3 February 2021

Desk and notebook

3 February 2021

As lockdown continues across the UK it’s still unclear when our schools, businesses and society can start to reopen. The vaccination roll-out is moving at pace, but this isn’t mirrored across the globe with some countries struggling to secure supplies and this is affecting global stock markets.

The vaccine break-through resulted in a boost to markets earlier this year but the stall in vaccination across much of Europe, continued lockdowns and positive coronavirus cases means the situation is still volatile - and this means you may see the value of your pension go up and down.

In a shift away from the 2020 headlines which were dominated with coronavirus and Brexit, last week saw focus change to the events surrounding Gamestop. The stock price rose by over 1000% in a matter of days, driven primarily by retail investors flocking to purchase shares in the company. This kind of event doesn’t happen often, and importantly these sharp spikes are often followed by equally sharp falls, with the Gamestop share price currently sitting at half the value it was last week.

Whilst we don’t invest in Gamestop in our core pension products, events like these highlight the potential risks for individuals in making investment decisions on individual companies and emphasises the importance of seeing pensions as a long-term investment.

It’s very normal for the value of investments to go up and down. Although not guaranteed, the hope and expectation is that values generally go up over the longer term, despite this short term volatility.

Making decisions based on what’s happening in the short term can be a risky thing to do. It might be tempting for example to take money out of your pension – but in doing that, you might miss out on the point when the value goes back up - so you could lose out in the long term.

As the uncertain situation continues to unfold, 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 thinking about switching investments, or if you’re taking money out of your pension, we strongly recommend that you speak to a financial adviser to consider your options thoroughly before taking any action.