‘How I am investing my pension during coronavirus’

Linda J. Dodson

Markets have fallen by more than a fifth from their highs at the beginning of the year and economic fears over coronavirus has caused more around half of Britain’s firms to cut their shareholder payouts already. 

The grimmest forecasts suggest the value of dividends could shrink by half, to less than £50bn from a record £100bn paid out last year.

The London stock market is heavily reliant on dividends and the effect on returns could be vast. Over the past 10 years the FTSE 100 index, a group of Britain’s largest companies, has returned more than 46pc. When dividend payments are discounted, investors have gained nothing, according to figures from broker Interactive Investor. 

Despite the fall in share prices, retirement savers are buying back into the market in the hope of profiting in the event the market recovers to the levels seen before coronavirus. 

We spoke to retail investors about the stocks they are buying for their pension pots now. 

Adrian Tanter, 53, has put £8,000 into new holdings since stocks plummeted in February and March. So far he has put more money into existing holdings including Lloyds, the bank, GlaxoSmithKline, the pharmaceuticals firm, and Legal & General, the insurer, through his broker The Share Centre.

He has also bought shares in insurer Aviva for the first time, as well as investment firm M&G, which he said is still paying out dividends and should be “a stonker” in the long run. 

“When there is blood on the streets it’s time to invest, even if the blood is your own” he said. “The market crash has been painful – some of my holdings are down as much as 40pc – but I’m not too worried.

“I’m 15 or 20 years from retirement so am confident buying in now when prices are low is a good move. It feels like it did during the financial crisis and I feel a bit like a kid in a sweet shop,” he said. 

Keith Emms, 50, from London, has built up a portfolio worth £250,000 over the past 25 years and has been buying into smaller, lesser-known companies in the aftermath of the market crash. 

He has put new money into ITM Power, a renewable energy firm. Its share price has been very erratic but appears to have escaped the worst of the sell-off unscathed so far and is up almost 90pc so far this year. 

Mr Emms also bought new shares in another renewable energy firm, Ceres Power, which has gained about 30pc in value this year. 

He has put money into two of his existing pension holdings which have been in chronic decline. These are Playtech, a gambling software firm, and Proactis, another software company.

Both are down more than 40pc so far this year already, but Mr Emms said the shares were so cheap he could not turn down the opportunity of buying them again, in case they recovered. 

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