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I'm nearly 30 and looking to open a private ready made pension, and also an investment ISA. Any advice about what risk level to choose?

Susan | WMD| 24/07/2018 | 1

  • Private Pension
  • Stocks and Shares ISA

Susan's question in full

I'm nearly 30 and looking to open a private ready made pension, and also an investment ISA for retirement funds or towards a property, but very unsure what risk level to choose (low to medium, or medium to high)? Any comments or advice welcome.

Cherry Reynard's Response

Hello Susan,

First, congratulations on opening up a private pension as well as an ISA, both are very healthy financial steps to take!

It's important not to think of risk as a measurement of how likely it is that your investment will disappear in a puff of smoke. In reality, it’s a measurement of how much the investment’s value goes up and down over time. So, your risk level for any investment depends on how long you plan to hold it for.

For your private pension, which you’ll keep for a long time before you need to use it, a managed fund with a higher proportion of shares makes sense. If you want to use the money in your Stocks and Shares ISA for property within the next 5 years, say, you would be best with a lower risk portfolio.

Have a look at some of the robo-adviser options like Nutmeg, Wealthify, Wealthsimple and Moneyfarm for your Stocks and Shares ISA. These companies will run you through a risk questionnaire before you invest and give you a ready-made low cost investment package that you can contribute to regularly if you want. You can learn about them here. Nutmeg is the most well-known of these.

For your private pension, have a look at our top 5 DIY pension options, just updated in July. We break it down depending on your time frame, fees and charges, and how much control you want to have on a day-to-day basis. You shouldn't be paying more than 1% in fees and if you want something low-cost and ready-made, we suggest AJ Bell Youinvest, which won Best Online Pension Provider AND Best Online Investing Platform at the Consumer Investment Awards in June.

Good luck! 

Our Expert

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Cherry Reynard

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