Stay calm when the share prices plummet

The financial markets suffered an unusually severe blow from the onset of 2016. For example, the large players on the Danish share market experienced a drop of 12 per cent. And that leaves its mark. So what do you ought to do?

Actually, you shouldn't do much. The best advice during turbulent times is to remember that pension savings are long-term. With both good and bad periods. Experience shows that the best approach is to look at investment in a long-term perspective and choose the correct investment profile from the beginning – and stick with it. If you, for example, look at the development in the largest Danish shares over 12 months, the picture looks a lot less gloomy with a return of +8 per cent.

Experienced investment experts look after your pension pot

At PFA; your pension plan is taken care of by experienced investment experts, who with great care see to the risk diversification and steer you through difficult waters in the best way possible. At the same time, it is worth noting that PFA automatically reduces your investment risk as you approach retirement. Therefore, you generally do not need to take any action yourself.

Always view your return in a long-term perspective

You will find that your 2016 return is negative. But if you look back a year or more, you will get a better idea of the full effect of long-term investments. At My PFA (mitpfa.dk), you can view your return both over the past year and the past 3 years. 

The best-suited investment profile

During turbulent times, you get the full notion of what it means to take risks. As investments in shares often generate better long-term returns, the main rule is that you need to look at the long-term perspective and stay true to the investment profile you have selected. Generally, it is not a good idea to change to an investment profile with lower risk during bad times as it can be compared to selling shares when the markets are at a low.

However, it is important to be able to sleep well at night, so if you really do feel that your investment profile entails too great a risk, the question is what you can do about it. The answer depends on your age and your needs. For example, if you are approaching retirement, you have received significant gains in recent years and, if you have a decent pension pot, it may be the best solution for you to opt for a lower level of risk and greater financial security.

You can check your investment profile by going through the investment guide at My PFA. Then, it may be a good idea to talk things over with your pension adviser before making a decision.