The Huge Pension Investment Mistake Costing You £165K

本站添加: 2026-05-31

[00:00:04][music] >> If your pension is mostly invested in the UK stock market, you know, the reality is you could be missing out on tens of thousands of pounds. And most people don't even know it. And the reason why they don't know it is because the vast majority people I speak to have actually got no idea where their pension is invested. You see, UK makes up just 3.4% of the world stock market. But if you've got most of your pension here, you're betting that your retirement on a tiny [music] slice of the global economy. So, the short answer is you should be invested globally. And once you see the numbers, you will begin to understand why.

[00:00:40]But many pension holders have 50% or more of their money sitting right here.

[00:00:46]That's like putting most of your savings into one shop on one street and ignoring every other shop in the country. So, my name's Sachin saying I've got over 25 years of experience helping people plan for their retirement. And this is one of the most common mistakes that I see. And as I said, it could be costing you more than you think. See, the FTSE 100 is made up of banks, oil companies, mining stocks, and consumer good firms. And financials alone make up 23% of the UK FTSE index. And energy is another 11%, but technology, the sector that's been driving global stock market returns for the last decade, [music] well, that makes up just 1% of the FTSE 100. 1%. Now, if you compare that to a global stock market index where technology is probably closer to 30%, [music] so that means if you'd only invested in UK stocks, you barely had any exposure to the companies that have grown the fastest over the past few years. That's your Microsofts, your Apples, your Nvidias.

[00:01:49]>> [music] >> And those aren't the small differences in a portfolio. Those are the engines that have powered global returns for over a decade. So, you can see here, you know, the FTSE 100 is dominated by financials at 23%, energy at 11%, and consumer staples at 18%.

[00:02:08]But, as you can see down there, red bar at the bottom, technology is just 1%.

[00:02:12][music] Now, the global index flips that.

[00:02:16]Technology leads at around 30%, as you can see here, with financials and energy much smaller. So, pause the video if you want to compare those two side by side.

[00:02:26]It tells you everything about why UK why UK stocks have been lacking. Now, let me put that into real money terms. Now, this will obviously differ for everyone, but as an example, take the FTSE 100 over the 20 years to 2026. Now, as you see, data shows it delivered a total return of about 244% including dividends being reinvested.

[00:02:50]So, that works out at roughly 6.4% a year.

[00:02:55]A global stock market index over the same kind of period has delivered closer to 8 or 9% a year. Now, that might not sound like a big difference, but on 100,000 pounds, it changes everything.

[00:03:06][music] So, watch these two lines here. Both start at 100,000 pounds. The yellow line is your money in UK stocks. After 20 years, it's worth about 345,000 pounds. And the orange line is a global tracker. So, that same 100,000 pounds has grown to around 510,000 pounds. That's 165,000 pound gap from one decision you made decades ago and never looked at again, or more than likely a decision you never made because you just invested where you were told to invest and never thought about it again.

[00:03:42]So, the real reason for that gap isn't that UK companies are bad. Many of them are really excellent businesses. It's just that you're fishing in a pond when there's an ocean next door. Now, other data shows that between 2004 and then 2025, UK equity funds saw outflows of over 100 billion pounds, while global funds attracted over 100 billion pounds in new money. So, that's basically money leaving UK uh businesses. And professional investors have already made the shift. And from what I've seen, the people who end up with the strongest pots spread their money across the world's stock market. And the ones who stuck with what felt familiar usually came up behind. And in my experience, >> [music] >> the fee that you pay and the geographic spread of your fund matters far more than which specific fund you pick. So, a global tracker at naught point one five percent will almost certainly serve you better over 20 years, I think, than a one percent actively managed UK fund.

[00:04:44]And many financial advisers will try and push you into managed UK funds, and certainly those that are actively managed, cuz a lot of them tend to earn money from there. If you're planning your retirement, we've created a really handy checklist for you. So, you can go to our website, financialeducation.co.uk, and on there, on the top menu, you'll see a page called retirement checklist.

[00:05:03]If you click that, it will take you to this page on there, where you'll find a pre-retirement [music] checklist. So, this is a PDF document that you can download called Are You Ready to Retire?

[00:05:13]>> [music] >> And within there, it sets out all the things that you need to be thinking about if you are planning your retirement. 10 areas specifically covered. So, within there, as well, as you go through, >> [music] >> it sets out what you need to do, why it matters, and why it's important, and when you need to look at it, which essentially gives you a bit of a blueprint and an action plan for you to follow to make sure that you are fully prepared and ready for your retirement.

[00:05:38]It's a really handy guide for you to print off and just fill in as you go through. Now, I should be fair, the FTSE 100 was up strongly in 2025, and for a period it actually outperformed the uh US's S&P 500 500. So, you might be thinking, well, why would I move my money out of something that just had a great year? And that, to be fair, is a perfectly reasonable question. But, one good year doesn't fix a structural problem. You see, over the last 17 years, the FTSE 100 index gained about 26% in total. The S&P 500 gained about 300%. That's a massive difference. So, even with dividends, the FTSE 100 has delivered roughly 67% a year over the long term, while global indices have delivered 8 to 10% a year. And the other thing people say is that the FTSE 100 is already global because about 70% of its revenues come from overseas. Now, that is absolutely true.

[00:06:38]But, the revenue coming from overseas doesn't change the sector mix cuz you are still invested in banks, oil, and mining, not in the sectors that have been driven driving the biggest returns over the past decade. And I think there's something else worth thinking about and knowing about. And that is that the government is now pushing pension funds to invest more in UK assets, not less. So, the Pensions Investment Review wants to channel more of your money into the domestic economy.

[00:07:07]And that might be good for UK growth, but it's not necessarily good for your pension pot. And you might have heard about this in the press recently, where it's been referred to as mandation. And there was a big fight in the House of Commons around whether the government should be allowed to mandate where pension funds are investing their money.

[00:07:25]So, we'll see how that plays out. So, if this does apply to you, I think here's the one thing I'd do this week. If I'd log into your pension account online and look at your fund allocation. Look where your money is being invested. And if more than 10 or 15% of your pot is in UK stocks, well, technically you are materially uh overweight relative to the UK's uh share of the global market. And the card shows what to look for. Your current UK global allocation, what global uh tracker looks like, and a sensible range for UK exposure. So, this is just my opinion. It might be something you want to think about. And if you're not sure where to find this, search for your pension provider's [music] name and fund fact sheet online, and you should hopefully access it, and it'll show you what the breakdown for your fund [music] actually looks like.

[00:08:15]Most pension providers offer a global index tracker with fees around [music] sort of 0.2 to 0.5%, and switching it is usually going to be free. So, you don't need to sell everything and start again.

[00:08:27]Just check where your money is, and ask yourself whether it matches the world [music] or just one small corner of it.

[00:08:33]Now, I'd love to know whether this is something you've looked at, >> [music] >> and where your pension is actually invested right now.

[00:08:39]So, do leave that in the comments below.

[00:08:42]I would be curious to hear. For more information, you can also check our website financialeducation.co.uk, where we've got a range of content uh to help you look at how your pension money is are invested. If you've got a question you'd like me to answer, please do leave it in the comments below.

[00:08:57]So, finally, uh good luck and goodbye.