Investing for your pension fund.

Recently I’ve had two pension funds mature. £10k GBP each. Could have been 30k each if I’d had the wit to hop the sawtooth cycle of the stockmarket. Both are managed funds, one Standard Life and the other Confederation Life. The Con life has done slightly better.

I intend to work for ten fifteen years, its a low key easy job the wage is very modest, yet there are compensations, I am my own boss and the hours are low. Yet I still worry- what an idiot!  Its in my nature to worry as I am ‘programmed’ to achieve more than the present modest performance.

However, the purpose of this post is to lay down my strategy of retaining the capital of the two funds and achieving growth. I want the freedom in old age that money could bring.

I found a statement from ’96 – fund value £7-1/2k, ten years on its little different, by ’08 its £9k. Thats after a 15% fall which has woken me up to realising I must do something myself. Most funds do little more than ‘track’ the index. The exception is Fidelity. I’ve spent a couple of days looking at graphs and have formulated a strategy.

Look at the markets in a single graph for a fifteen  year span. Notice the saw tooth profile. This I believe will be repeated.

I should have switched to an interest bearing account six months ago in Autumn ’07, I had my head in the sand.  First rule: look at the graph – don’t buy at the top. Yet like lemmings so many do. Hint: look at Asian funds and their nasty p/e ratio. In comparison is London cheap?

Guru kllrchrd has 90% decided to push the two funds into an interest bearing account. Hint: ensure its a fund you can transfer out of again. Con life ‘locks’ your fund once its in their ‘Pension Deposit’. A hunch is that it could be for a year or two. Looking at the graph for the last downturn it TOOK THREE YEARS TO REACH THE BOTTOM. A long and hard fall, then the Iraq war kickstarted the up -turn. Do I make sense??

Charts, graphs explain so much.

I do not want my capital to decrease, yet letting it seesaw in an ongoing so called ‘managed’ fund willdo just that. To use the horrible trendy term I need to be more ‘pro-active’. Yet so few people I encounter are savvy to managing their managed funds. Even a so-called financial adviser was a bit vague to say the least, nice fellow tho he was.

So, the strategy is to ride or surf the sawtooth cycles which are pitched at an approx eight year frequency.

The assumption is that the funds only fall. Tho surely materials raw and processed cannot buoy a fund alone.

The signal to pile in I suggest is four months of no further decreases in the index, then its out of interest bearing into say Fidelity Wealthbuilder – tho I have yet to explore fully their full portfolio.

I hope this post brings in comment from more learned bods.

Update 13 March ’08. Recession is the word everywhere. I can see no reason now to doubt moving the two funds to interest for a year or two. It is scandalous to think of all the poor saps out there holding on to managed accounts. Move ’em – preserve your capital. Just over half of my pension funds are ‘with profots’, just as well in case I drop a clanger. Yet, timing is not that critical contrary to received wisdom, anywhere roughly on the curves will do, as long as you don’t get hit by the main downcurve. There will be still money to be made, tho I don’t stockpick, these are just general so called ‘managed funds’.An interesting diversion would be to play with an imaginaryt 1k and see if in these hard times it can be made to grow. I haven’t the time, other interests beckon me.

Hint: Look at the price of gold, investors flee to this when the outlook is bad. And nowadays its all the other metals and Earth resources that attract suchlike money.


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One Response to “Investing for your pension fund.”

  1. Allen Taylor Says:

    I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.

    Allen Taylor

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