I’m five years from retirement, should I move my pension into cash? ...Middle East

Question: I’m five years from retirement, should I move my pension into cash to avoid stock market crashes?

You would probably want to do this gradually though, over the five years until your retirement. That way you might continue to experience some stock market growth while also increasingly protecting the capital value of your pension by steadily building up cash.

Either of these options requires a different approach to investing as you approach retirement. If you’re looking to buy an annuity with your pension pot, then the traditional investment strategy in the run-up to retirement is to buy an annuity-hedging fund, which invests in long-dated bonds.

square NEWS Exclusive

Chinese EVs may face UK ban under Trump trade deal - sending car prices soaring

They work in this way because annuity rates are determined by bond yields – essentially interest rates – which move in the opposite direction to bond prices.

Conversely, if bond yields are on the up, your lifestyling fund might be falling in value, but annuity rates should be rising, again broadly maintaining your level of retirement income.

If you’re planning to keep your pension invested after retirement and take an income from it, via a drawdown plan, then you’ll need a different strategy again. It’s likely you’ll continue to take some stock market risk after retirement, so you don’t want to totally do away with it.

For many people this will be a combination of stock market funds and bond funds. A lot of investors choose a multi-asset fund which is a one-stop shop that bundles up stocks, bonds, cash, and sometimes other assets like property and gold too.

In this instance, gradually moving your pension into a multi-asset fund might work until you make some concrete decisions. These funds come in a variety of risk profiles so you can pick one which suits your own appetite for risk.

Whichever route you take, you may also want to build up some cash to be ready to take your 25 per cent tax-free cash lump sum at retirement. It’s also a point at which you might benefit from financial advice, because there are lots of options to consider, and your pension is probably at its peak value.

Read More Details
Finally We wish PressBee provided you with enough information of ( I’m five years from retirement, should I move my pension into cash? )

Also on site :

• Pro-EU candidate wins Romanian presidential election rerun
• Kamala Harris Reacts to President Biden’s Cancer Diagnosis: “Joe Is a Fighter”
• Stars From Bravo’s 'The Real Housewives' Franchise Set to Appear on 'Celebrity Family Feud' This Summer