"Enjoy The Sixth Stage* of Your Life To The Full
With Lots of These
Trendy Retirement Ideas"

Introduction

What do we mean when we say: "You need Retirement Ideas?"

We don't mean where to retire to.  Or what to do in retirement. Or what hobbies to take up in retirement.

No.

You can go to the Your Retirement page for that kind of information.

In this section we will focus on what investments you can put into your retirement nest egg. 

This is not about having a bit of fun.  If the Return on Investment does not stack up, then don't do it.

But there really are some weird and wonderful investments you can add into your DIY Pension. 

And, as mentioned earlier, if the Return on Investment is not up to scratch, then don't do it.

"Should We Deviate From
Warren Buffett's Philosophy?"

Saving for your retirement doesn't have to be a dull affair, whereby you just invest in funds or shares.  There is a whole new world of alternative investments.

Now - we don't want to sound contradictory.  We prefer (at least most of the time) to be like Warren Buffett, and stay invested in shares. 

But not everybody's the same.  You have options. 

Or maybe you want to switch into some alternative investment during a Bear Market.  That's OK too.

In this section of 'Common Sense Retirement Investing', let's take a quick shuftie at some 'out of the ordinary' investments that you are allowed to hold in your DIY Pension.

"What Investments Are You Allowed
in Your DIY Pension?"

Here are some awesome Retirement Ideas ...

At the time of writing, individuals could hold the following investments in a Self Invested Pension Plan (a.k.a. DIY Pension Plan):

  • Cash - no real surprises there!
  • Company shares
  • Deposit Accounts
  • Commercial Property and ground rents in respect of commercial property
  • Exchange Traded Funds (ETFs)
  • Exchange Traded Commodities (ETCs)
  • Gold bullion
  • Real Estate Investment Trusts (REITs)
  • Open Ended Investment Companies(OEICs)
  • Warrants
  • Foreigh Exchange
  • Traded Endowment Plans
  • Overseas Stocks and Shares
  • Unit Trusts (Mutual Funds in US)
  • Investment Trusts
  • Venture Capital Trusts
  • Contracts For Difference (CFDs)
  • Futures and Options
  • Hedge Funds
  • Corporate Bonds

It should go without saying that you should check with your pension provider which of the above they can provide for.

Some providers, especially low-cost providers, may only provide access to main investments such as cash, funds and shares. 

Whereas a full, or bespoke, plan provider should offer the full range.  You only have to ask.

Of about 100 Pension Plan providers, probably around 70% of these may offer you the full range of investments.  But do check before committing yourself.

"What Should You Do With Your Pension Pot?"

It isn't that long ago when financing your retirement meant giving your nest egg over to an insurance company who would then give you an annuity until you die.

We have always thought that annuities are a bad buy. 

Interest rates (which annuity rates are based on) dropped, and have stayed low.  Which obviously means that annuity rates are low, and have stayed low.

Who knows?  Interest rates may stay low for quite some time.  It is possible that they will remain low forever - at least in our lifetime.

Which means that annuity rates will languish more or less where they are right now.

Until fairly recently, you HAD to take an annuity on retirement.

Now there is a commonsensical alternative - income drawdown.

As things stand right now, when you want to realise what you've been saving for all those years, you can take an immediate 25% of your pension value TAX FREE. 

And it is advisable that you do so.  At least we think it makes sense.

The remainder of your pension goes into drawdown (actually there are a couple of alternatives but annuities and drawdown are your main options).

Which means - that you can draw money from the remainder of your pension pot as and when you require it (subject to tax at your standard rate, of course).

You will be able to "drawdown" sums of money each month, each quarter, or any other times that suit you.  Or, if you don't require regular sums of money, you can drawdown sums as and when you require them.

There are worries that people will draw all the money left in their pension pot before they die.  We have to admit, this is where annuities win support.

Unfortunately, with interest rates so low, annuities are a poor alternative.

Drawdown is the way to go.  But ... discipline is required.

For more information go to:  Drawdown

"Here Are Two Options For
Investing a Lump Sum"

If you have a lump sum and are planning on investing for the long term (which you should be), how should you go about it?

