Picking the right pension

by Ed Bowsher on 27 May 2009  |  0 comments
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I've decided how I'm going to invest my next pension contribution.

My latest money moment was a bit of pension management. It took me much longer than a minute, but I was enjoying myself, so the time flew by!

We're lucky at lovemoney.com as we have a good company pension scheme. It's actually a SIPP which is operated by Hargreaves Lansdown. It's attractive because it has low charges and offers lots of investment options.

I'm 41 and I need to build a much bigger pension pot if I'm going to have a comfortable retirement. So I'm now paying a significant chunk of my salary into the SIPP each month.

That's all well and good, but a pension saver also needs to decide where to invest her pension cash. The simplest approach is just to put all your pot into an index tracker fund. If you want to be a bit more adventurous, you can split your pot into several chunks and invest in a range of investment funds.

But I like to take a more risky approach - sometimes anyway. Some months I invest my latest contribution into shares in an individual company. Doing this is much riskier than investing in a fund as there's a much greater chance that an individual company could go bust or perform very poorly.

Other months, I take the safer approach and put my money in an index tracker.

Anyway, I had some spare time yesterday, so I decided to think about what I'll do with my next contribution. I was tempted to put more money in London's bellwether index, the FTSE-100. Sure, it's risen by more than 20% since its low earlier this year, but I'm still confident that the current level of 4416 will look cheap in ten years' time.

I was also tempted to buy more shares in a fairly small satellite company called Avanti Communications. Its first satellite, HYLAS, is due to be launched this year, and that launch should boost the share price. The company has also announced several good deals this year with customers who are buying capacity on the satellite in advance of its launch.

I decided in the end to go for Avanti. It's far, far more risky than an index tracker but I just can't resist the lure of big profit potential. That's unless the share price has already soared away by the time I get my pension cash. Fingers crossed.

I should add that I did this money moment yesterday, but only got time to write about it today. Today's money moment will follow shortly....

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