Finance
Retirement issues and
children finances
In this, another new regular feature Paul Brady, DipPFS a partner in St James’s Place
Wealth Management based in Sutton Coldfield will answer your finance questions.
In this first feature he guides on retirement issues and children finances.
Q: I am a fire fighter and due to
retire soon. I will receive a lump
sum of c £100,000 from my pension
scheme. My pension will cover
some of my lost earnings and I
would like the lump sum to provide
some additional income. What
is the best course of action with
regards to these funds?
Income is important, especially
when you are in a period of lifestyle
change, such as retirement.
Investors looking for income have
faced an increasing challenge ever
since the financial crisis broke in
2008 as financial institutions across
the globe took extreme measures
to protect themselves and Central
Governments across the world also
reacted strongly, forcing interest
rates to record lows. Seven years
on and interest rates in the UK
remain almost non-existent. This
is of particular concern to those
investing for immediate or future
income provision, which
is, after all, the objective
behind most investment
decisions. Whilst good
news for borrowers, low
interest rates are very
bad news for savers
with significant
sums of money on
deposit who may
be dependent
on the interest
to supplement
their income. For
most savers, the
return is falling far
short of what they were
getting, and what they
need.
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The harsh reality is that, once
tax and inflation are taken into
account, many savers will have
to erode their capital simply to
maintain their income needs.
Suddenly, the traditional ‘safe’
option looks anything but. However,
there are alternatives.
Investors wanting to secure a better
level of income have realised that
they must look beyond traditional
cash deposits. History shows that
investing in equities, or shares, has
provided investors with a better
chance of outpacing inflation over
the long term versus other asset
classes, particularly if the shares
are able to increase the dividend
(income) payments year after year.
classes remains the most suitable
strategy for investors to satisfy
their longer-term income needs.
Many savers are recognising
the need to look for alternatives,
but understandably want the
reassurance that their money
is in expert hands and is being
managed to take account of the
uncertainty in current financial
markets
Those wishing to invest for income
need to remember that a welldiversified, well-managed portfolio
which blends a range of asset
Q: I would like to start putting some
money aside for my children’s future
– what would you suggest?
Whether investing for income or
capital growth, the principles of
diversifying your investments and
finding the best possible investment
managers to look after your money
are as important as ever, particularly
in these challenging times.
Watching the children in our lives
grow up can be a rollercoaster
ride. Whether it’s drying their tears,
encouraging their studies, or
providing financial and emotional
support for one or more of life’s key
milestones we do what we can to
give them the best possible start in
life.
Of course, money isn’t everything
but it can help to give the children
in our lives a head start. And the
simple fact of the matter is that
the financial world our children are
growing up in is a very different and
difficult one. If saving for our children
was once perhaps an aspiration, it is
increasingly becoming a necessity
if we want them to have the best
possible start to their adult lives.
The increasing cost of university