projections, the outlook for HICP inflation has been revised downwards by 0.8 percentage points in 2020, 0.6 percentage points in 2021 and 0.3 percentage points in 2022."


  • Registered Users Posts: 807 ✭✭✭ Jimbobjoeyman


    Geuze wrote: »
    OK, cost increases may lead to upward price pressures, yes.

    But the huge drop in demand may leading to downward pressure on prices.

    This is what the ECB say, today:

    https://www.ecb.europa.eu/press/pressconf/2020/html/ecb.is200604~b479b8cfff.en.html

    "While headline inflation is suppressed by lower energy prices, price pressures are expected to remain subdued on account of the sharp decline in real GDP and the associated significant increase in economic slack.


    According to Eurostat’s flash estimate, euro area annual HICP inflation decreased to 0.1% in May, down from 0.3% in April, mainly on account of lower energy price inflation. On the basis of current and futures prices for oil, headline inflation is likely to decline somewhat further over the coming months and to remain subdued until the end of the year.

    Over the medium term, weaker demand will put downward pressure on inflation, which will be only partially offset by upward pressures related to supply constraints. Market-based indicators of longer-term inflation expectations have remained at depressed levels. While survey-based indicators of inflation expectations have declined over the short and medium term, longer-term expectations have been less affected.

    This assessment is also reflected in the June 2020 Eurosystem staff macroeconomic projections for the euro area, which foresee annual HICP inflation in the baseline scenario at 0.3% in 2020, 0.8% in 2021 and 1.3% in 2022. Compared with the March 2020 ECB staff macroeconomic projections, the outlook for HICP inflation has been revised downwards by 0.8 percentage points in 2020, 0.6 percentage points in 2021 and 0.3 percentage points in 2022."

    Fair point on oil.

    I guess its going to come down to how quickly unemployment is managed and therefore demand returns to whats considered a normal level and if demand can return to a normal level.
    It'll be interesting to see how the next few months play out nonetheless.


    For the OP on the original point. The takeaway in my opinion is your investing for the long term ~15 years.
    To make a long term investment decision based on short term factors is probobly not prudent. Looking at active fund performance vs Passive fund performance its clear that trying to double guess the market rarely works unless your exceptional at what you do or lucky which few are.
    The question you should be asking is where do you see things in ten years rather than one year.


  • Moderators, Business & Finance Moderators Posts: 7,818 Mod ✭✭✭✭ Jim2007


    DM1983 wrote: »
    Hi all, I'm 15 years minimum to retirement. Taked to my pension advisor today to look at performance of my fund, Zurich dynamic, risk rating 6 out of 7, 95% equities. It's ok, down about 10% from peak, 6% down ytd. He advised against any move towards cash and said I should just completely forget about the pension. I'm unsure. When I ask myself do I expect the market to be down 6 months from now, the answer is yes. I feel reasonably (75%?) Sure of this. I'm thinking of hedging against this by moving at least partially towards cash, perhaps a fund with a risk rating of 3 or 4. Not necessarily trying to time the market but why give up gains to date when I strongly feel we are headed down? Any instruction to change has a one day lag to take effect.

    Anyone else toying with this idea?

    Btw he's an independent financial advisor, not employed by Zurich.

    Here is the thing, the entire investment strategy behind pension funds assumes that there will be down turns in the market from time to time and that the fund will be able to take advantage of them to load up on cheap stocks. If you abandon that strategy at this time, you should not be surprised if the outcome is not as good as projected. So I’d agree with your advisor on that one.

    Portfolio construction is part science, part art and a dash of opinion. And here I’d have to disagree with your advisor - for me 95% equities is too high regardless of age. I tend to favor 85% equities, 5% property and the rest in bonds and/or alternative investments. Generally speaking such portfolios tend to out perform pure or almost pure equity funds over the long run.


  • Registered Users Posts: 8,749 ✭✭✭ Shedite27


    Zurich's YTD performance has been closest to the markets, they've remained bulllish and have got the full effect of the rebound. Other providers in Ireland are more prepared for another drop. What do you expect to happen yourself?

    FWIW, 15 years to retirement I hope to be in an ESMA 3 range, and would want more than 50% in bonds. I'm 30 years out, so hoping the growth goes well to allow me be more cautious. Maybe if you were a late starter and need to grow the pot a bit more? If you've a small pot maybe his thinking is you need to take more chances? Depends a bit on your circumstances.


  • Registered Users Posts: 5,440 ✭✭✭ daheff


    Equity markets tend to go on cycles of roughly 7 years in length. 15 years to go to retirement is roughly 2 cycles. Moving to a 3 rated pension fund would mean giving up a lot of gains over that period. Maybe 6 or 7 years out I'd start tapering your fund.....but remember retirement day is the day you stop adding to your fund, but not necessarily the day you stop investing your fund....that can still go for many more years.


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  • Registered Users Posts: 622 sheepsh4gger


    DM1983 wrote: »
    Hi all, I'm 15 years minimum to retirement. Taked to my pension advisor today to look at performance of my fund, Zurich dynamic, risk rating 6 out of 7, 95% equities. It's ok, down about 10% from peak, 6% down ytd. He advised against any move towards cash and said I should just completely forget about the pension. I'm unsure. When I ask myself do I expect the market to be down 6 months from now, the answer is yes. I feel reasonably (75%?) Sure of this. I'm thinking of hedging against this by moving at least partially towards cash, perhaps a fund with a risk rating of 3 or 4. Not necessarily trying to time the market but why give up gains to date when I strongly feel we are headed down? Any instruction to change has a one day lag to take effect.

    Anyone else toying with this idea?

    Btw he's an independent financial advisor, not employed by Zurich.


