I’ve finally got round to choosing some shares for my pension. As a recap: I moved my pension out of an existing pension company and put it into a SIPP (a self invested personal pension). This means I can choose how I want to invest the money (shares, funds, etc) so long as it’s in the market.
As it happens, I moved the pension some time ago. So the full pension was sat in my new SIPP as cash and it took my a while to get round to choosing some shares and I needed some support for when using the system.
Ironically, although cash was losing 10% per year due to inflation, it still outperformed the market over the past six months.
As mentioned in this post about pension pots I categorized the FTSE companies into some buckets according to their agility and antifragility. I then selected about 6 or 7 from the top 3 categories. A couple from agile, a couple from antifragile and a couple from ‘fuck you’ money. I kept half the SIPP in cash as optionality.
My original intention was to keep my pesion in GBP due to the currency fluxuations at the moment. I learnt that you can still buy shares in e.g. US or AUS companies if they trade on the stock exchange, thereby keeping the stock in local currency. Possibly a bigger impact on overall performance is the flux in currency exchanges that the company trades in (e.g. producing in China and selling in e.g. Germany).
Key benefits:
- ability to have control over which companies to invest in
- liklihood of actual gains if realised (rather than notional gains from a pension designed pot)
- optionality (i.e. 50% kept in cash)
- bought shares that are ‘buy and forget’. I cannot beat the market traders in the short term, but I’m aiming to invest for a longer period of time – gains that are realised over a 20 year period for example.
- Learning – I get to learn from my own mistakes and no doubt there will be some (antifragile!)