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

05 April 2022

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Question by Duncan

Hi
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 Andrew Neligan

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.

Andrew

Answered by

Andrew Neligan

Chartered & Certified Financial Planner

Typically, I work with individuals and couples who have got to the point in their lives that they have important questions about money they want answering. They may be thinking about retirement in the next 5 to 10 years but they are worried they won’t have enough so they want to make sensible decisions now. Or, they really want to retire sooner, but either they don’t know if they can afford to, or they are afraid they will make decisions that they may later regret.