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Real life ideas

If you have a good idea of which investment choices might be right for you it’s now time to consider how to put these together to create a suitable investment strategy.

Different people need different strategies

Of course, the right choice of investment funds will depend on a range of factors, such as how long you have until retirement, your attitude to investment risk and what other investments you own.

Unfortunately J.P. Morgan Asset Management can only provide you with information to help you decide which funds maybe suitable for you. If you need any further help in deciding which funds are suitable, please contact a financial advisor.

Look at the following case studies (illustrations only, not intended to be recommendations) to see how three very different people might allocate their pension portfolio in line with their personal needs.

• Planning in your 20s and 30s
• Planning in your 40s
• Planning in your 50s and 60s

Planning in your 20s and 30s

Alicia – young, and wanting to have fun.

Profile

Alicia is 28, single and has just joined her pension scheme. She is keen to maximise the growth potential of her pension – and is willing to take quite a high level of investment risk for the time being. She intends to retire at 65.

Investment strategy

With 37 years before she retires, Alicia should have plenty of time to overcome short-term falls in The stock market. In addition to a core ‘medium-risk’ holding in UK equity funds, Alicia could look at more specialist choices such as overseas equity, emerging markets and smaller company funds to boost her growth potential. But she must be comfortable with the fact that these funds could be volatile and also fall in value. She should also be sure to reduce the amount of risk she is taking as retirement gets nearer.

Planning in your 40s

David – Married with children

Profile

David is 46, married and his wife stays at home to look after their three children. David has already built up other pension benefits with his previous employer. He now wants a pension strategy with good growth potential – but he doesn’t want to experience too much volatility

Investment strategy

With almost 20 years to go before retirement, David can afford to take some investment risk with his pension strategy. As well as a core exposure to UK equities, he could include a small amount of exposure to higher-risk choices such as overseas equity or smaller companies to boost his growth potential. To provide the stability he wants, David could invest in bond funds –both government bonds and corporate bonds. As retirement gets closer, David should aim to reduce the level of risk he is taking – especially as his wife may be relying on his pension as well.

Planning in your 50s and 60s

Howard – Approaching retirement

Profile

Howard is 58 and intends to retire at 65 – although he would like the option of retiring earlier. He has built up a sizeable pension and wants to take very little risk so that the value of his pension fund can’t be hit by any 11th hour falls in The stock market.

Investment strategy

With seven years or less to go before he wants to retire, Howard can’t afford to take much risk at all with his current pension. He should therefore focus on lower-risk investments such as cash funds and bond funds. When he has five years or less before retirement, he may wish to move more of his portfolio into cash funds to protect against falls in bonds.