07 September 2015

Are you an investor in denial?

You may never have picked a stock, bought a share or spoken to a fund manager, but the chances are you may already be an investor. You just might not realise it yet.

The government’s workplace pension scheme has been rolling out across the country during the last three years. To date it includes every company in the country with 40 employees or more where an employer doesn’t already have their own pension scheme. Unless you have specifically opted out, a portion of your salary may now be going into a pension fund to support you in retirement.

Why pensions involve investing

It’s the responsibility of a pension fund to invest its contributors’ money in order to provide retirement benefits – and it’s difficult to do this just by putting all of the money into savings accounts.

However the value of investments is generally more volatile than saving accounts, but over time the ups and downs of the market cycle have tended to even themselves out and the general trend has been upwards. There is of course no guarantees, remember the value of investments can go down as well as up and you may not get back the amount originally invested.  For example, the value of FTSE 100 Index grew in value by 549% in the first 30 years since it was launched on 3 January 1984 but it fell in value by 31% for the year 2008 as the credit crunch hit.

Becoming a private investor too

There may be plenty of other areas in life that investments could help you with in the meantime. If your pension is on course to provide you with the retirement pot that you would like, and you still have disposable income available at the end of each month, then investing could help that money to do more for you.

Choosing an approach

Many pension funds balance bonds and stocks in their investments; there are many that invest in commercial property and other types of assets too. And all of these options are open to you if you choose to invest in funds as a private investor as well. As with your pension, it’s important to choose an approach to investing that suits your individual circumstances and appetite for risk.

Changing your approach depending on your timeframes

Many pensions offer you the option of a lifestyle fund, which moves your money into less volatile assets as you approach retirement and helps to protect the fund when there is less time for investments to make up any losses. Again, making adjustments along their investment journey is an approach that private investors may take as well.

If you are comfortable with the risks, then investments could hold the key to giving you a better quality of life before retirement – as well as during it.

Past performance is not a guide to future performance.

The value of investments can fall as well as rise and you may not get back the amount originally invested.

Why not explore investments further?

If you're thinking longer-term, investing could help your money grow - but you have to be prepared to put your money away for a period of time and expose it to some risk. We can guide you through what's involved to help you decide if investing is right for you. Don't end up where things take you - by starting to plan today, you might be able to get better returns.

See my investment options

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