Posted on: 28-09-2015 in InvestmentsIn the new world of pension freedom, anyone from the age of 55 has the flexibility to access their pension pots and offers the liberty to make their own choices about how they use their savings. Therefore, when you reach the age of retirement, it is important to decide where you should put the cash to ensure a decent income that lasts the rest of your life. Your ideal portfolio should have minimal risk and maximum return at the brink of retirement. Here are 4 ways you could do to reduce portfolio risk now that you are retired: 1. Savings at Bank – This is the best choice when you need to access your money anytime and has almost zero risks, as the value is not going to fluctuate overnight. However, keep in mind that you are prone to lose money over time in a slow steady and steady way. Example: If your savings account is paying you 1%, and inflation is 3%, you are losing 2% a year in buying power. 2. Certificate of Deposits (CD) – A popular investment among many retirees, CDs are a great place to keep money. It offers the guarantee of a specific interest rate over a specific term (which could be 6 months, 1 year or 5 years) – and it does not change, no matter what happens to volatile financial markets and fluctuating interest rates. Please remember, you are locked in until maturity and if you withdraw money before the end of term, you are will likely have to pay a penalty. 3. Bonds – Adding a large chunk of bonds to your portfolio helps to keep a balance. It takes away the chance of your pension pot losing value over short time periods. But, keep in mind this investment strategy gives a lower chance for growth in income. 4. Fixed Annuities – A great financial instrument for the retired, fixed annuities are a security for the guaranteed income which ensures fixed payments to the retiree until his or her death. Although the payout is low, it eliminates the risk factor, which many pensioners find the price worth paying. Investments for retirees are all about risk and the challenge is to find an investment where you receive a reasonable return for the risk you are taking. Holborn Assets financial advisors are prepared to help you manage and maximize your retirement fund prudently. We are prepared to offer the best understanding of your current financial position and options available in the future for a comfortable retirement.
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