I opened a pension account and bought four pension target funds

Recently, the “Personal Pension Implementation Measures” was promulgated, various sales platforms have been launched one after another, and the personal pension system has been implemented. Many friends hope to use up the 12,000 quota in the last week of this year.

Faced with 129 Y-type share pension funds, many people are still stuck in the difficulty of choosing. Some friends told me in private: Mr. Erniao, you have to take care of yourself. I will copy the homework for whatever fund you buy, and I will buy whatever you buy.

I am definitely going to retire. As for what fund to buy, if you only tell a few codes, it may not make much sense. Because pension investment is closely related to personal retirement age and risk preference, it is a personalized matter. I still want to clarify my thinking, and everyone can follow the gourd to draw a scoop, so that it can be more targeted.

1. The policy must first be thoroughly understood

In the process of communicating with you, I found that many friends still haven’t fully understood the policy. For example, some friends think that you can only buy a target date fund according to your retirement age. This puts a curse on yourself, which will directly affect investment decisions. I want to clarify some misunderstandings first.

1. Q: Can I only buy one fund for the pension account?

A: Only one pension account can be opened. You can buy as many funds as you like, and no one cares about you.

2. Q: After buying, can’t I sell it before retirement?

A: Pension target funds generally have a holding period (such as 1 year, 3 years, 5 years). From the date of purchase, the shares are automatically locked during the holding period and cannot be sold. After the holding period, it can be traded freely, but the redeemed funds cannot be withdrawn (it can only be withdrawn after retirement). Without special circumstances, frequent transactions are generally not recommended.

3. Q: Can I choose target date funds only by retirement date?

A: In the list, no one cares what fund you choose. Pension target funds have two types: target date and target risk. The target date FOF will dynamically adjust the equity position as the pension target date approaches, gradually reducing risk exposure. It can provide investors with “one-stop service”, which is more suitable for Xiaobai. The target risk FOF is a FOF that pre-sets different expected risk and return levels and has a relatively constant asset allocation strategy. Common words such as “stable”, “balanced” and “active” roughly correspond to the allocation strategies of partial debt, equity-debt balance and partial stock. Investors can complete the allocation of major categories of assets by themselves, which is suitable for investors with certain experience.

4. Q: Will the operation be terminated after the target date FOF expires?

A: It will not be liquidated immediately after maturity. Generally, it will continue to operate, but it will not contain equity positions. It is basically a bond FOF. As for whether to liquidate in the end, it depends on the existence scale of the fund. If the vast majority of investors have redeemed and the scale is small, it is not ruled out that the fund company will voluntarily liquidate and dissolve. At that time, its historical mission will be completed.

5. Q: What should I do if there is no target date fund that exactly matches the retirement time?

A: Both target date and retirement interval within 5 years can be considered. For example, retirement in 2037, target dates of 2035 and 2040 are both appropriate.

6. Q: Is it possible to make a fixed investment in the pension account?

A: Of course you can. The annual quota of 12,000 can be understood as “annual fixed investment”. The 12,000 can also be decomposed into a monthly fixed investment of 1,000 yuan, which will not have a major impact on daily life.

7. Q: Is the investment in the pension account tax-deductible tax-free?

A: It’s not tax exemption, it’s tax deferred, deferred payment. When the pension is withdrawn after retirement, a personal tax of 3% is charged.

8. Q: When you withdraw your pension after retirement, you will be charged a personal tax of 3%. Is it only the principal, and is the income tax-free?

A: No. The tax base is principal + income. When withdrawing, how much money is withdrawn, and 3% tax will be deducted according to the corresponding amount. Directly deducted by the consignment agency.

2. Investment ideas and logic

I wrote “If you want to go to jail for ten years”, what kind of fund should you buy before going in?” I wrote last year. Five principles are proposed for ultra-long-term investment: 1. Major asset allocation: all allocation to stock assets; 2. Prioritize active management funds; 3. Exclude industry-themed funds with too narrow investment scope; 4. Annualized 10% -15% is a reasonable expected target; 5. In the short term, choose a fund manager, and in the long term, choose a fund company.

Pension investment is not limited to “10 years in prison”, this “prison” is for 20 to 30 years, or even longer. As far as ultra-long-term investment is concerned, the logic of this article is similar to pension investment. However, pension investment has its special features: it emphasizes the safety of investment. The above five principles, except for 2 and 3 (the target has been selected for you and endorsed by the state), are still applicable to pension investment. Therefore, I make four suggestions for pension investment:

1. Try to choose varieties with higher equity asset positions. It is a generally accepted conclusion that stock assets have the highest long-term investment returns. If you want to obtain higher returns, you need to allocate more equity assets, and try to choose varieties with higher equity asset positions. Anyway, they are all “in prison”, and the money cannot be withdrawn. The investment time is as long as 20 to 30 years, and such a long time is enough to smooth out market fluctuations. Why not engage in more equity products to strive for higher returns?

