(Full article is below the infographic)
Source: Sell Pension
Explore Higher Yield Alternatives to Poorly Performing Pension Funds
Today’s investors are seeing better returns by cashing in their pension now and reinvesting to make their money work harder.
The crisis that is hitting so many pension funds has been well publicised, with multi-million pound pension deficits being reported by some of the most high-profile and successful companies in the UK. From high street retailers to public transport companies, it seems that nobody is immune.
At the same time, people are living longer and retiring earlier, and today, someone who retires at 55 stands a good chance of spending more years in retirement than they did in work.
It comes as little surprise, then, that the pension model of the 20th Century is no longer fit for purpose. When the Royal Mail announced last year’s cuts, a spokesman described the schemes as “simply unaffordable” in today’s market conditions.
This is why so many people are rethinking the way they fund their retirement. Fortunately, the 2015 Pension Reforms have given investors more freedom than ever to manage their investment the way they want to, in order to make their money work harder for a secure future.
Diversification is King
“Don’t put all your eggs in one basket” is one of the best-known proverbs in the English-speaking world, and it is certainly appropriate when it comes to investments. Spread risk across cash, bonds and other investments for increased financial security.
Many families, and indeed individuals, have multiple pensions, and it can make a lot of sense to leave one in place to provide a regular income and to cash in and reinvest the other.
In the current financial times, you might reasonably ask where else you can invest your money, as pension funds are not the only investments to have struggled in recent years. A growing number of commentators see property investments as one of the safest investments, and one that can realise the best yields.
Unsurprisingly, property in London and the Home Counties has seen the highest increase in values, but other investment hotspots such as Manchester, Birmingham and Liverpool are rapidly catching up.
As prices continue to rise, yet interest rates remain low, it is little wonder that buy-to-let is so popular with investors. Of course, there are downsides too, or everybody would be doing it. Property investment brings a number of responsibilities with it, and being a landlord might not be for everyone. Also, property is, of course, a low liquidity investment, so prepare for your money to be tied up.
Bonds are a hugely popular type of investment, and around half the UK population has almost £50 billion invested. Yet in late 2016, government bonds, which were seen to be as safe as “money in the bank,” started to yield negative returns, and put many investors into a tail spin.
So does this mean that bonds are no longer worth considering?
The answer is that bonds can still bring in a good yield, but investors need to rethink their investment strategies. Despite the events of 2016, safer options might prove a sound long term investment, but for the best returns, a higher risk strategy could be necessary. Corporate bonds are less secure than those issued by governments, but can offer significantly better returns if you know where to invest.
From vintage wine to new business startups, the range of investment options out there is almost endless.
For those who choose wisely and spread their risk, the opportunities for a long and prosperous retirement have never been better!