I am looking to flatten out some of the peaks and troughs in my portfolio, can you please provide advise?

05 April 2022

Question by Duncan

My current pension pot is £170,000 invested 100 in equities (global, international, North america and FTSE). I'm 49 with a potential retirment age between 60 and 63.
I would like to add some safety into my portfolio with bond/gilts/fixed interest/property & cash, however they classes seem to be in the doldrums and havent recovered as quickly as my equities from recent downturns. I understand they will never perform in the same way but a I am looking to flatten out some of the peaks and troughs in my potfolio?

Answered by Boring Money

Hello Duncan,

It is a good idea to add other assets classes to diversify the risks within a portfolio and add some safety. Equities, being more volatile than other asset classes will tend to fall and recover more quickly; that's the 'cost' of higher long term returns. The job of Fixed Interest securities is to reduce volatility within a portfolio not to chase return

They are also more sensitive to rising inflation and interest rate expectations which is why they have not been doing so well of late. It might therefore be a good time to invest while the prices are lower (though of course they can go lower still!).

With over a decade to go until you wish to retire you have got a long enough period of time to maintain a relatively high equity allocation to benefit from the probability of higher long-term returns, especially if you are contributing to your pension each.

I hope this helps.


Answered by

Boring Money