Should you move your Pension to cash

E

EamoRath

Guest
Hi,

Im 35 and have 100k invested in 2 pension plans, one heere and one in the UK. Like everyone fund has lost value in last few years. Wondering if people think its worth transferring fund into cash until equity & curency markest stabilse somewhat to protrct myself somewhat from futher market volatility?

tks
 
Bottom line - that wouldn't be a great idea! Investments are always increasing & decreasing in value, including your house for example! But that wouldn't cause you to sell your house, would it? Admitted this trough has been particularly severe, but therein lies the opportunity for real investors! They pile more into their investments at times like this! Seems you have time on your side, which is very appropriate for pension plans invested in growth investments. Take Warren Buffett's advice - cash is the worst possible investment. Keep in regular contact with your pensions advisor.
 
The problem with moving from the Equity market to Cash or vice versa is when. Ideally you should have moved to Cash around mid 2006 (when markets were flying) and you should have switched back into mEquities in early March 2009 (when the world looked like it was coming to an end).
The difficulty with this concept is knowing when to switch. Ideally you should sell at the top (when is that?) and buy at the bottom (wnever that is). The reality is that human nature often means we do the exact opposite (behavourial finance).
Unfortunately its only with hindsight that we can see the top or the bottom 9despite what some people calim).

At age 35 I think you have to take a long term view (time rather than timing). Trying to job in and out of the market is next to impossible. Markets will be volatile, which if you remain invested will mean that you continue to buy at a mix of prices. If you take a 30 year view (to age 65) then a well balanced portfolio (including Equities, Bonds, Alternatives, Property etc) is perhaps the most prudent approach. As you get closer to retirement you certainly should consider de-risking the portfolio.

Equity markets have recovered significantly since March 2009 and are likely to be volatile over the next few years (up and down). But switching to Cash, which offers very low rates may give you a dfegree of security but a very low return.

Talk to your Plan advisor (if you have one). Maybe consider transferring your UK pension to your Irish pension (if that possible). This issue revolves around the currency trade (currently every £ will give you €118. Whether this will improve or not if you delay, is a difficuly call.
 
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