Self directed pension plans

fitzgea1

https://www.boards.ie/discussion/comment/121769463#Comment_121769463

"And I probably have the option of selling and holding cash when I think a downturn is coming."

I think, as Jim has been trying to point out, that this is the problem with managing your own investments. Very few people can time the market, you'll end up selling near the bottom and then buying back in after the bounce has already happened.

rocky

Very few, but not none... Even the option to rotate between plays on AI, defensives, energy etc is appealing.

Could have at least doubled the pension fund in the last year, when META, NVDA etc have done a 3+x

cnocbui

https://www.boards.ie/discussion/comment/121769608#Comment_121769608

My portfolio delivered an income of 4.1% of it's capital value via dividends and the capital value of the assets appreciated 6.07%, which despite being a manual calculation, agrees well with my portfolio reporting software that has the annualized XIRR being 6.11%.

So how is it that you claim 4.1+6.07 is not remotely close to 10.17?

Jim2007

https://www.boards.ie/discussion/comment/121770975#Comment_121770975

Because that is not how you do the calculation, it is as simple as that! I don't have access to your portfolio, nor do I want to, to tell you what the correct figure is. But 35 years doing this kind of analysis tells me it is not going to be remotely close to that figure, maybe around 1% - 2% would be my expectation. The majority of fund managers are not capable of delivering a 10% annualised return over say 30 years never mind the average person trying to do it on their own. The expectation for a pension fund manager would be say 5% - 6% over a thirty year time span and one of the contributing factors on that is that they don't have to deal with the float problem.

Jim2007

https://www.boards.ie/discussion/comment/121769463#Comment_121769463

Because the Swiss population is much older that most in Europe they had to tackle the second pillar pension problem much earlier than most and more by accident than anything else I got involved in it over 35 years ago. At this point it is very well regulated to protect the employees funds and to ensure they get a reasonably good return on their contributions.

I can invest in the QQQ myself, don't need any managers for that. And I probably have the option of selling and holding cash when I think a downturn is coming.

If a Swiss pension fund manager was to do anything close to this strategy he commit a criminal offence and could go to prison, that is how dangerous your strategy is considered.

Understand that I'm not saying any of these approaches are doomed to fail, but that you are taking on way to much risk to achieve them versus the wisdom of well constructed portfolio in which there is a reasonable expectation of a good return. A very big chunk of manage pension funds is about understanding and manage risk so that you don't loose the clients money. And most people don't understand the nature of financial risk, ETFs for example. ETFs are not all the same, some of them can be way more risky than than others because of the way they have been constructed and instead of replicating an index the actually magnify the gains and losses on that index.

cnocbui

How do you do the calculation? If total gain is not the addition of income and capital valuation change, what is the correct definition?

The performance of fund managers put's an upper limit on what an individual can achieve; yeah, right.

I do my own tax returns. I'm really confident as to the exact dividend returns my investments generate. I also think I have a good grasp of what constitutes a capital loss or gain, for tax purposes.

Jim2007

https://www.boards.ie/discussion/comment/121771677#Comment_121771677

Here would be a good place to start learning how to do it:

https://www.wiley.com/en-ie/Practical%2BPortfolio%2BPerformance%2BMeasurement%2Band%2BAttribution%2C%2B2nd%2BEdition-p-9780470059289

cnocbui

https://www.boards.ie/discussion/comment/121772154#Comment_121772154

Lol.

You remind me of my former Swiss bank. I once asked them could they not provide me with a way to log into my account online? Too which they replied, 'certainly Herr sucker valued customer, just authorise us to deduct CHF 85 from your account and we will send you a code device.'

Rabo bank and later AIB, gave me one for free, well what passes for free in bank terms.

rocky

https://www.boards.ie/discussion/comment/121771630#Comment_121771630

Pension funds try do the best for everybody, so there's a pension fund in the future, even if it's smaller than expected.

On the other hand, I try and do best for myself, which is not necessarily applicable to large cohorts of people. We can't all invest in the next disruptive company or technology so we all get rich at the same time...

Also, I assume the risk of losing this pension fund, if I couldn't afford it, I wouldn't do it.

PenguinEggs

I have a Davy Self Directed PRSA for about 5 years. I moved to this from a institutional retail fund after years of poor performance in the good times which in no way reflected the growth in the markets and drops in value to my fund which mirrored drops/crashes in the market. After years of bullshit and incompetence I made the switch and have done pretty well and would recommend this approach for like minded people

You need to go through an independent broker to get in. Mine was a IFA who I guess I had to persuade I was up to looking after myself in this regard. I think there is a minimum pot they require but I don't think it's that much

I pay fees on each transaction, buy & sell, these vary depending on the exchange and than a 1% annual fee

You then have total control over what you buy and sell except you are limited to stocks/etfs/bonds that are on their trading platform. If something you want to buy but isn't available through the very clunky online trading platform you can ring the trading desk and see if they can make it available for you

Davy are complete boomers when it comes to crypto and won't let you trade the BTC efts. A BTC EFT went live in Amsterdam in August and Davy refuse to open this up in the platform to "protect their customers". When speaking to Davy support they don't distinguish between bitcoin and alts

So on the one hand you will have freedom and control to manage your investments but on the other you will have to navigate this ridiculous paternalistic attitude - BTC up around 80% since August. They are inconsistent as well as you can trade Coinbase and Micro Strategy which are 100% crypto companies. Obviously they know better than Blackrock etc

I have read the comments about trading style in this thread and really its up to yourself. I have actively traded in the five years except for one. The one year I was not getting in and out, taking profits - limiting losses, was the year I lost money. You can be conservative and it can all go to ****. On the otherhand I can look back at some of the first trades I made and if I had just left them alone I would be better off. But I really enjoy actively trading. I'm a retail trader, nothing like a pro and I'm doing well. I am assuming we are in for another year of growth but the peak is, if not on the horizon, just over it. If I get out somewhere between 1-20% off the top valuation of my pot when the crash comes I'll be happy. 20-30% down won't be a disaster.

