# Should I move to something more cautious for a while to slow down losses on pension?



## Castlelyons (11 May 2022)

Not sure if I'm allowed to ask this or not.  I have DC  2 pensions, one with Aon = less than 20k, one with Mercer = 100k.
Aon offers just 5 options; Growth, Diversified Growth, Cautious Growth, Cash, and pre retirement. Mine is currently in Growth and dropping quickly.

Mercer offers: long term, moderate, global dev equity fund, global emerging equity fund, aggressive, long term euro bond, cash,  and short term global bond. Mine is in  Long Term, and dropping quickly.

I know there's no right answer here, trying to guess the market etc .. watching it falling is alarming.   but should I move to something more cautious for a while to slow down losses.


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## Castlelyons (11 May 2022)

Forgot to mention Age 51!


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## Steven Barrett (11 May 2022)

Falls in the market are a part of investing. We have gotten used to double digit returns for the last decade (almost) so when getting real volatility, we are freaking out. While the falls in the "safer" funds probably won't be as great, they will probably fall too as they have a high bond content, which is also falling. 

If you are 51 and planning to retire in 9 - 14 years, leave it be. The best thing to do is stop looking at your pension values. It will drive you crazy. We could be in for a year of negative returns, it happens but watching it fall on a daily basis will result in your moving funds.


Steven
www.bluewaterfp.ie


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## Dave Vanian (11 May 2022)

I agree 100% with Steven.  The decision to switch to lower-volatility funds when values are falling is the easy one to make.  The far more difficult decision is when to switch back into funds with better growth potential, when you judge that the falls have stopped.  Nobody rings a bell at the bottom.  So when do you switch back?  The bounce-back is frequently quite sudden and the increase quite short and sharp.  Miss it and you've shot yourself in the foot, financially.  What you're suggesting is known as "timing the market" and is more likely to make things worse for you than better.  Google "timing the market" for any number of articles why.


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## NoRegretsCoyote (11 May 2022)

Castlelyons said:


> but should I move to something more cautious for a while to slow down losses.


Don't think of it this way.

There is a huge pie which grows and shrinks. Your share of the pie today is the same as it was a few weeks ago before markets fell.

You have a small % the future profits of a large group of companies. Leave it that way. You won't be drawing from it for at least a decade and then likely for two decades after that. Ignore the noise.


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## Bow tie (11 May 2022)

More recently, some of the financial advise Ive received is that in no other area of your life would you ignore or infrequently manage potentially such a large value. That made decent sense to me.
With the long car crash that the current mess seems to be, I moved funds to more conservative funds in March after losses since Jan. If I miss the start of the market going back up, I think I'll be ok with that for some safety considering the value which was already lost.


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## SPC100 (11 May 2022)

I think it might be time to start buying more.


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## SPC100 (11 May 2022)

It's on sale!

By moving out of a more aggressive options
 you are locking in the current drop, and you are locking yourself out of higher expected returns.

Maybe do a money makeover, I'd think you should be moving some of that long term bond into global equity.


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## Gordon Gekko (11 May 2022)

Bow tie said:


> More recently, some of the financial advise Ive received is that in no other area of your life would you ignore or infrequently manage potentially such a large value. That made decent sense to me.
> With the long car crash that the current mess seems to be, I moved funds to more conservative funds in March after losses since Jan. If I miss the start of the market going back up, I think I'll be ok with that for some safety considering the value which was already lost.


This is just terrible advice…awful advice…absolutely the wrong thing to do.

OP, tune out the noise and remain invested in the higher risk options.

The shoeshine boys are talking about shares tanking, and meanwhile Buffett’s out buying; what does that tell you?

When it’s the right time to buy, it doesn’t feel like the right time to buy.

Stay the course and tune out the noise.


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## Farma1 (11 May 2022)

Are you still working and contributing - that's also a key consideration as you will be get more units for your contributions and are effectively dollar cost averaging. Not that the above advice would change much whether you are or aren't contributing but it does make you feel a lot better to think you buying cheaper.... It also has to be thought of in the context of any cash/invesments/property - but again the above advice unlikely to change.


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## Castlelyons (11 May 2022)

The bigger Mercer pension I no longer contribute to. My current  Aon one in new job, I am trying to pay as much as possible into. % salary plus AVCs  My intention is to build this up quickly.  So far in 1 year in new job with Aon pension, its in the negative


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## Itchy (12 May 2022)

Castlelyons said:


> So far in 1 year in new job with Aon pension, its in the negative



You've pick an arbitrary (short) time period to reference performance for a (very) long duration investment? Why? 

What were the reasons you picked the particular fund to invest in at the time, and what has changed?


