How to protect your investment portfolio against inflation
Andy Haldane chief economist of the Bank of England warns people and companies have a “dependency culture around cheap money”. He also believes the threat of a quick increase in prices is “rising fast”, reports the Financial Times.
He emphasised the need for ideas outside of mainstream central bank thinking and his concerns about inflation in global markets.
The outgoing chief economist reckons inflation will hit 4% by Christmas. This is double what the Bank of England is targeting. He warns this could mean a return to even higher inflation, even bigger than the 1970s wage-price scandal.
Inflation is always a concern for long term investors. Historically the best way to combat rising prices is to hold shares in companies who benefit from them.
Take more risk with your pension or work 10 years longer
Young savers might be saddened to hear they could be working an extra 10 years longer than anticipated if they do not take bigger risks with their pension, The Telegraph warns.
Back in 2007, a 22-year-old starting on a salary of £22,437 would most likely have a pension pot worth £236,800 by the time they turn 68, if they put in 8% per year. However, those starting out at the same age and salary now could be looking at a pension pot with much less purchasing power at £157,700.
However, research by LCP calculates that, if savers invest 100% into stocks, up from the average 60% in workplace pensions, they could generate an additional £68,200 by retirement age.
You should never take more risk than what is suitable for you. Whilst taking more risk means you might be able to achieve higher returns. There is more of a chance of you not being able to sleep at night if markets fall like they did last March. If this happens your retirement could be threatened.
I’m trying to buy an annuity with a £55k pension pot and was gobsmacked to find my broker gets a £1,155 commission: Is this right or fair?
This article in The Mail’s online money site This is Money looks at someone trying to buy a fixed-term annuity.
Former pensions minister Steve Webb tries to navigate through the reader’s question. His first piece of advice is to always read the small print. His second piece of advice is that the confused pensions customer can also exercise the ‘Open Market Option’. This means that, rather than be stuck with their current provider they can shop around for their annuity. This was what the customer was doing but is good advice.
If there is very little being done other than offering a few quotes, there is not much value being added here and I agree the cost is high. However, if that is the only way to buy such an annuity you might not be able to compare it with a direct option. But the value might be had in taking a step back in deciding why someone might be buying such an annuity what the alternatives are and what the right options to take are.