Choosing your Investment / Risk


Aside from how much you pay in, investment performance will have the biggest impact on how much pension you receive in retirement, so it's very important!

In simple terms, higher risk investments tend to offer the highest potential profits. But the scope for losing money is also greater, so it's sensible to strike a balance that suits your situation and tolerance to risk. For example, if you're close to retirement you'd likely want to take far less risk than someone who's not retiring for another 30 years.

The illustration below highlights the relative risks of the types of investments you might hold within your pension:

 

 investspectrum.gif

 

Most pensions offer access to these investment types. The simplest approach is to use a single 'managed' fund that invests in some of the above areas, although using individual funds in each area provides greater flexibility to tweak your pension to your needs. 

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