Retirement Planning ? Are You Investing in the Right Places ...

After buying our own home, the savings we make for our retirement are probably the biggest investment we make. The trouble is, unless you?re fortunate enough to own a crystal ball that actually works, what happens to your money whilst it?s waiting for you to retire is often left in the lap of the gods.

Most of us know that we should be investing for our retirement but there are so many other demands on our money that our retirement pot is either neglected or the decision is made on the basis of promises that we hope are true.

A lot of pension schemes are put into stocks and shares. The logic for this is that ? over time ? they go up in value. Whilst that is true, it hides a lot of things.

Individual shares can go down in price as well as up. You?ve read the warning at the bottom of the advert and thought (or hoped) that the firm selecting the shares for your pension pot will be OK.

If you take the time to actually study the charts, you could be in for a shock.

An awful lot of pension fund managers ? likely including yours ? underperform the market.

And that?s before they start charging you for the privilege of doing so.

Keeping with stocks and shares, most people would be better off using a tracker fund than an actively managed fund. The charges are significantly lower and by its nature the fund will do roughly as well as the index it is tracking.

Bonds are another option for your retirement investment. They?re not as ?sexy? as shares and don?t pay as high a commission, so they?re not pushed as much.

As with shares, not all bonds are created equal and the rate of interest they pay will vary because of this. As a general rule, the higher the interest rate relative to other bonds, the riskier the investment. Not even government debt is safe ? it?s not unheard of for countries to default on their debt ? so keep this in mind if you decide to go down this route for your retirement investment.

Property is another option that a lot of people choose for their pension fund. Like shares, property tends to rise in value over time. But it also has its ups and downs, so timing can be critical.

Whilst shares usually pay out income in the form of dividends, property costs money to maintain: ground rent, utilities, rates and other taxes. But it can also be rented out which should at least contribute to these costs.

You need a good advisor if you decide to use property for your retirement fund. Ideally, you should choose someone who knows the property market you are considering entering. UK residents should also make sure that the investment you are considering is covered by the Inland Revenue?s rules (other countries will have similar conditions) so that everything is legal and above board.

The important thing for your retirement planning is to ensure that you?ve actually spent some time considering what you?re investing in and also that you carefully monitor your retirement plans ? what seemed like the best thing since sliced bread a decade ago may be less glittery now.

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Source: http://pennystocks-towatch.org/retirement-planning-are-you-investing-in-the-right-places/

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