- Published
Major tech firms have seen their stock values fall after a sell-off by investors following the US midterm elections.
asserted
values → publish → elections
The fall in the value of their shares across the world has been blamed on an expectation of a slowdown in AI development, although it comes after sharp rises over recent years.
As companies grow, they may issue shares.
uncertain
they → blame → shares
Many of the largest companies in the UK have shares which are bought and sold on the London Stock Exchange.
asserted
which → have → Exchange
Their collective performance is often quoted amid a blizzard of numbers that may feel confusing and irrelevant.
uncertain
that → quote → numbers
Booms or falls in the stock market make the news, but rarely does anyone mention the FTSE 100 during a coffee with friends.
asserted
anyone → make → friends
Yet, there are good reasons why this performance affects your life and finances.
asserted
performance → be → life
'I don't invest' - actually, you probably do
Many people's initial reaction to "the markets" is that they are not directly affected, because they do not invest money.
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they → invest → money
Yet there are millions of people with a pension - either private or through work - who will see their savings (in what is known as a defined contribution pension) invested by pension schemes.
asserted
what → be → schemes
The value of their savings pot is influenced by the performance of these investments.
asserted
value → influence → investments
Pension savers mostly let experts choose where to invest this money to help it grow.
asserted
it → let → money
Hundreds of billions of pounds are held in defined contribution pensions at the moment.
asserted
billions → hold → moment
So big rises or falls can affect your pension, but the advice is to remember that pension savings, like any investments, are usually a long-term bet.
asserted
savings → affect → investments
Experts say that investors have always had to ride economic shocks.
asserted
investors → say → shocks
Investments, by definition, require a long-term outlook and strategy.
asserted
Investments → require → outlook
So, they are urging people not to panic in such circumstances or make knee-jerk decisions.
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they → urge → decisions
Is my specific pension affected?
asserted
pension → affect → ?
Some people have a pension which promises a specific value, depending on their salary.
asserted
which → have → salary
Others have no pension at all.
asserted
Others → have → pension
Millions of people have been automatically enrolled into a pension and may have not really noticed.
uncertain
Millions → enrol → pension
Those schemes see employers divert wages into a pension and contribute some money themselves.
asserted
employers → see → money
The government adds a little in tax relief.
asserted
government → add → relief
In every case, the value of these pension savings is affected by investment performance.
asserted
value → affect → performance
So "the markets" matter - maybe not as much as everyday wages, but for future pensions.
asserted
markets → matter → pensions
What happens if I'm just about to retire?
asserted
I → happen → ?
Timing is more critical for those at retirement age, as this may be when a retiree uses their pension pot to buy a retirement income, or annuity.
uncertain
retiree → use → income
The bigger the pot, the more income they will get in retirement.
asserted
they → get → retirement
As you approach retirement age, pension pots tend to be moved to less risky investments, such as government bonds.
asserted
pots → approach → bonds
When stock markets fall, these bonds can do better.
asserted
bonds → fall → ?
Anyone who has a pension pot invested and is taking an income from it will again see their investment go up and down with the stock markets.
asserted
investment → have → markets
That could mean getting less than you expected if you cash in too much after stock markets have fallen, making it important to plan how to make up any of this shortfall, experts say.
uncertain
experts → mean → shortfall
However, higher interest rates tend to mean better rates offered on annuities, and there is a chance of more rate rises in the UK by the Bank of England.
asserted
rates → tend → England
If share prices fall for an extended period then that could have an effect on jobs.
uncertain
that → fall → jobs
That's because investors in the company expect a return on that investment.
asserted
investors → expect → investment
When it falls for a while, then they would expect the business to address issues, for example by cutting costs, and therefore jobs.
asserted
business → fall → costs
Companies have to consider lots of factors when making decisions on investment and employment.
asserted
Companies → have → investment
In purely investment terms, lower share prices can offer an opportunity to buy, in the hope that over the long term, they recover and rise.
asserted
they → offer → term
Many people will do this initially through a stocks and shares Individual Savings Account (Isa).
asserted
people → do → Account
However, it is worth noting that the sell-off in tech stocks in particular came after big rises, so long-term investors are still likely to have seen gains.
asserted
investors → note → gains
Experts and regulators are at pains to point out that investments can go down as well as up, and urge people not to put everything into one investment, but to diversify.
asserted
investments → point → investment
Some people invest money in what are known as tracker funds.
asserted
what → invest → funds
…and 15 more, not listed.
The Aporia