Your two options are:

  1. Invest the whole lump sum
  2. Invest smaller amounts on a regular basis (pound-cost-averaging or dollar-cost-averaging

Sir John Templeton, who ran the very successful Templeton Growth Fund between 1954 and 1992 which grew at a phenomenal 16% per annum was famous for saying: "The best time to invest is when you have the money."

Well, O.K. that was then, and this is now.

We personally favour Pound Cost Averaging.  Here's briefly why...

You can keep your lump sum in a safe place and maintain your cash flow.

Secondly, you would normally set up cost-averaging with a direct debit which offers you the advantage of drip-feeding your pension pot without the worry of forgetting to manually add funds.

Shares can go down as well as up, by cost-averaging, you get the best of both worlds.  You probably won't invest at the top of a bull market and you probably won'y buy at the bottom of bear market either. Always somewhere in between.

Your investments will be averaged out.

We would most definitely think twice about investing a lump sum in normal circumstances.  We would always go for cost-averaging.

There are exceptions of course.  You may have done some extensive research on a company, or seen some directors dealings, or got a "hot" tip from your mate down the pub, that you feel compelled to act on.

Generally speaking though, cost-averaging is the way to go.

"Be Careful When Buying Your Retirement Home"

There's no doubt about it - all developed countries of the world are growing a large proportion of over 65s (soon to be over 70s and there's no doubt that will become over 75s not long after).

Property developers have long realised that and are desperately trying to keep up with the demand for retirement homes.

The ageing populations recognize that there are advantages to living in retirement communities.

They can retain their independence and at the same time have access to the various support services that may be on offer.

Should you wish to go down this route, and it is becoming an ever-popular route - do your homework first.

For example, most residential homes are leasehold.  Meaning there will be ground rents to pay. Now the ground rents may be £50 (or $50) per year or they may be £300 ($300) per year.  Or more.

And the biggy "hidden" costs are the service charges.   These can be rather naughty!

It is important to check, and double-check, any contract that you sign.

"A Little-Known Way To Increase Your Pension"

Most people at retirement age, just can't wait to access their state pension.

But wait!

Most don't realize that you can defer taking your state pension - with considerable benefits.

It's understandable that after 40+ years of "paying into the system" you want to draw on all that saving as quick as possible.

But, say you defer taking your state pension for a year, then you will get approximately 10% more pension until you leave this world.

Defer your state pension for 5 years, and you will get approximately 50% more pension.

None of us know when we are going to depart this world but my opinion on deferring your state pension, would be that if you are in good health, and are not desperate for the money at your retirement age, then deferring is a very good idea. 

It will give you a boost to your pension when you'll most likely need it.

Food for thought!

"How To Make Your
GrandKids (Or Kids) Millionaires"

There are several ways that you can invest for your children's (and grandchildren's) future.

It's even better to educate the yougsters on the value of saving. But of course, they have to be of an understandable age before you can do that.

A good place to start getting into the habit of saving is, surprisingly, with a savings account. 

Shop around the banks.  Some offer reasonable rates for, say, a 12 month period.  Putting money aside on a monthly basis is a good discipline for children to follow. 

Get them into the habit.

But that's about getting into the savings habit.

Children can also have a pension fund in their own name.  A sort of Junior Pension Fund.

My suggestion would be for parents, and grandparents, to shop around and get the best deal possible.  Then, make regular monthly payments until the child is say, 18 years of age. They may need that accumulated cash for education fees - or whatever else.

The key here is - get kids used to putting something away every month.

"Even More DIY Pension Ideas"


For more information go to:  more-diy-pension-ideas

Conclusion

Saving regularly for Your Retirement is the whole point of this website. 

However, you can do better.  A lot better.

If you've been sensible in your retirement preparations, you can (and should) afford to supplement what you will already be elegible for.

Deferring your state pension is a cracking idea and one that you should consider very seriously.

Down-sizing your home and moving into a communal type atmosphere is another great move.  No-one wants to feel lonely when they get old.  Living in a community is good for you.  You make new friends.  You can go on organised trips.  You can attend, in your own environment, social events.  The benefits go on.

We commend the community way of life.  We have lived it fr over 10 years and love it. 

And don't forget your loved ones.  Put something away for your off-spring and their kids. 

*  The sixth stage of your life is when you finally hang up your boots and vow never to go back to that 9 till 5 routine. 

It's that's time when you'll enjoy the fruits of everything that you've saved for over your working years - Your Retirement.

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