Preparing your investments for retirement
Whether you plan to work part-time or continue full-time until retirement, here are key considerations to help you prepare your portfolio.
Important Information: This isn’t personal advice. All investments can rise and fall in value, so it’s possible to get back less than you invest. Remember past performance doesn't predict future results.
Investment strategies
Getting the right balance between your investments and cash is key to staying financially secure and growing your wealth. To help prepare for both now and the future:
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Plan your retirement
Decide if you’ll retire gradually by working part-time or stop working completely on a set date. This will impact your income and the investment strategy you’ll need.
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Keep cash for short-term needs
Save 3-6 months' worth of essential expenses as an emergency fund for unexpected costs, helping you to avoid sudden changes to your investment plan. Additionally, keep cash for any expenses you expect in the next five years to stay safe from market ups and downs.
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Invest for the long term
Put your long-term savings into investments that can potentially beat inflation and grow your retirement fund.
Diversify investment accounts
You could explore options like Stocks and Shares ISAs, Self-Invested Personal Pensions (SIPPs), or General Investment Accounts (GIAs) for long-term growth potential and portfolio diversification.
Optimise cash savings
Consider splitting your cash between easily accessible bank accounts, fixed-term savings accounts or cash ISAs to make the most of interest rates on offer and tax-efficient saving options.
Investment ideas for a balanced portfolio
The first three investment ideas have been selected by our research experts for their growth potential. However, they are not personal recommendations. When choosing investments, ensure they match your objectives and fill a specific need in your portfolio. Understand the risks of each investment and aim to diversify your portfolio to help mitigate risk.
Remember, all investments can rise and fall in value, so you might get back less than you invest. If you’re unsure about an investment, ask for investment advice.
Troy Trojan Fund
- Strategy: Conservative, balanced approach focusing on well-established companies, government bonds, inflation-linked bonds, gold, and cash for stability.
- Use: Foundation of a broad portfolio, stability for adventurous portfolios, or long-term growth for conservative portfolios.
- Specific risks: Investing in smaller companies increases risk. The fund's concentrated investments mean each one can significantly impact performance, and add risk. It may underperform in rapidly rising stock markets.
Schroder Managed Balanced Fund
- Strategy: Mixed-asset fund with global shares and bonds, favouring shares in positive economic environments and bonds/cash during stress.
- Use: Core of a broader portfolio aiming for long-term growth or stability for share-heavy portfolios.
- Specific risks: Includes high-yield bonds and derivatives, which can increase risk. It may deliver lower returns than equity-focused funds over the long term.
This fund has a holding in Hargreaves Lansdown PLC.
Legal & General Future World ESG Developed Index
- Strategy: Global equity fund focused on ESG principles, excluding companies involved in controversial activities and industries.
- Use: Long-term growth in a responsible manner, good foundation for diversified portfolios.
- Specific risks: Invests in large and some smaller companies, which adds risk. Tracking an index means it will closely follow the market’s ups and downs, with limited flexibility to avoid downturns.
HL Balanced Managed
- Strategy: A balanced fund combining equities, bonds, and other assets for long-term growth and risk management designed by HL’s team of experts.
- Use: Aims for steady growth with moderate risk. A simple, all-in-one option for investors who want professional management without having to choose individual investments.
- Specific risks: While the fund spreads risk across different assets, it might not capture all the gains of a rising market. Market ups and downs can affect both stocks and bonds, and even though diversification helps, it doesn’t eliminate all risks.
This fund is managed by Hargreaves Lansdown Fund Managers Ltd, part of the Hargreaves Lansdown Group. If you invest, HL will receive the fund's management charge, as well as the platform fee.
Managing your income
Using cash from non-pension sources first
- Pros: Using cash accounts and ISAs to cover income shortfalls can be more tax-efficient. Letting your pension grow for longer may increase the value of your tax-free cash and protect more assets from creditors and inheritance tax.
- Cons: Depleting emergency cash funds might leave you unprepared for unexpected expenses. You should always maintain a healthy cash buffer.
Taking tax-free cash from your pension
- Pros: Up to 25% of your pension can be taken as a tax-free lump sum, up to £268,275. This can help to boost any fall in earnings without affecting your tax bill.
- Cons: Once money is held outside a pension it’s subject to inheritance tax and income tax will be payable on any interest earned.
Pension and tax rules can change, and benefits depend on your circumstances.
Note: Accessing money from your pension is a complex decision with permanent consequences. Get guidance on your options from the government’s Pension Wise service or consult a financial adviser to create a strategy that fits your specific needs and goals.
Get advice on your investment choices
If you're not sure how or where to invest, you should consider getting advice from a professional.
Our financial advisers can work with you to understand your investment goals, risk appetite and affordability to create an investment portfolio to match your needs and align to your financial goals.
Investing in the Web's Global Broker Awards 2024
Finder Awards 2024
The Personal Finance Awards 2023/24
Help and support
Take a look at our most frequently asked questions for quick answers.
If you need more assistance or have specific questions, please contact us.