01 Nov Falling stock markets, and now?
Share prices have fallen over the past few weeks. That means the value of the investments in your pension pot may also have decreased. We will explain why prices fall and what this means for you.
Falling prices. Why does that happen?
The stock markets have fallen over the past few weeks. That is mainly because investors are worried. They think companies will make less profit because there are forecasts of lower economic growth ahead. If companies make less profit, or if investors expect less profit, share prices are affected.
What other factors are involved?
The world is unsettled at the moment. The trade row between The United States and China is a key factor. Trump is also threatening to withdraw from a nuclear weapons treaty with Russia. Investors don’t like unsettled times because consumers buy less and companies invest less.
Europe also faces economic challenges. The Italian government has presented a budget that breaches European Commission rules. Italy is spending more money than it earns. The European Union wants Italy to spend less because it already has too much debt.
Has this happened before?
Yes, steep falls occur quite often. Stock markets were hit hard during the credit crisis, for example. They recovered afterwards, though, and over the long-term shares on the stock markets have always risen in value. That’s because the economy grows over the long term.
And now? What does it mean for me?
It depends on which LifeSight investment solution you’ve invested in. You can view the return on your portfolio at MyLifeSight or in the LifeSight app for Apple (Google play LifeSight app). But it also depends on what your forecast pension would be at your retirement age. This forecast includes your current return and an expected return in the future. We also take future contributions into account.
What does LifeSight do?
If you invest in Smart Investing, LifeSight carries out the entire management of your investment portfolio on your behalf. We take a number of steps to protect you as fully as possible against price falls.
We reduce your investment risk as your retirement date draws closer
If you’re young, for example, you’ll automatically invest more in shares and other investments aimed at achieving a high return. These investments entail a higher risk. You need a return in order to build up a good pension. And when things go less well, such as now, there’s still sufficient time to catch up. As your retirement age draws closer, the risk is scaled back and your pension pot is invested increasingly in government bonds. Then, if share prices fall, your pension pot is barely affected, if at all.
Spreading the risks
It’s important not to invest everything in the same market. We therefore make sure you invest in a basket of different investment funds with the aim of achieving a good return with an acceptable risk. We select the best asset managers to manage your money. It’s invested in European shares, American shares, emerging market shares, real estate and corporate bonds.
Testing and evaluating our investment approach
Every year LifeSight assesses whether the investment approach needs to be adjusted in view of the state of the economy and future forecasts. LifeSight also assesses the performance of the selected asset managers. Our aim is to deliver the best results for you. You don’t have to do anything yourself.
If you invest in Self-Investing, you select the investment funds yourself and are responsible for your portfolio allocation.
What should I do?
The money you invest is intended for your pension, so it’s important to focus on the long-term and stay calm. History has shown that turbulence recedes and the economy grows over the long-term. We also advise you to check your pension situation from time to time. You can do that in detail at MyLifeSight and in summary in the LifeSight app for Apple (Google play LifeSight app). Here you can see immediately how the investment results will impact your future pension.
Tip: be sure to assess your overall situation using the inventory page in MyLifeSight. This will increase the reliability of the pension amounts displayed and give you a comprehensive overview.