Come 6th April, Compulsory Annuitisation Will Be A Thing Of The Past – And The Consequences Will Be Profound.

Come 6th April, Compulsory Annuitisation Will Be A Thing Of The Past - And The Consequences Will Be Profound.

by Rebecca Hall on 28 Jan, 2011

Investing is generally seen as something to do purely to grow capital, and it has attracted the stigma of short-termism in the context of the recent financial crisis. However, given the low state pension we can all expect to receive by the time we retire (at an ever increasing age) for a longer retirement than has traditionally been had (due to improving health care extending life spans considerably), long term investment for retirement looks like an increasingly good option.

More people are considering investing for retirement over simply putting into a pension scheme after seeing pension funds hit hard by the volatility of the markets, and the experience of pension funds collapsing pre-2005 (before the government introduced the Pension Protection Fund).

In this context, taking a more hands-on approach to your retirement fund suddenly seems like a far more attractive option.

There is very little difference between investing for retirement and investing for profit. The only real difference is in strategy. Pursuing profit tends to instil a more short term view, whereas investing for retirement should be directed to a slow and steady growth, building a solid portfolio over many years that can be traded for equity when the time comes.

As such, safer investments such as bonds (particularly government bonds) which offer a fixed interest rate over a specified period of time may be more attractive than riskier portfolio building of stocks and shares, that are far more liable to losing you money. Investments with a guaranteed return are a far safer idea for retirement investing.

Of course, what will yield the best return will change drastically with the state of the markets, which can change day by day. Taking a long term view is absolutely essential, and panic selling should be strictly off the cards. That being said, it’s always a good idea to jump off a sinking ship.

To take such a hands-on approach to saving for retirement will obviously require an awful lot of research, and in this respect, it is a good idea to find a good independent financial adviser who can help you make the best decisions based on their wider knowledge of the market. They are certainly not infallible, but unless you want to spend all day, every day watching the markets like they do, they will have a better knowledge of your options than you do, no matter how much research you do.

Investing can be thrilling, even if you are taking a longer term view, and it can be tremendously rewarding to take an active role in saving for your twilight years.

About the Author

Rebecca Hall


Rebecca Hall worked as an independent mortgage adviser for 10 years before turning to financial journalism full time. She has strong links to the CAB advising families on mortgage refinancing.