There is no chance my pot would be anywhere near the valuation it is now if i remained in the retail fund and when the crash happens it would plummet in value and the fund managers will shrug and take their fees anyway

cnocbui

https://www.boards.ie/discussion/comment/121771491#Comment_121771491

Yes it is how you do the calculation.

You don’t need a doctoral degree in finance to calculate your portfolio’s investment returns. A few principles are enough to make even the most math-phobic savvier investors. Knowing your potential returns is not simply wise; it is essential.

Your investment returns can be calculated by comparing their current and initial values while accounting for dividends or interest earned.

https://www.investopedia.com/ask/answers/062215/how-do-i-calculate-my-portfolios-investment-returns-and-performance.asp

That boils down to exactly what I said the calculation of total returns, ROI, amounts to. The only slight difference being the explicit mention of costs, which I account for automatically in the calculation of the change in capital value.

My professionally manged super scheme delivers risible returns compared to my own investment portfolio. In a single year the managers of the scheme creamed off 25% of the annual gain in fees, so it's no wonder.

BishopBrennen

https://www.boards.ie/discussion/comment/121771630#Comment_121771630

Which ETF's would you regard as being very accurate at replicating their Index and not magnifying the highs and lows? How would you rate VWCE is this respect?

I read of some of the Insurance company passive funds getting slagged because they don't even replicate the Index accurately, is this true, and if so if this the norm or the exception regarding the insurance tracker funds? Also, is the reason they don't track the Index accurately because of them magnifying the highs and lows concept that you speak of?

Jim2007

https://www.boards.ie/discussion/comment/121775519#Comment_121775519

Well if you seriously believe we pay people around 150K a year to apply a a formula from investopedia then that is it, I guess.

I did not expect for a second that you’d actually sit down and read the text, had you done so you’d realize it is way more complex than you think and furthermore that you have insufficient data to do the calculations.

cnocbui

https://www.boards.ie/discussion/comment/121796155#Comment_121796155

You never expected anyone to read the text when the cost to do so was €74.

Hands up anyone who bought the book?

Your cute version of the Swiss banker asking for CHF 85 just so I could have something close to online banking.

As an interesting additional data point to your implication my returns are incorrectly calculated when I say my portfolio returned 10.17% ROI in 2022 - Vanguard have started offereing Australians a superannuation product, for which they claim current annual returns of 14.7% for people under 47, with fees of 0.58%.

They offer a different product that they say is more conservative and returned 10.89%, for someone aged 61, so that makes me feel better.

Next you will be claiming Vanguard can't calculate ROI or performance correctly, either.

Jim2007

https://www.boards.ie/discussion/comment/121796748#Comment_121796748

I'm not asking you for any money.... you asked how it should be done, I gave the reference book on the topic... And we were talking about your ability to calculate your return.

cnocbui

https://www.boards.ie/discussion/comment/121797339#Comment_121797339

I never said you were, you suggested I buy and read a €74 book.

amacca

https://www.boards.ie/discussion/comment/121630774#Comment_121630774

After some casual research in the intervening weeks...it seems quite difficult to do what I would like to do within a run of the mill PRSA available on the irish market.

I want to invest in a global index tracker that includes developing as well as developed markets such as VWCE....It seems on an execution only basis (or even with advice) I cant do this without going for self directed

It did seem that it might be possible via standard life but looking through their documentation I dont think their Vanguard Global Stock index fund is even close to what I want...their literature mentions this uses the MSCI as a benchmark, uses sampling and has over 1000 equities in it

What I want is VWCE ...tracks the FTSE All World, uses full replication and has well over 3500 equities or something similar so the sampling above means its not the same product

The only way I can see to buy VWCE or something similar is through a self directed pension

Could anyone confirm this?

And would you be willing to enlarge a bit on why you think buying something like VWCE is such a bad idea Jim2007? It wouldnt be my only pension so I think all equities isnt a bad idea in my case but on top of that my reasons for thinking its a decent course of action is the diversification, its not all US companies (although it has a fair whack of them) it has developing markets (so can take advantage of opportunities/growth there if it occurs), it rebalances and over the long term very few fund managers seem to do better than the index, tracking the market appears to work as long as its a long term approach you take

I cant help wondering would I really be better with a managed fund from irish life/zurich etc with approx 100 equities etc...or those kinds of products...maybe just from a cost point of view (zurich do offer higher than 100% allocation rates on large single deposits over certain amounts so that could be taken into account I suppose)...

Is it just the costs associated with self directed that make the other products more desirable? What they are invested in dont seem inherently more diversified or capable of similar returns over the long term...

Are there decent value self directed pension products out there does anyone know?

And if manged versions I havent considered may be more capable or likely to deliver better returns over a long term investment horizon (15/20 years) what are they? And are costs/charges etc being taken into account?