Is it worth putting AVC in?

[pumi63]

Hello ,

Many thanks for replying . I got about 7 years to retirement and i decided last month to check what i was getting monthly start-end compared to what i put in .

I was shocked to discover that i actually lost £370.00 over the month !

It's a shame that RM have chosen Scottish Widows for AVC but don't advise on best scenarios for investments , and i understand that investments can go down as well as up .

I can almost believe that a fund could in theory dwindle to nothing , and you may get very little compared to what you have unvested .

Just wondering what other members invested in the money for life scheme think and any good experiences and bad ones ?

Thank you

[RobertT]

What is £370 in percentage terms? It doesn't mean anything otherwise!
Which funds are you invested in?

You'll only get advice from an IFA! Some employers offer them, most don't.

In theory it's possible for a fund to dwindle to nothing, but most major drops are usually down to a specific shorter term reason. Things usually recover!

The good thing is you're currently buying at a lower rate than before, and as long as prices go back to where they were, you'll be making money overall.

SW have only been the AVC provider since 2019 and personally I've seen relatively modest growth in my Flexiplan fund in that time. Although I stopped contributing before then and wanted to protect my gains, so that was more or less as expected.

I was paying AVC's for around 28 years I think, and in that time there's been a few ups and downs, as that's the nature of stock market investment. But overall I've gained a healthy amount via tax relief and PSE, aswell as made good returns via the funds available.
My money has still grown substantially more than if I'd put it in a savings account!

[pumi63]

I appreciate that investing in this scheme is a long term process as this will 'smooth out ' any drops and gains made over the period .

I am looking for a steady reliable growth that will supplement my pension when i retire and i wondered what members have found to work well .

So, which of the 7 funds that appear within the Money4Life scheme are the best ones to invest in and starting with 100% then what ratio of a fixed regular payment should i invest into the 7 funds ?

Should i balance with some in cautious and some in growth ?

Go crazy and aggressive and invest in Growth but subject to losses too ?

Or Balanced and growth ?

As you can see the permutations involving 7 funds to choose from is a particularly large number , and not all choices made are good .

Any thoughts or advice from members that have made successful investments here please ?

Thank you

[Hawkey99]

Its a complete no brainer to pay into AVCs.

I did it for well over 20 years and ended up in a fantastic position.

If you have a longer period look at growth or Shariah.

Evey major global fund makes great profit over the long term.

When you consider that every £ you put in cost you 67p after tax and NI saving your 37% up before you start.

Best time to start is NOW...

Best of luck to anybody and great to see the amazing Robert still helping out

VERY HAPPILY RETIRED....after nearly 35 years in RM

[Tc1963]

Hi I have an old work place pension worth quite a lot is it possible to transfer it into an AVC?

[RobertT]

Hi I have an old work place pension worth quite a lot is it possible to transfer it into an AVC?

In a word, no!

[Dexydog]

I thinkmits worth mentioning to be careful how much you put into AVCs.
If you're lucky enough to be able to set aside a good chunk of your wage; you may end up losing all PSE if that takes you under the national minimum wage in hourly terms.

[Decky Boy]

I think we all want maximum growth for minimum outlay when it comes pensions, investments and savings.

Pensions and AVCs offer various funds where growth and risk are inversely related ie low risk funds (usually) offer less growth (but more security) than higher risk funds... which more often than not... promise a greater return and outcome for the capital you invest on a weekly basis ! The instruments high growth funds invest in tend to be more volatile than cautious or balanced funds and so are riskier. They tend to fluctuate positively or negatively dependant on market conditions and trends and are also influenced by geo-political and environmental events !

If you are young then growth products are likely best.We can move into less volatile funds as we get older thus protecting "growth" as we get closer to retirement. Cash and Money Market Funds are often the safest funds to be in as we approach retirement.

As others have said AVCs are such a cost effective way to plan for the future that they are almost a no brainer. We don't get told about pensions, funds, investments and the financial system at school (or at least I didn't !) and so it can seem impossible to navigate for many. Over the years I've tried to educate myself. I'm still learning, reading articles and books and trying to work out just what the dickens is going on in our world of today.

Knowledge is Power. We need to educate ourselves in financial matters or if this seems impossible then perhaps approach a financial advisor ? They will charge you a fee for any indepth advice given.

I am not a financial advisor and the above are merely my current thoughts on the topic in question. Good Luck !

[Hyrrokkin]

I have been paying into AVC's for several years - only regret was not starting earlier

It has build up nicely over that time - not a huge amount but certainly much better than without having it.
I have found that most do not even know AVC's exist never mind paying into them - i have tried to inform others-but most are not interested...a shame but their choice at the end of the day.

[RobertT]

I have been paying into AVC's for several years - only regret was not starting earlier

It has build up nicely over that time - not a huge amount but certainly much better than without having it.
I have found that most do not even know AVC's exist never mind paying into them - i have tried to inform others-but most are not interested...a shame but their choice at the end of the day.

That was my experience aswell.
A lot of people just don't want to know about their pensions in general until it's time to take them, let alone consider paying more when they're younger.
Most see it as something to think about when they're old, which is totally missing the point as far as I'm concerned.

I paid into AVC's for around 28 years and built up a fairly decent amount of money in that time, a large proportion of which was from either RM(Bonusplan), the taxman or from investment returns(the biggie). So I can say from experience, it's definitely worth doing and has helped put me in the position I'm in today.

I don't know how many pay AVC's into the current schemes, but apparently 14,000 have signed up to the lump sum booster via the RMCPP, which is great.