Market update

Here we share the latest market update to help you understand how stock markets may be having an impact on your retirement savings.

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Our latest market update

3 August 2020

The Prime Minister’s recent claim that life in the UK could return to “normality” before Christmas has been dampened by a sudden lockdown U-turn for much of the country.  Casinos, bowling alleys and many beauty salons’ services have been asked to put the brakes on opening for another fortnight in England.  

Boris Johnson is now warning of a “damaging second wave” hitting the UK and has ordered swathes of the north of England back into partial lockdown. This may well have a knock-on effect on employment, the economy and impact stock markets...

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Hi, I’m Katie Eagles from the investment team at Royal London and if you’re saving into your pension then I’m here to tell you a bit more about what’s happening in the stock markets, how this will be impacting your pension, and some of the things you might want to think about.  

As coronavirus has gripped the globe, we’ve seen big stock market losses and no doubt you’ll have seen the value of your pension drop. As lockdown eases across the world, global markets are showing signs of recovery, but we do expect it to continue to go up and down over the short-term. 

The most important thing to remember is that a pension is a long-term investment and time is still on your side. And it might take some time - but markets do normally recover. And some of the strongest positive returns tend to follow the biggest falls, so staying invested can pay off in the long run.

If retirement feels a million miles away for you, or you’ve experienced a drop in income, then it’s natural to think that reducing or even stopping your pension contributions might be a good idea. But continuing to make regular contributions during volatile periods means you could get more shares for your money and potentially improve your returns over the longer term. And the more you pay into a pension plan, the more you should receive when you retire. So, try not to make any hasty decisions if you can.

Having a spread of investments can help reduce the impact of market shocks on your pension. If you’re invested in a Royal London workplace pension or one of our Governed Range portfolios, then you’ll automatically benefit from being invested in a spread of different investments like company shares, government bonds and cash. This way, if one particular investment is performing poorly, you shouldn’t be as badly affected.

And finally, as this uncertain situation unfolds, you can feel assured that our investment experts are continuously monitoring the markets, keeping a close eye on your pension investments and making any changes we feel necessary in response to market events.

If you’re unsure what to do with your pension investments, then I would recommend speaking to a financial adviser. We have some information on our website on finding a financial adviser, if you don’t already have one.

And in the meantime, you can use our retirement planner tool on our website or download our mobile app to keep an eye on the value of your pension.

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During this uncertain time, Royal London remains focused on delivering good outcomes for our customers.

We do this by following three core beliefs. Long-term thinking, greater diversification and strong governance.

While it can be hard to watch large market drops, it’s important to remember that investing for retirement is a long term game.

It’s very normal for the value of investments to rise and fall...

As the economy goes through cycles of expansion and contraction.

Our investment experts analyse and understand where we are in that cycle and which asset classes we should be investing in within the portfolio mix over the longer term...

And on a day to day basis, so that we can try to maximise returns and avoid some of the losses.

We believe that investing in a wide range of asset classes – also known as diversification...

will help to reduce the risk of having all your eggs in one basket.

This way, if one particular investment is performing poorly you shouldn’t be as badly affected.

Our Governed Portfolios have been built for saving for retirement.

Each of the nine portfolios has been designed to match a risk attitude, and term to retirement.

They’re made up of a diversified mix of assets which has helped them stand resilient for more than 11-years during times of uncertainty...

... such as the China/US trade wars and Brexit.

Our Governed Retirement Income Portfolios are designed for customers who are taking money out of their pension...

and aim to maximise returns above inflation to support sustainable, regular income withdrawals.

The portfolios hold a wide range of investments, including company shares, property, government bonds, commodities and cash in order to help them meet their objectives. This helps them to be better prepared to withstand sudden market shocks.

You can feel assured that Royal London’s investment experts monitor all our portfolios on an ongoing basis to ensure they deliver in line with their objectives over the longer term.

By keeping a close eye on what’s happening in the market, our experts can make any changes necessary in response to market events.

All our investment portfolios benefit from regular reviews, hands-on supervision and ongoing fine tuning at no extra cost.

Read the latest updates from our experts by visiting www.royallondon.com/marketupdate

 

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