# AVC losing money



## dariuscork (8 Apr 2009)

Hi all,I started paying into avc 1 year ago @50euro per week into exempt consensus fund,recently got statment and I am down over 500euro in fund value,what plan should I opt to go into as obviously this is not any good?


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## peter murray (8 Apr 2009)

*Re: AVC losing moey*

Hi. Darius,

Keep away from anything managed by Irish fund-managers. Try Paddy Power instead. His customers' lose far less of their money.

If you thought endowment mortgages were good value, you will just love AVCs. They are very similar instruments. However, since the aforesaid endowment mortgages were exposed as risky and bad value in the late 1980s it has been accepted that they are unsuitable for ordinary folk, and that pushing these instruments on ordinary punters is miss-selling.

So how come you thought that a similar instrument would be suitable to fund your pension? And what genius of an agent advised you otherwise. Sadly, because the financial services industry is exempt from the consumer protection legislation that applies to the providers of most other goods and services you probably have no recourse. If your AVC was a widget rather than a financial product the bank that provided the product would be caught by the implied term as to fitness for purpose, and the bank would also be liable as principal for the advice given by the agent who flogged it too you.


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## LDFerguson (8 Apr 2009)

*Re: AVC losing moey*

Peter - you seem to have a poor understanding of how equity investment works. 

In an 82-year period, from the start of 1926 to the end of 2007, the S & P 500 index went up in 59 calendar years and down in 23 years. So, in more than one in four years, anyone tracking this index would have seen negative returns. In one instance, the index showed negative returns for four consecutive years following the 1929 Wall Street crash.

Yet in that 82-year period, the index rose by an average of more than 10.3 per cent per year. In other words, despite 23 negative years, the average after 82 years was still strongly positive. Inflation over the same 82-year period averaged just over 3 per cent per year, so the real return was well ahead of inflation. 

You seem to be caught in the understandable trap of those who don't understand - thinking that when markets and pension funds fall in value, that the system has somehow failed. 

In the pension & investment business, you'll hear the mantra "fund values can fall as well as rise" a lot. If you can't accept the fall part, you should stick to lower-risk assets.


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## LDFerguson (9 Apr 2009)

*Re: AVC losing moey*



dariuscork said:


> Hi all,I started paying into avc 1 year ago @50euro per week into exempt consensus fund,recently got statment and I am down over 500euro in fund value,what plan should I opt to go into as obviously this is not any good?


 
Hi Darius, 

Do you know what the charges are on your AVC?  These may account for some of your drop in fund value.

That said, the bulk of the drop has probably been caused by the recent drop in global equity markets.  Was it explained to you at the time that a fund like the Consensus Fund can fall as well as rise in value?  

Was the concept of risk vs reward explained to you at the time?

Have a look at [broken link removed] from the Motley Fool site in the US.


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## dariuscork (9 Apr 2009)

*Re: AVC losing moey*

So to sum up then do I stick with the exempt consensus fund as I retire in about 10 years or ask to swop to something more secure?


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## eirefinq (9 Apr 2009)

*Re: AVC losing moey*

Hi, If I were you and I was retiring in 10 years time I would move 10% of the units in the fund into a cash fund each year between now and then.  By doing this you would strike a balance between making up for losses you are currently nursing when the Consensus Fund starts to perform better again (and this will undoubtedly happen) and you would also gradually copper fasten your overall investment as each year goes by (as you get closer to your retirement date). So this year I would split the funds 90% in Consensus 10% cash, next year 80% consensus and 20% in cash etc etc, obviously this is just a suggestion - speaking to a qualified financial adviser would be beneficial I think. Hope this is of help to you, I wish I was retiring in 10 years time!


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## dariuscork (10 Apr 2009)

*Re: AVC losing moey*

Thanks, that is very helpful,but dont wish your life away!!!!


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## Bronte (10 Apr 2009)

*Re: AVC losing moey*

As you don't seem to have understood what you have purchased and you seem risk adverse how about a bank account that pays a decent amount of interest for regular savers.


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## annebriere (14 Apr 2009)

I was asvised by an agent to invest in AVCs when I should have been advised to buy back service. The AVCs (invested in an Irish Life "secured performance fund" are now worth less than the almost €60,000 I invested over the last ten years). Neither Irish Life nor Marsh accept any responsibility for the bad advice given by the agent or that a pension investment called "secure" was anything but. They say that this agent was my agent, not theirs.  
Surely this can't be correct. If I had bought a car with a manufacturing defect the manufacturer would be responsible.
The agent has retired. Have I any comeback against this sort of behaviour? I can now use what is left of my fund to buy back service - but at a much less disadvantageous rate than I could have 10 years ago. I feel gutted and foolish.
Is there any advantage in leaving my money in the fund?


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## LDFerguson (20 Apr 2009)

Although the agent has retired, you mention Marsh so I presume that your agent was a Marsh employee?  If so, Marsh was your agent and they are still in existence.  

You appear to have two complaints - (1) that you were sold AVCs when you should have been advised to purchase Notional Service and (2) that the secure fund dropped in value when you thought it couldn't.  Either of these could be the result of misunderstanding or could be the result of mis-selling.  I've no way of knowing which occurred here.    

If you can document mis-selling on either complaint, you can contact the Financial Services Ombudsman.  Make sure you have exhausted Marsh and Irish Life's formal complaints procedures before doing so.


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## upport (24 Apr 2009)

Irish Life Secured Performance Fund is guaranteed not to have negative annual returns and locks in all previous annual returns.Are you talking about the current value of your AVC or the transfer value?The transfer value maybe significantly lower due to market value adjustment which is applied in order to protect remaining investors.Contact Irish Life and ask for written policy summery which shows current value and transfer value or if you received a current statement it may refer to both amounts.


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## LoisLane (7 May 2009)

I remember a letter we received about the irish life secure performance fund and that it was closing to new contributions. watch out for the 'exit' charges on it too - you'll lose money if you decide to un-invest it before you retire or leave the company.


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## upport (18 May 2009)

LoisLane said:


> I remember a letter we received about the irish life secure performance fund and that it was closing to new contributions. watch out for the 'exit' charges on it too - you'll lose money if you decide to un-invest it before you retire or leave the company.


 
'Exit' charge you refer to is market value adjustment and doesnt apply if you are invested ten years or longer.


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## round1 (19 May 2009)

Hi Darius
The Consensus Fund has shown some gain in the past few months in line with improved stock market performance. As you have 10 years to go to retirement it could be worth staying with it. You should be able to moniter 
your fund performance on line by getting a password from Irish Life.


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## NorfBank (9 Jul 2009)

load1234 said:


> I do my own investments now after 5 years hard work on this
> I am making  50 % on average per year.



The screws given you access to the internet eh Bernie?


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## PaddyBloggit (9 Jul 2009)

NorfBank said:


> The screws given you access to the internet eh Bernie?




I don't get this .... 

Back to AVC's .... is the general advice to give up or weather the storm?

I'd be in the same boat as dariuscork.


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## DerKaiser (10 Jul 2009)

PaddyBloggit said:


> I don't get this ....
> 
> Back to AVC's .... is the general advice to give up or weather the storm?
> 
> I'd be in the same boat as dariuscork.


 
Stick with it if you can afford to tie up the money until retirement.

You're probably best off not worrying about fund performance until you get within sight of retirement (10 years or less), if you can't do this then switch into risk free funds


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## newtogame (12 Apr 2010)

I have an avc with irish life and put 500 euro a month through scheme at work.It is 25% cash,25% pension protection fund and 50% consensus fund.My question is that of the 500euro only 469 is being invested the rest seems to be taken in charges.Is this a very high amount ?


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