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## Castlelyons (12 May 2022)

I picked it  hoping to see strong  growth based on past performance and based on free FA advice provided my employer, the advice was to move to a combination of medium/high risk to generate some growth.  My plan is to pump max or close to max the tax free amount for next 9/ 10 years.


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## Castlelyons (12 May 2022)

I see the general advice here is to hold tough and wait for upswing, but I'm understandably jittery with this advice. 
Thanks for all responses. I really appreciate this platform.


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## PGF2016 (12 May 2022)

Castlelyons said:


> I see the general advice here is to hold tough and wait for upswing, but I'm understandably jittery with this advice.
> Thanks for all responses. I really appreciate this platform.


Do some reading. What is happening now has happened many times before and is fairly normal. Those who do well generally hold or continue investing.


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## TRS30 (12 May 2022)

If any consolation, my 2 cents.....

I'm a little younger than you (just) and am 100% in equities in my pension (about 500K in all with wife). I check it every quarter, more for my own interest that anything. It's my biggest investment/ financial consideration by some way and one I think the least about. 

The way I look at is, that went the value drops I'm getting cheaper (more) units that will most likely be worth more in 15/20 years time. 

As one post above says, pensions are probably one of the few investment type that you should just forget about once you have the basic set up, i.e. level of contributions, fund type, charges etc. The only caveat to that is once you get close (5 years) to retirement to think about what you want to do with your pot, annuity, ARF etc.


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## SPC100 (12 May 2022)

Anyone who is not planning on withdrawing equity any time soon should be delighted that prices are dropping.

You can now buy the same amount of the market's future earnings/growth for less money.


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## SPC100 (12 May 2022)

Look back at some past crisis or drops, and at what has happened prices since then, and ask would you have preferred to stop buying or load up.


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## SPC100 (12 May 2022)

20k equity
100k bonds

This is way too conservative imo.


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## SPC100 (12 May 2022)

I guess Aon is actively managed and mercer global equity are index tracking. If that's the case I would prefer to have my equity in the index tracking ones.


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## Steven Barrett (12 May 2022)

Castlelyons said:


> The bigger Mercer pension I no longer contribute to. My current  Aon one in new job, I am trying to pay as much as possible into. % salary plus AVCs  My intention is to build this up quickly.  So far in 1 year in new job with Aon pension, its in the negative


You have 12 contributions in that 1 year. One of them is invested for 1 year. One of them is invested for 1 month, 1 for 2 months etc. You need to give your investments time. 

When it comes to time, investing and gambling are polar opposites. With gambling, you are more likely to win in the short term but the longer your gamble, the more likely the house wins. It is the opposite with investing. You have a greater chance of losing in the short term but the longer you leave your money there, the less likely you are to lose. 



Castlelyons said:


> I see the general advice here is to hold tough and wait for upswing, *but I'm understandably jittery *with this advice.
> Thanks for all responses. I really appreciate this platform.


Were you in the wrong type of fund in the first place? It's very easy to invest in equities when you are getting double digit returns. You only truly find out your true risk appetite when your fund is falling in value. 


Steven
www.bluewaterfp.ie


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## interested21 (12 May 2022)

As someone that is still accumulating my retirement fund, I'm trying my best to think of this table from A Random Walk Down Wall Street, where it lays out how regular investments into a volatile market that doesn't even rise can in some circumstances lead to better returns than a market that is steadily rising. Obviously this is only one way the scenario can play out, but it does demonstrate the power of being able to buy a larger number of shares during down periods.


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## TRS30 (12 May 2022)

interested21 said:


> As someone that is still accumulating my retirement fund, I'm trying my best to think of this table from A Random Walk Down Wall Street, where it lays out how regular investments into a volatile market that doesn't even rise can in some circumstances lead to better returns than a market that is steadily rising. Obviously this is only one way the scenario can play out, but it does demonstrate the power of being able to buy a larger number of shares during down periods.



Never seen that before, illustrates my point much better then I did!


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## lff12 (23 May 2022)

Castlelyons said:


> Forgot to mention Age 51!


Ah shure you've plenty of time. Remember if you are still putting in money you'll get the benefit of lower prices. Its a bit swings and roundabouts.


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## garbanzo (23 May 2022)

Steven Barrett said:


> You have 12 contributions in that 1 year. One of them is invested for 1 year. One of them is invested for 1 month, 1 for 2 months etc. You need to give your investments time.
> 
> When it comes to time, investing and gambling are polar opposites. With gambling, you are more likely to win in the short term but the longer your gamble, the more likely the house wins. It is the opposite with investing. You have a greater chance of losing in the short term but the longer you leave your money there, the less likely you are to lose.
> 
> ...


The bit I’ve highlighted above is a brilliant insight. 

Thanks Steven

g


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