A diversified and well constructed portfolio is critical to income flow at retirement. And, having a good understanding of each principal investment class is important to achieving this. In this part of the blog series on building income and wealth for retirement, we examine savings and cash.
Since the massive fall in the bank base rate in 2008, the return on cash and savings accounts has been between 0% and 2% pa which is not enough to account for annual inflation. In other words, your money has been losing value every year.
It is entirely correct that we all should have some ‘instant access’ funds available for short term and/or emergency requirements. The big question is ‘how much’?
There is no one right answer, everyone will be different. However for some investors with substantial sums in cash deposits, that could be reduced with the surplus funds invested in alleviating a shortfall in planned income.
To provide a perspective on this, if you have £100,000 in cash earning nothing, which could be invested at (say) 12% pa, then you would be £1,000 a month better off.
Coming to a decision about the value of funds you will keep in short term savings or cash may not be secure, IFA advice is recommended.
How to build income and wealth for retirement: 1. Identify the obstacles
How to build income and wealth for retirement: 2. How to create more retirement income
In this part of the series we examine if unquoted bonds and gilts could work to help build a pensionable income
In this part of the series we examine if property could work to help build a pensionable income
In this part of the series we examine if starting a business could work to help build a pensionable income
