Hi there. I want to just invest in SP500 ETF and Few individual stocks. Little voice in back of my head saying i should put my money into a professional pension fund and let the experts control it. What’s your view pls?
There can be positives and negatives to both. It would have to be what you are comfortable with, the good news is that by understanding some over arching principles you can DIY and achieve the growth that has created most millionaires in the USA.
Pension pros:
Time- don’t have to think about it leave it up to the “pros”
Benefits- A pension plan can work with you possibly for early retirement, or early draw (maybe for a down payment or medical bill)
Taxes- Income going straight to a pension account may have tax benefits then taking your taxes money, buying stocks, and then getting taxed on the growth as well
Pension cons:
“Pros” - the “pros” can be cons! Also how are they making there money? Is it a % of your account annually? If you lose money do they still make money? Misaligned incentives
No control- other than moving all of your money out of the pension you have very little control over the investments that your pension plan use.
Monthly payments- you will probably receive your pension as monthly installments, when having access to all of your retirement fun in retirement maybe beneficial (so you can move somewhere cheaper)
Hope this helps!
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Hey @Knightro7!
What do you mean by a “professional pension fund”? Pensions are usually offered only through your current employer and they’re rarely optional. Do you mean “actively managed mutual fund”? i.e. putting your money in a fund that’s managed by someone else to pick and choose stocks for you?
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Thanks for replying! I’m expat in singaore and get my pension contribution in cash. So part of my feels I should enter some kind pension fund managed by pros-because I’m a novice and no time to research. But really I’d prefer to just invest inETFs and control my money. Thoughts?? Thanks!!!
Oh yeah. Skip the pros. They’re good at charging a fee, but they aren’t good at outperforming the market. Buy a 3-Fund portfolio of ETFs.