My pension isn't good enough, is it?

[concernedchild]

I'm 24. Been contributing into a workplace pension for about a year. That's the standard 8%. I then contribute an extra £90 into a SIPP - with the tax relief I get on that it works out to be about 10% of my pay after tax, all in all I'm contributing about 15% of my gross salary into a pension pot.

My pension (across the two pots) is only £2300 or so. My Aegon pension only seems to be going up with the contributions I make, I'm not seeing any growth. My Vanguard SIPP has grown by £100 on top of what I put in to it.

It's estimated I'll need something like £1m to retire. How the hell am I ever going to meet this???

45% in the life strategy 20% equity fund - gross accumulation

6% in the ESG EUR corporate bond UCITS ETF - accumulating (V3RE)

47% in the target retirement 2065 fund

A little bit of cash which it automatically invests into these funds

But they have started it and are contributing a decent amount - so why worry at 24?

Because they more planning people do at that age the less they will have to worry in the future.

Remember you have 40 years of compound interest to add to that. You're contributing more than most.

Any reason you’re only doing 20% equities in the LifeStrategy fund? At your age I’d be 100% equities, I’m no expert but my understanding is that’s where the long term returns are usually greatest.

I'm 49 and self employed and stared a pension last year. You're worrying? 😅😅

This.

The vanguard funds are good, but you can get slightly lower charges via other global equities ETFs.

Take a look at LGGG (legal and general global equities ETF). It has a 0.1% annual management charge vs 0.22% for the vanguard.

Because I have no clue what I'm doing and was told not to do 100% as it could mean I lose everything

A global equities passive fund invests money based upon the value of global companies.

The money is invested proportionally according to the company values and there will be thousands of companies held by the fund.

You could only end up losing everything, if every single major company in the world went simultaneously bust.

Never say never, but that would be a complete and total collapse of global civilization and your investments would be the least of your worries.

LGGG holds shares in the world's largest 1,493 companies.

There are the top 10 holdings.

Alphabet = Google
Meta = Facebook

At your age you can afford to be in 100% equities, pick a global/all world tracker for your vanguard.

I have a small amount with Aegon and their funds seem to be complete dogs, I have favourable tax free cash rights from it so haven’t moved it yet, but it has not performed well at all (but it is a small proportion of my overall pot so I’m not too worried).

Rough guide is to pay in half your age when you start your pension as a % of salary, so you’re doing great with 15% but I would look to increase that by say 1% each time you get a pay rise until your at least at 20%.

If you've trusted the advice of someone who said you could lose everything and instead to have 80% bonds at 24 stop listening to them. Look at something like Meaningful Money and watch their YouTube's about new accumulators. Adjust your strategy then carry on saving/investing based on your new strategy

2800 divided by 12 months equals circa £233/ month. That monthly contribution at 11.4% annually over period of 41 years equals to over 2 millions pounds without adjusting for inflation. But even with more Conservative 8% oer annum over 41 years her pot would be circa 785k. So you are way off in your calculations.

Is Ageon that bad??? That's my workplace pension

Aegon is fine, you can move your funds to a Vanguard fund within it. Funds like FTSE Global all cap or FTSE developed World Ex-UK are well diversified, 100% equity and low fee.

God I'm totally out of my depth here.

Is it ridiculous to book an appointment with a financial advisor? I'm only on £18k a year at the moment but that'll go up quite a lot when I qualify, and I want to make sure I'm doing the right thing

You don’t need a financial advisor. Try something like the Rebel Finance School videos, they’re about to run a new annual series (May I think). Given your questions, I’d start at the beginning, but you’re in an ideal place to be asking these questions at such a young age.

My Aegon pension is an old workplace one, the fund selection I have open to me is awful, but hopefully you have more choice.

You don’t need a financial adviser, just work out which funds you can choose from are global equities trackers and pick one (preferably with the lowest charges).

Feel free to post the list of equity funds here & we can help you choose.

Two things strike me:

1. why are you investing in two arrangements? It sounds unduly complex and you can put what you want into a single pension.

1. the poster who suggested investing in a global equities tracker (passive) had a good suggestion. Equities markets are proven to produce growth over the longer term, and your money will be invested for upwards of 40 years. You could invest in more risky funds but fees will be higher too and I personally never think they are worth paying for a fund which over time often won't do better than a passive tracker (even if it does for the sort term).

You don't need an IFA. Just invest in a single pension in a passive fund, keep contributing as much as you can and make sure none of your funds are "life-styled".

Definitely don't waste money on a financial advisor.

There are two types of investment:

* active
* passive

Active funds have managers that decide where to invest your money. They have higher charges. They can have great returns, but can also have huge losses - look up the Neil Woodford scandal.

Passive funds simply track the stock market and most automatically reinvest dividends (known as accumulation funds).

Multiple studies have shown that passive funds give the best results due to lower fees and automatically holding all the 'winners' vs fund managers potentially making bad decisions.

Vanguard 100% equities is a passive fund that tracks global stock markets. It is a good fund, but the charges are a little too high IMHO for a passive fund - 0.22%.

I have a regular investment into the Legal & General version (stock market code LGGG) - 0.1%.

There are other options, but they're all very similar - iShares, HSBC, Vanguard, L&G, etc, all have global passive tracker funds.

One last thing, ETFs are good because you don't pay stamp duty when buying shares.

I opened up a vanguard account, my work pension is aegon and I don't get a choice

But OP is primarily WORRYING, not planning. To be actively stressing about pensions at 24 is not particularly healthy in my opinion…

Glad I'm not the only one! I started my first pension 3 years ago, I'm 42. DH is self employed and doesn't have one.

We're only just scraping by now so he can't afford to pay into one now.

Luckily we're used to living quite a simple life so I'm sure we'll get by

I opened up a vanguard account, my work pension is aegon and I don't get a choice

Sure, but you can pay higher amounts into your work pension and you can likely consolidate the two. Easier to manage a single pot and potentially lower fees (you might be paying more in account charges by having two arrangement). The funds most providers offer are much of a muchness, especially if you don't want something fancy.

I'll look into changing my pension contributions through work but I think they're set based on the selection I made when I joined, I also do like the option of changing the contribution I make into my vanguard and being able to top up as a one off