Quote Originally Posted by beechcustom View Post
I don't mean to hog / derail the thread but I'm very grateful for the input. I'm just getting started so to get the ball rolling I moved half the pot to the risk level 4 fund. It has a 0.2% fee (the default level 2 fund fee is 0.5%).

It might not be a massive move but at least I did something! I'm going to do some research and I may well move the funds allocate to the default (currently 50%) to another fund or funds. Will take a look at your tracker advice. I am adding between £1k and £2k to the pot per month. Not going to go crazy just yet as I need build my knowledge up.
Well done. Also a 0.2% fee is pretty good - that 0.3% difference with the standard fee will make a massive difference over 15 years.

For example for the sake of maths say you had £100k in there today and you added £10k a year. And say the average real return (after inflation and fees) was 7% a year. After 15 years you'd have £545k in today's money in there, after adding £150k to the £100k you already had (so £295k investment return in today's money). And that's with fees at 0.5%

If fees were 0.2% (so 0.3% lower), that doesn't seem a lot right? 0.3% is peanuts surely?

Well using the same scenario as above you'd have £557k in today's money after 15 years, so £12k more.

Plenty of nice watches available as a retirement gift to yourself with that extra £12k!

Now that 7% return per year after inflation and fees is a historical average with some years massively higher and some years massively lower so of course that's probably not how it will end up, although with a 15 year horizon I'd like to think you'd get close-ish at least having a diversified global portfolio.

What a lot of people do once they get to retirement age is change their portfolio to be more dividend stock focused (for the income) or less risky portfolios so they have more comfort that a market crash won't wipe them out (market crashes are fine when you keep investing as you now get to buy cheap stocks but once you're retired you are usually taking from the pot not adding to it).