It can be easy to make pension mistakes Enable’s experienced IFAs come across many people who see retirement as a long way off. But when it comes to financial planning and retirement planning one of the biggest mistakes people can make is to put off starting a pension.
As long as you can afford it the sooner you start saving and regularly paying into and reviewing your pension pot, the easier it will be in the long run to provide for your retirement years. Where you invest can depend on your age and the number of years you have left before retirement as this will determine the kind of risk you might be able to sustain over the years.
If you have a long time until you retire, you can afford to take more risk with your investments and investing in shares is likely to give you the best long-term returns. While the closer you get to retirement, the more widely spread you’ll want your portfolio to be to minimise your exposure to risk. Think of things like cash, fixed-interest bonds and property.
However, in retirement, one of the most common errors people tend to make is to be too risk-averse. One of the golden rules of investing is that you need to hold your money for at least five to 10 years as that will iron out short-term volatility of any market. Ultimately, you could argue that older investors holding all your money in cash and savings is actually the more risky strategy as it all but guarantees you’re going to lose money in real terms as inflation eats into your savings.
Lots of things can affect your pension pot, both those in your personal life and global events as well as making silly pension mistakes. So the best thing to do is to take some good quality financial advice from the like of experienced IFAs at Enable’s in Bishops Stortford. And remember to regularly review your investments and pension pot if not every six months at least once a year.
It is important to take professional advice before making any decision relating to your finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individually tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain.
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The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may harm the value or price of an investment in sterling terms if it is denominated in a foreign currency.