    I'm 30 and only buy gold. (Would buy silver but here there's some tax on it)
    I get mocked for buying 'boomer rocks' but we'll see who will have the last laugh.


    All money I made in the 2017 crypto market (got out with a 700% profit) I put into gold. Now I'm waiting for this fake economic expansion to end (10 years of plain 'money printer go brrrrr'). My prediction is that next year there will be a huge wave of bankruptcies (especially if the second wave of virus like in 1918 hits) and all of the fake businesses keeping themselves afloat with the money spigot will get rekt. It's hard to time things exactly (it's a fool's errand) but I would say 2023 will be peak gold.


    I hang here and make indoor-farming threads:
    https://boards.4channel.org/biz/catalog
    Some guys did word usage analysis on the board an determined /biz has the highest number of boomers.


    Anyone who believes in the pension system is deluding themselves IMHO. Yes, everyone will get their pension - it just won't buy anything because just inflated the money supply.


    I would re-introduce the Irish pound and create a strict gold standard. Euro was a mistake and it only serves the oligarchs.




  • Registered Users Posts: 17,080 ✭✭✭✭ kippy


    I'm 30 and only buy gold. (Would buy silver but here there's some tax on it)
    I get mocked for buying 'boomer rocks' but we'll see who will have the last laugh.


    All money I made in the 2017 crypto market (got out with a 700% profit) I put into gold. Now I'm waiting for this fake economic expansion to end (10 years of plain 'money printer go brrrrr'). My prediction is that next year there will be a huge wave of bankruptcies (especially if the second wave of virus like in 1918 hits) and all of the fake businesses keeping themselves afloat with the money spigot will get rekt. It's hard to time things exactly (it's a fool's errand) but I would say 2023 will be peak gold.


    I hang here and make indoor-farming threads:
    https://boards.4channel.org/biz/catalog
    Some guys did word usage analysis on the board an determined /biz has the highest number of boomers.


    Anyone who believes in the pension system is deluding themselves IMHO. Yes, everyone will get their pension - it just won't buy anything because just inflated the money supply.


    I would re-introduce the Irish pound and create a strict gold standard. Euro was a mistake and it only serves the oligarchs.



    Have you that spiel ready to paste into any semi relenant thread at a moment's notice?
    Fair play to you for your investment wins so far. For the OP I don't they they have the option to put all their pensions fund into gold, or crypto a few years ago for that matter.


  • Registered Users Posts: 3,288 ✭✭✭ dresden8


    DM1983 wrote: »
    Hi all, I'm 15 years minimum to retirement. Taked to my pension advisor today to look at performance of my fund, Zurich dynamic, risk rating 6 out of 7, 95% equities. It's ok, down about 10% from peak, 6% down ytd. He advised against any move towards cash and said I should just completely forget about the pension. I'm unsure. When I ask myself do I expect the market to be down 6 months from now, the answer is yes. I feel reasonably (75%?) Sure of this. I'm thinking of hedging against this by moving at least partially towards cash, perhaps a fund with a risk rating of 3 or 4. Not necessarily trying to time the market but why give up gains to date when I strongly feel we are headed down? Any instruction to change has a one day lag to take effect.

    Anyone else toying with this idea?

    Btw he's an independent financial advisor, not employed by Zurich.

    I don't believe you. As a public servant I have been reliably informed for the last ten years that your private sector pension has been destroyed and I deserve similar.


  • Registered Users Posts: 429 ✭✭ Figel Narage


    I'm 30 and only buy gold. (Would buy silver but here there's some tax on it)
    I get mocked for buying 'boomer rocks' but we'll see who will have the last laugh.


    All money I made in the 2017 crypto market (got out with a 700% profit) I put into gold. Now I'm waiting for this fake economic expansion to end (10 years of plain 'money printer go brrrrr'). My prediction is that next year there will be a huge wave of bankruptcies (especially if the second wave of virus like in 1918 hits) and all of the fake businesses keeping themselves afloat with the money spigot will get rekt. It's hard to time things exactly (it's a fool's errand) but I would say 2023 will be peak gold.


    I hang here and make indoor-farming threads:
    https://boards.4channel.org/biz/catalog
    Some guys did word usage analysis on the board an determined /biz has the highest number of boomers.


    Anyone who believes in the pension system is deluding themselves IMHO. Yes, everyone will get their pension - it just won't buy anything because just inflated the money supply.


    I would re-introduce the Irish pound and create a strict gold standard. Euro was a mistake and it only serves the oligarchs.



    Are you Irish?


  • Registered Users Posts: 622 sheepsh4gger


    Are you Irish?


    No, I just want a gold standard.


  • Registered Users Posts: 429 ✭✭ Figel Narage


    No, I just want a gold standard.

    Ah I see. I was wondering because you sound pretty based haha. You a Neo Luditte?


  • Registered Users Posts: 622 sheepsh4gger


    kippy wrote: »
    Have you that spiel ready to paste into any semi relenant thread at a moment's notice?


    No, if I were a shill I doubt anything here would have any traction anyway. There's maybe 5 people here including the jannies.


    kippy wrote: »
    Fair play to you for your investment wins so far. For the OP I don't they they have the option to put all their pensions fund into gold, or crypto a few years ago for that matter.


    I see pension funds as a scam. I'm interested in what will happen.


  • Registered Users Posts: 622 sheepsh4gger


    Neo Luditte?
    No, I'm a software engineer and can see how this will pay out.
    Every crypto currency by the way is a software project ran by people.
    I own gold and some crypto mined directly.


  • Registered Users Posts: 429 ✭✭ Figel Narage


    No, I'm a software engineer and can see how this will pay out.
    Every crypto currency by the way is a software project ran by people.
    I own gold and some crypto mined directly.

    I understand, I'm sure you're aware that everything is a scam as a consequence, join the Neo - Luditte future


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