Platforms & Pensions taking less risk with your investments from as early as your 50s , so you don ’ t risk being hit by a crash . I am arguing that if your pension fund is below £ 500,000 , you may struggle to fund a decent lifestyle by , err , lifestyling . Adjusting risk is about the only “ lever ” an investor has if it looks like they won ’ t have accrued enough cash to meet their target . Yes , you can invest more each month too , but removing the ability to generate growth in your portfolio can make a big difference to the amount of money available to you at retirement . If you already have a portfolio large enough to fund the retirement lifestyle you require , then you may still want to consider managing down the risk on your investments .
So , is risk our friend ? I would argue that taking more investment risk is the central weapon in tackling the dilemma of making your money go further and staying ahead of rampant inflation . If you haven ’ t put more money into your portfolio over the years , then you have two choices . Take less risk , knowing you ’ ll have a lower but more certain amount of money to last for a potentially longer retirement , or take more risk and continue to sweat your investments harder towards and through retirement . You may need to flex your withdrawals in retirement to reflect markets ( meaning don ’ t encash investments when markets are down ), but you will expose yourself to more upside by staying in a higher-risk portfolio . Taking more generic risk is easier to do than consistently picking top-performing funds . But don ’ t take unnecessary risks either . Stay within the confines of major index trackers or triedand-tested fund managers with a consistent record . It ’ s a personal choice , as you have to feel comfortable with what could be a roller-coaster ride and need to know what you ’ re doing by taking an interest in your investments and when to draw them down . Most of all , keep calm and rational , and resist making any rash decisions . Historically , a well-diversified portfolio of reasonably priced holdings has always recovered . Eventually .
Issue 86 - July 2022 / 65 /