If you are planning to retire in the near future, then you will need to think about how best to invest your money. Everyone wants their hard-earned money to work as hard as possible, especially if they are likely to be on a fixed income for some time. Remember that depending on where the market is at when you exit work, investments may go up or down in value.
Potential for greater returns
At retirement for most investors opting for low risk investments such as Cash Individual Savings Accounts (ISA’s) and bonds which are considered safer than stocks and shares, however these options also produce lower returns over time. If more riskier investments are chosen at this point then there is potential for greater returns but the capital could get depleted very quickly too.
Less risky investments for those who retire early can be found in fixed interest funds which take a lot of the risk away from the investor and aim to offer reasonable returns over time. If appropriate these types of investments could be used alongside other higher risk savings that are expected to grow much faster than cash or bonds.
Principles of investing apply
It is important that investors obtain professional financial advice before committing to any financial product or investment opportunity once retired. This will help ensure investors fully understand the possible consequences by investing in a specific product or fund.
When choosing investments, investors need to consider the level of risk they are willing to take and how a downward turn in the market would impact on their retirement income. The usual principles of investing apply – a well-diversified portfolio, with a range of assets, geographical areas and sectors.
Alternative investment option
Although there may be some benefit in taking a risk with your money, most investors once retired will aim for low risk options such as bonds and Cash ISA’s that can grow steadily over time. This form of investment may not produce the highest returns but can offer the security of knowing that your capital will still be there when needed.
Low-risk investments such as fixed interest funds also offer steady growth and are another option worth considering if you are looking for an alternative investment option at retirement age.
- Children’s pensions
- Defined benefit (or final salary) pensions
- Defined contribution pensions
- Personal pensions
- Self-Invested Personal Pensions (SIPPs)
- The state pension
- Annual allowance and lifetime allowance limits
- Busting myths about pensions
- Increases to pension age and new normal minimum pension age
- Pension freedoms
- Pension withdrawal methods
- The lifetime allowance
- Delaying retirement
- Generating income from investments throughout your retirement years
- Importance of a retirement wealth check
- Retirement goal setting
- Retirement planning
- Reviewing your retirement plan
- Staggered retirement
- Taking control of your retirement plans
- What can I do with my pension?
- What happens to my pension on death?
- Discretionary Fund Managers
- Market timing
- Minimising risk
- Multiple asset classes
- Portfolio insulation
- Pound cost averaging
- Principles of investing
Growing your wealth
Goals based investing
- Cash flow modelling
- Creating a financial roadmap
- Investment objectives
- Timescales and market activity and the impact of losses
- ‘What if’ scenarios
- Discussing legacy planning with your loved ones
- Inheritance Tax (IHT)
- Inheritance Tax Residence Nil Rate Band (RNRB)
- Lasting power of attorney
- Lifetime transfers
- Making a Will
- Preserving wealth for future generations
- Protecting your assets for the next generation
- Slicing up your wealth pie