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Amateur Financial Advice request (Brexit related)

5 replies

inquiquotiokixul · 14/08/2018 08:29

My pension pot isn't currently big enough to interest proper Independent Financial Advisers - I have tried and failed to get one but basically they won't bother to get out of bed for me until the pot is at least 4 times its current size. (Teens of thousands rather than tens of thousands ds). So just wondering if any amateurs out there would share their thoughts with me.

The pension is a simple personal private pension with Royal London and I can choose a balance of funds across the dozens of managed and passive funds they offer. I currently have 70% in one fund that was most appealing to me in its description and which has performed well in the last 3 years since I started the pension, 20% in another which has also done well and 5% each in two others which have basically been stagnant but they may grow.

It seems quite likely that there will be a financial crash next year triggered by Brexit and the markets in general will lose a significant chunk of percentage points - which will hopefully be recouped over the subsequent decades before I eventually retire. However I am wondering whether it would be wise to rebalance the spread of the funds now in order to hopefully cushion the impact of the crash.

Of course each individual fund already has very spread risks - typically no more than 1% of assets in any one company. Does that mean that the investments are already sufficiently spread out even though I have 70% in a single managed fund?

Are there some fund types that are going to be less exposed to the fallout from brexit and won't suffer as much when the crash comes?

Or are my worries too petty given that this is still a relatively small amount of money as pension funds go.

OP posts:
pacer142 · 14/08/2018 10:28

Highly unlikely to be a substantial brexit crash. The markets are always proactive and pricings etc already anticipate the most likely effects of Brexit. That's why share prices/currency exchange etc has already taken a hit - that's the Brexit hit which has already happened.

You don't make money in investments by planning for the expected - the market makers have already beat you to it. You make money by investing with the unexpected in mind.

Consider it like horse racing. If you want to make a fortune, you don't put a bit of money on the favourite, because even if it wins, you barely get any profit. You have to put your money on horses that are less likely to win, hence better odds, so your horse is less likely to win, but when it does, you win a huge amount. That's the skill, and investments is just the same - it's just betting on businesses/economies rather than horses.

You never win big by following the herd. The herd is expecting a brexit crash, so like I say, investment prices/currency etc are already accounting for it, so if it happens, there won't be much change in prices/values etc.

Ta1kinpeace · 14/08/2018 13:38

Any fund which had a significant crash would be negligent.
They should be spread betting across countries and sectors - that is what they take 1% of your fund every year for.

I suspect that a lot of "no deal" is already factored in
As was Trump for example

inquiquotiokixul · 14/08/2018 22:16

That makes sense I guess. Thanks.

OP posts:
inquiquotiokixul · 14/08/2018 22:34

So thinking about this - is it basically that the funds are all employing (using my 1%fees) experts to "beat the market" by working out which companies have shares/assets that are "under priced" to buy and identify shares/assets that they already hold but are "overpriced" to sell. I guess that means that the "choices" I make are mainly about which mathematical genius turned city-slicker to trust to lay my bets for me? In which case why doesn't the pension company tell us more about the fund managers? I feel I need CVs!

OP posts:
Excitedbutconfused · 14/08/2018 23:41

Most established big funds will have info on their fund managers and a search on google and LinkedIn will give you more background.

I have a similar issue - just opened a SIPP to consolidate a load of smaller pensions and have started to research what investments I want to put and am cautious re Brexit - so looking for finds that invest in global companies here and abroad. I do think there are still some uncertainties over what will happen, and think some fund managers are hedging bets so want to diversify and hopefully insulate from any bad decisions on their part!

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