Ask a planner answers: pension funds

Tuesday, June 7, 2016

The question, from C. Clarke, 39 in Bournemouth

I currently have a company DCS pension where all investment funds are going to the company's default fund.  I need guidance/advice on where I should be focusing my investment funds in the current market.  I have access to selected UK, Global, Regional Equity funds; Balanced and AlternativeBalanced funds; Bonds and Liquidity funds. I am currently of an age where I can be fairly aggressive in terms of risk (in an attempt to gain some good returns) and would look to move to my conversative funds the closer I move towards a retirement age.  Can you help please?

The answer, from Justin King CFPTM at MFP Wealth Management

I agree with you that at 39 you have time on your side, if your normal retirement age is 65 or after. Without knowing your capacity for loss it is difficult to advise anything other than a well-diversified  portfolio which has historically served investors well. The problem with timing your exit from equities as you get closer to retirement is your emotional state of mind can take over! If equities are having a great run it is difficult to exit a "winning" strategy and if they aren’t it may be emotionally difficult to buy into equities if you are waiting for the market to "recover". The consistency of return and the benefit of a regularly rebalanced portfolio should not be underestimated. It has the ability to provide a more steady approach rather than a roller coaster. The greatest chance of success in your retirement planning will be the consistent funding of your plan and your ability to stay the course. Good Luck!

Justin King CFPTM
MFP Wealth Management