2. Target date and target risk product matching, just choose 2-4 funds. The difference between the two products has been explained earlier, and it doesn’t matter whether it is good or bad. My suggestion is to choose one of each: choose a target date according to retirement age, and then choose a target risk according to your own risk appetite. As for whether to disperse or concentrate, it still depends on personal investment habits, but it is best not to exceed 4.

3. The expected annualized rate of return is about 6%-10%, and the investment goal can be achieved if it can reach 8%. Someone asked: Can the annualized rate of return of pension products reach 15%? I said, stop dreaming. The primary goal of pension products is to ensure safety, not to guarantee wealth.

In terms of setting investment goals, I think an annualized rate of return of 6%-10% is a more rational goal. Taking the middle figure of 8% as an example, if you invest 1,000 yuan per month and invest for 20 years, the total principal plus income will be about 560,000 yuan when you retire. On the basis of the basic pension (+occupational/enterprise annuity), with this money, I will not panic.

It needs to be explained that 8% annualized return may not seem high, but it is not an easy goal to achieve. It is not difficult in the short term, but it is difficult in the long term, and managers need to make great efforts. In addition, the compound interest effect is also very amazing, the earlier the pension investment, the better the benefit.

4. In the short term, choose a fund manager, and in the long term, choose a fund company. Someone asked: Is it possible for a fund manager to work for 20 or 30 years? My product has not yet expired. What should I do if the fund manager leaves?

Good question. In as long as 20 to 30 years, fund managers will definitely have a certain turnover, but fund companies must operate for a long time. What determines the final income is actually the overall strength of the fund company. The essence of ultra-long-term investment like pension is to choose a fund company. It will be more secure to choose a fund company that focuses on pension business.

Some people may ask: Now that every company claims to attach importance to the pension business, how to identify it? I teach you a simple method. You observe that two or three months after the introduction of the “Personal Pension Implementation Measures”, whoever uses resources to really publicize and promote this business will most likely pay attention to it. This is different from the new fund. Pension investment is not very well accepted at present, and the scale growth will not be very fast. It is difficult to bring direct benefits to fund companies in the short term, and basically it is to lose money and make money. Throwing real money into it now is a long-term consideration.

Three, point four people

According to the above principles, I chose four funds: two target date type, two target risk type.

Target date type: 1. Huaxia Pension 2040 three-year holding mixed (FOF) Y (017247)

2. China Universal Pension 2040 five-year holding period hybrid (FOF) Y (017361)

Reasons: 1. The target date of 2040 is relatively close to my retirement time.

2. The two fund managers both emphasized the selection of “gray horse funds” that have not been fully explored by the market and the timing of large cycles, which is very close to my thinking.

3. The equity positions of the two funds are currently relatively active.

4. The scales of the two funds are 1.056 billion and 781 million respectively (as of the third quarter of 2022), which are relatively large-scale in the partial equity pension FOF and have a high degree of market recognition.

Target risk type: 1. GF Balanced Pension Three-year Holding Period Hybrid (FOF) Y (017383)

2. Xingquan Antai active pension five-year holding mixed (FOF) Y (017386)

Reasons: 1. Xingquan Antai active pension five-year holding hybrid (FOF) is the only pension FOF with the word “active” in its name.

2. GF’s balanced pension investment is more balanced and cost-effective.

3. The two funds not only operate proactively, but also have better retracement control.

4. I agree with the ability of these two FOFs to select funds.

The two most important points: 1. The four fund managers are highly qualified and experienced, and all have backgrounds in the insurance asset management/annuity industry; 2. The four fund companies all pay more attention to the pension business.

Finally, where to buy? Only platforms with pension sales qualifications can sell Y share pension products on a consignment basis. At present, banks, securities companies, and third-party sales agencies all have consignment sales. You can find a platform you are familiar with to open an account.

Disclaimer: The research and analysis of funds and fund investment advisory portfolios do not constitute investment consulting or advisory services. The remarks published on this account represent personal opinions and are not used as a basis for trading. Fund investment is risky, the past performance of the fund and fund investment advisory portfolio does not indicate its future performance, and the income created for other customers does not constitute a guarantee of performance. The fund investment advisory business is still in the pilot stage, and there is a risk that the pilot fund investment advisory institutions will not be able to continue to provide services due to the disqualification of the pilot program. Please read relevant legal documents and risk disclosure statements carefully, and make rational investments based on your own risk tolerance.

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