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If you choose the flexi-access pension drawdown option at retirement you effectively become an investor. You (or your adviser) are responsible for managing that investment over time.
The amount of income you can safely withdraw from a retirement fund is directly related to the initial value of the fund and its growth over time. Your objective should be to achieve reasonable investment growth to sustain your income throughout your lifetime without taking undue risk.
Simple in theory but not so easy to achieve in practice. We thought it would be useful to summarise some key investing Do’s and Don’ts.
Prepare an investment strategy and long term plan. Always remember Investment is a long term game and things change over time. You should have something to refer back to and review why did you decide to do ‘X’ and not ‘Y’? And importantly is that decision still valid?
After taking the time to prepare a plan it is important to stick to it unless there are strong, well thought out, reasons to change. It is important to tune out the short term noise, avoid knee jerk reactions to events and continue to focus on the long term.
Keep it simple and stick to known assets groups. Learn about the long term history of performance and compare your investment performance against industry averages. Although history is not an indicator of the future it can help the decision making process.
Diversify investments across a wide range of holdings and asset classes i.e. shares, bonds, gilts property and even cash. Diversification reduces risk.
Monitor a portfolio regularly. It does not need to be weekly or even monthly but things do change over time and you might want to tweak things here and there to make sure that you are on track to achieve your objectives.
Ensure costs (fees) are reasonable when compared to industry averages. Does the service on offer justify the fee? It is important to keep costs under control.
Be aware of current SCAM’s. Check out any person or business trying to sell you something. Research them and their background. Are they authorised by the Financial Conduct Authority (FCA)? Are they trustworthy?
Don’t invest without a strategy and plan. (it’s so important we mentioned it twice).
Don’t try to forecast the future. Don’t try to guess the best time to buy and sell, it’s a fool’s game.
Don’t be seduced by so called high-yield investment schemes. Don’t fall for the no risk (or minimal risk) but high returns pitch. All investments carry an element of risk.
Don’t invest in anything that you do not fully understand.
Don’t leave too much in cash. There may be valid reasons for keeping part of your pension fund in easy to access (cash) reserves but leaving significant sums in current and low interest accounts leaves them exposed to the impact of inflation.
Finally, if you employ an adviser they will come at a cost. It is important to weigh that cost carefully against the potential downsides of any decisions you make. It is important to choose your adviser carefully and ask yourself if they (the Adviser) understand your objectives.
Should you need any help with your investment or retirement planning please give us a call or complete the form below and we will call you back. If you have any questions simply Email us or open a Chat.
This blog is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investment or course of action. The past is not a guide to future performance. The value of investments can go down as well as up and you may not get back the full amount you invested. Tax and financial regulations can change. Any figures quoted above are correct at the date of publication.
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