↑ Emerging
Markets Stock Index Fund is up by $2,158 or +1.8%
↑ Eurozone Stock
Index Fund is up by $1,407 or +1.2%
↑ US 500 Stock
Index Fund is up by $2,712 or +2.1%
↑ Global Small
Cap Index is up by $2,998 or +2.7%
↑ EUR is up to
USD by $2,216 or +1%
↑ GBP to USD is up
by $1,956 or +4.7%
↑ Additional
cash to invest $1,159 under my pension plan.
Grand total additions:
$14,576
Observations:
Change of the pension
fund provider. When I started my private pension fund to take advantage of tax breaks,
I did my online research. The company I chose had the best rating for smaller
pension pots (under $300 K), as the fee was 0.25% or no more than $125 a year.
As it is very typical in the UK, this is not
true. The company set up an
"administrator" subsidiary, which charges some fees. Such fees are
not reportable for comparison. All together I am paying $250 a year.
The tipping point was
to receive their estimate for the year (they have to do it by law): if I contribute 720 a month for 30 years, my
pension would be 500 a month (with average life expectancy they will pay it for
15 years). This is great success of British
finance sector. They assumptions:
investment return – 5% a year, inflation -2.5%, investment cost (including
infamous administration) – 1.25%. So, in
real terms the money will grow 1.25% a year and still they will pocket most of
what will be left.
I decided close the
private pension fund and combine the pot with the company one. Company is an
FTSE behemoth, so it will be cheaper for me in the long run, as with new fund I
will indeed pay 0.26%.
Choice of funds. I was also reading Vanguard analytics, where the
fund analysts offered their view on the market performance in the next ten
years. Where US would grow 1.7% and
China 6.1%. Global equities (excluding
U.S.) will perform at 6.5%-8.5% a year. Projected inflation is 2% a year. This
essentially means that in real terms the US economy stalls and no growth in
wages is projected. I am planning to
invest UK growth index fund with passive management style.
No comments:
Post a Comment