Pension: ‘Sensible’ way to invest to make the most of cash in retirement
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Juggling retirement and pension is intimidating. As is calculating just how much you need to save and spend in later life.
Chris Ball, the managing partner of Hoxton Capital Management, spoke with Express.co.uk about investing pensions.
He detailed a “sensible” way to approach investing during retirement.
“I think the key with pensions is managing cash flow, understanding how much you need and understanding that if there was a crash, what would happen to detrimentally impact you,” Chris explained.
“Generally speaking, it’s not when the crash happens you feel it because you’re not taking money out at that point.
“But it will be the effects to your investments when you’re 90 and still need the money from it.
“You might have taken out too much at that point if you’re not careful.”
Chris, who recently told Express.co.uk where you are “statistically likely to make more money” investing, explained striking the right balance is key when investing in retirement.
“It’s not being too cautious with the assets, but at the same time not being ultra-aggressive,” he explained.
“It’s really understanding how much you would need for two to three years – if there was an economic storm – to ride it out.
“So, if you need £50,000 a year to spend, and you’ve got a £1million pension pot, leaving £150,000 pounds in cash to low volatility assets, bonds, these kinds of investments, and then having the rest invested in more aggressive style investments would seem sensible to me.
“And each year you’re making sure that amount is still providing two to three years worth of income.
“Then a period like 2008 to 2009 happens again, you’ve got the cash available in that period, and you haven’t got to sell off the new equities.”
Chancellor Rishi Sunak has detailed a number of pension changes in the recent budget.
The state pensions will increase by £5.55 a week next year.
This is means the weekly figure will rise from £179.60 to £185.15 in April 2022.
It is a break from the triple lock guarantee for pensioners, which has caused anger amongst some.
Chris also recently discussed a new inheritance tax “get around” becoming more popular.
He claimed families are setting up Family Investment Companies (FICs).
Chris explained: “What we’ve seen a lot of our clients at the moment and doing, what’s become more attractive just because it’s an easy way to do it, is setting up Family Investment Companies.”
An FIC is a private company run by family members, with other family members owning the shares.
The investment decisions are taken by the directors, those running the FIC.
Parents often play the role of directors, with children or grandchildren as shareholders.
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