If you are in a company Pension Scheme - that's magic.
Stick with it. And contribute as much as you can. This is especially true if your employer will match what you put in. But that's usually up to a limit.
If you're already up to a limit and can afford to save more per month, then you need to consider a Personal Pension managed by nobody but - yourself. That is, a DIY Pension.
But this question is not directed at those with a company scheme, but rather at those who have already taken out a private pension.
It may be that you're perfectly happy with the Personal Pension you have, but if you're not, then this article is for you.
And if you don't know if the Pension Plan you currently have is good, bad, or indifferent, then this website is most definitely for you.
Not all Pension Plans are poor performers. But even the best performing ones barely beat the market.
You can do so much better.
But there is one thing that all Pension Plans have in common, and that is, they generally have high management charges.
If you have a modest pension, say, around £50,000, then management charges can start to become significant. If charges are based on a percentage of your Fund value then the larger your Fund, the more you are likely to be charged.
We really have never quite understood why management charges are based on value. A much fairer way would be to charge a flat fee - and a small one at that.
But, we fully understand why people choose managed Pension Plans in the first place.
Peace of mind. Nothing more to worry about. All investment choices done for you.
Admirable. But not that clever.
There is a cynical side to us. Lots of people "invest" in Pension Plans because their financial advisor directed them that way.
Advisor fees, management charges, call them what you like, but you want a Pension Plan to invest every available penny of your contributions for you. Not start contributing until after hefty fees and charges have made a significant dent in your Fund.
Sure, a DIY Pension Plan has charges too. But they are at an absolute minimum. Although, even these vary from company to company.
Now, let's get back to the original question.
"Why should I fire my Pension Fund Manager and go it alone?"
We've just about answered the first part - because they underperform, charge hefty fees, and add heavy management charges.
The second part of the question is a little trickier.
Because you, the reader of this article, may not have ever invested in shares before nor even had the slightest intent to do so. You think that you may find it difficult to 'branch out' on your own.
And we get that. We really do.
But you know? Setting up your own DIY Pension and managing it, isn't as daunting as you may think.
Fact is, you can set up your DIY Pension and not invest in individual shares at all. You don't HAVE to be an active investor.
We believe that if you invest in a basket of the right shares, at the right time, your DIY Pension Plan will do very well. And all that, without really knowing how to invest.
Here are a couple of examples:
1. You could invest in an ETP (Eschange Traded Product) that tracks the Dow, or the FTSE, or some other geographical index.
2. You could invest in, say, a dozen or so 'blue chip' companies, that could beat the market.
3. You could simply invest in a tracker Fund. One that tracks its underlying Index.
Whichever one of the above three choices you decide to do, you'll probably do better than average.
Another strategy could be to cautiously start out doing 1, 2 or 3 above and over a period, study the contents of this website and actually learn how to invest yourself.
You may find that it's not that difficult.
We guarantee, that after a short period (a few months) you will have the confidence to make your own decisions.
It doesn't matter what age you may be when starting out. We have made a case for starting as late as 60+ and still do remarkably well.
But obviously, the younger you are the better.
** The key is to save as much as you can afford, each and every month. **
Make it a habit. That way you'll not miss the chunk of money you contribute each month.
It may be that you begin from a standing start. Ground zero.
That's O.K. If you are contributing £100 per month, that won't give you any meaningful Pension Pot until you've been doing it for a year or so.
But it also means that any initial investment you make will be small. It may also mean that, in the beginning, you have identified the type of share that you want to buy but no 'buy' signal has yet been given. That's O.K. because your Pension Pot at this stage will only be small.
It's not a problem to only invest a few hundred pounds (or dollars). If you are only investing that relatively small amount you can't lose much if it starts to go pear shaped. Which will be most unlikely because you will have done your due diligence.
It is, however, a good way to gain confidence in trading. Invest small amounts at first and then, when your Fund has grown some, you can invest larger amounts.
Investing larger amounts is our preferred way. Our average transaction cost is somewhere between £10,000 and £30,000.
But when you're starting out you may not have the confidence, or indeed the resources, to do that. But given time, you will.
You will always have one big dis-advantage compared to a 'professionally' managed Fund. They have a bigger pot than you, and can afford to trade in large lots.
But as mentioned elsewhere on this website, one of your biggest advantages will be patience. Patience to wait for the right trade to come along, and patience to stay with it.
That's where you will have a terrific advantage over your 'professional' counterpart, he will tend to hold the shares invested come what may. You however, will not only know the best time to buy, but also the best time to sell.
The professional manager may get in at the right time, but rarely do they get out when they should.
This is the main reason why, over time, you will beat them hands down.
If you already are a member of a company Pension Plan, that's wonderful. Contribute as much as you're allowed to.
If the above applies to you, then this article is probably not for you, unless you want to start a DIY Pension with some extra cash that you want to put away.
But this article is most definitely for you if you already have a private Pension and for one reason or another are not happy. You need to transfer that Pension into your new DIY Pension.
For those people, and people that don't have any Pension in place at all, then you are on the right website. Read all you can on this website, and make your mind up to start your very own DIY Pension.
Trust us, you'll be glad you did.
As a newbie, you may want to read the other "Frequently Asked Questions" on this website. Doing so, will give you a good introduction to running your own DIY Pension.
Chris and Clem Meet Up - hopefully, the last time before lockdown easing
Chris and Clem Meet Up - at last! They can meet in the beer garden
Chris and Clem Meet Up and it is Chris' turn to do most of the talking. Chris' little windfall has allowed him to widen his portfolio. Chris vows of more.