Your pension and the stock markets - Aviva

1 Your pension and the stock markets 1 10/8/20 5:00 PM. Inflation. Budget deficits. Oil prices. Recession. Coronavirus. Political turmoil. Currency chaos. Boom and bust. War. All these events and more can unsettle stock markets . And in the short term they can also affect the value of money held in your pension . Today's 24-hour cycle of news and information can sometimes make things look worse than they really are. Relax, and read on. Pensions funds invest in company shares, bonds and Taking the long view, there is one hard truth about investing: property with the aim of helping people like you save for nobody knows when stock markets will rise or fall. retirement.

2 We'd all like to find a way around the fact that stock markets and The reason why pension schemes make investments in bond markets wobble from time to time, but that goes with the company shares and bonds, rather than leave your money on territory. deposit is because inflation can and will reduce the value of your pension savings over time. That's why we put your money With investing, the simple fact is that past performance is never to work in stock markets and other asset classes, including fixed a guide to the future and your money is at risk. So, you could get income, namely government and corporate bonds. back less than you put in. Over the short term, stock markets will rise and fall in response to each day's trading.

3 Over the long term, your pension is designed for decades of investment ups and downs, not for this week's news headlines. 2 10/8/20 5:00 PM. Your pension money and investment cycles Here's the UK's ftse 100 stock market index , from 1990 Do people like it when the value of their stake in a company is through to the middle of 2020. Often called the Footsie ', suddenly smaller than it was the day before? it's the one you see and hear mentioned on the radio and television and read about in newspapers and on the internet. It's unlikely, but it's all part of investing and this is simply what It measures the latest value of the UK's largest 100 companies markets do.

4 The shape you see here is the type of path your (based on their current value), moving up and down from pension money takes as it crosses this mountain range from minute to minute, hour to hour on days when people buy and month to month and from year to year as you travel through sell shares. Many of these Footsie companies are household your journey towards retirement. names, such as Unilever and Tesco. If you look closely at the graph, you can see several occasions The first thing you'll notice about the ftse 100 graph is the when the market has fallen and then recovered. But nobody shape: it resembles a mountain range with peaks and deep knows exactly when this will happen, and if you had that valleys.

5 Steep ravines follow several of the peaks, and then from information in advance, you wouldn't be reading this right now. the valley floor the ftse 100 rises to hit new highs. We call these investment cycles' and they can be influenced by many One of the advantages of investing in one of these dips is different things including good and bad news about specific that shares are cheaper than at the peaks. If a company is a companies; changes in the value of the British pound and other successful business and represents good value, this could currencies, as well as political uncertainty and unexpected represent an attractive opportunity for investors and especially events like the Coronavirus crisis.

6 stock pickers. In this situation, you simply get more shares for your money than when share prices are higher. Source: London stock Exchange Group, August 2020 ftse 100. 8, 7, 6, Points 5, 4, 3, 2, 1, 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020. Year ftse is a trade mark of the London stock Exchange Group companies and is used by ftse International Limited under licence. All rights in the ftse indices and/or ftse ratings vest in ftse and/or its licensors. Neither ftse nor its licensors accept any liability for any errors or omissions in the ftse indices and/or ftse ratings or underlying data and no party may rely on any ftse indices, ratings and/or data underlying data contained in this communication.

7 No further distribution of ftse Data is permitted without ftse 's express written consent. ftse does not promote, sponsor or endorse the content of this communication. 3 10/8/20 5:00 PM. A reminder about how we manage your money Governance government bonds Your money is invested in collective investment funds government bonds issued by the UK government are referred and managed on behalf of Aviva by regulated investment to as gilts'. If a government or company defaults on the loan, professionals, which the analysts in our in-house governance then the interest will not be paid. Gilts are regarded as less risky team have carefully chosen. than corporate bonds as the UK government has a good credit rating.

8 For this reason, it is believed to be in a sound enough Investing always carries a degree of risk and it is impossible to financial position to be able to repay the money it has borrowed predict and control falls in stock markets . That would be like and honour its debt repayments. trying to change the weather. But that's why we have controls in place and only make funds available to you that are managed by Long-term investment investment professionals according to FCA (Financial Conduct Pensions are a long-term investment and throughout this Authority) regulations. The analysts in our governance team then journey there will be ups and downs along the way.

9 This applies review these funds on an ongoing basis. whether you select the funds you want to be invested in, or you are invested in a default investment solution* for the entirety of Our funds can help diversify your pension savings your retirement journey. As we've explained, ups and downs in Basically, we provide a choice of funds that invest in different the markets are part and parcel of investing. asset classes to avoid you putting all your eggs in one basket. For us, taking a long term view is essential. Our pension As mentioned above, we invest your money in what are known as investment funds provide a wide range of different assets to help collective investment funds.

10 As the name suggests, your money manage risk. Investing in diverse assets in different industries in is pooled with that of other pension scheme members and the various countries can help provide stability in times of market professional fund managers will use it to buy investments such as stress. company shares, bonds and commercial property. *Please note that default investment solutions (where money We also offer funds that invest in fixed interest is automatically invested in funds designed to manage risk throughout the retirement journey on behalf of customers) are assets. Here's why only available to those investing in a workplace pension via There is more to investing your pension money than just their employer.