Reduction in Pension valuations

Share prices are down because more people think
1. future profits and dividends will be lower than they thought a year ago
2. higher inflation and interest rates makes future earning worth less in today's terms

and so there are more sellers than buyers = price drops

Will future profits recover - probably and then the sentiment will turn and the prices will go back up

When will this happen and have we reached a bottom ? - NOBODY knows but it will

If you are too uncomfortable with this level of uncertainness, then you could put your savings and investments into cash - at least then you know the nominal value will stay the same and may even increase as interest rates rise
 
jpd said:
Share prices are down because more people think
1. future profits and dividends will be lower than they thought a year ago
2. higher inflation and interest rates makes future earning worth less in today's terms

and so there are more sellers than buyers = price drops

Will future profits recover - probably and then the sentiment will turn and the prices will go back up

When will this happen and have we reached a bottom ? - NOBODY knows but it will

If you are too uncomfortable with this level of uncertainness, then you could put your savings and investments into cash - at least then you know the nominal value will stay the same and may even increase as interest rates rise
Click to expand...
I understand all that and I'm not overly concerned about what has happened in the last 6 months as there are ample reasons for the declines.

As I said earlier my focus is trying to forecast albeit at a basic level the next few years I presently use 4% growth at end of year , so, opening balance of units at closing price add units bought during year and multiple fund value by 4%.

Again its basic but has given a guide to where the pension funds are going to be at the end of 2022,23, 24 ......etc. so she can see what is available say when shes 60,61,62....

Now we enter a different economic cycle with interest rates going up ,inflation forecasted to remain above 2% until at least 2024 and no doubt other events will happen to further affect pension valuations.

We can't put more money into the pensions as they are maxed out to the Revenue limits her pension fund has already begun investing 50% of her contributions into " more stable " funds.

Is 4% a sensible growth factor to use given the general economic situation? Or am I mad even trying to forecast despite it being with 5% of actual outcomes in the past.
 
Last edited:
No you are not mad but there is no "correct" or "right" rate to use - everyone will bring their own rate to the table.

All you can do is take a view and use a rate you are comfortable with and knowing that in 3, 4 or 5 years time the actual rate was different. There is no crystal ball in investing decision making unfortunately
 
jpd said:
No you are not mad but there is no "correct" or "right" rate to use - everyone will bring their own rate to the table.

All you can do is take a view and use a rate you are comfortable with and knowing that in 3, 4 or 5 years time the actual rate was different. There is no crystal ball in investing decision making unfortunately
Click to expand...
Thanks appreciate the input
 
You must log in or register to reply here.
Back
Top