PRSA Lost Value Immediately

I’ve just started a new prsa with k*c and everything can be viewed via an app so I can see the value as soon as contributions are made. Is it typical that contributions might lose value immediately or is this just not a good choice for me? I went for the low risk option so I assumed my money would at least maintain its value. I’ve already allowed for the contribution fee and this is highlighted so it looks like the fund is underperforming. I understand funds are subject to loses as well as gains but it seems a bit worrying that my money is losing value almost before it’s invested. Or is this just how pensions go?

How much did it fall by? The most obvious explanation is the premium charge can knock up to 5% off the value immediately. If you are invested in anything, it will vary in price on a daily basis. Tracking the value that often will drive you nuts, so invest and leave it do its thing...which includes falling in value as well as rising. If you are invested in low risk funds, don't expect much of either. If you have a 5% premium charge, you will struggle to make it back in the current bond environment.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

Thanks for replying, it’s just disappointing to see it fall straight away but I suppose that’s a downside of having the data so readily available. I’ll try to resist tracking it. The contribution charge is 2.5%

Opal** said:

Thanks for replying, it’s just disappointing to see it fall straight away but I suppose that’s a downside of having the data so readily available. I’ll try to resist tracking it. The contribution charge is 2.5%

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How old are you?

I recently got a PRSA and got screwed with a contribution of 5% so I changed it to no contribution charge with another provider.

I presume your employer is not putting anything into your pension right?

An Irish person should not take a PRSA for anything less than 100% allocation and approx 1% annual charges per year.

A contribution charge of 2.5% is a harsh hit to take, I think you should look at moving it to someplace better.

Also, go with high risk funds if you are 10 years or more from retirement. The low risk funds just means your money won't fluctuate a lot so you don't cry but over a period of say 10 years or more you will always have less money than choosing the riskier funds.

Where did you move it to? Am I correct in saying there’s no cost to move so you transfer the full value?

Opal** said:

Where did you move it to? Am I correct in saying there’s no cost to move so you transfer the full value?

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Davy Select. They will charge you .75% on fees and then you have the fund that you purchase on top. But it is self-directed so you will purchase the funds yourself. You need a small bit of knowledge for this but not much. You can just buy a global equities ETF and leave it there for 30 years and you will come off a lot better than funds from other providers after they take their high fees.

If you go through a broker, you can get Zurich around 1% or Aviva I think also all with 100% allocation.

Biggest mistake is to get a PRSA through the bank advisor or by ringing them directly, except for DAVY, you can go to them direct.

If you use an online discount broker you'll get a DIS (Default Investment Strategy) PRSA for 100% allocation and 1% AMC.

You would need a pot value of €100k or more to get an AMC less than that

Thank you both for the advice.