26 March 2012

What's your "Retirement Personality"?

MGM Advantage recently produced a report with six "personality types" for retirees:
  • Thriving
  • Aspiring
  • Comfortable
  • Careful
  • Squeezed
  • Restricted
Since these are largely based on someone's financial situation I don't really think they are "personality types" as such, but  they do serve to illustrate the range of possible situations which people face in retirement.

54% of those interviewed said they were "not at all prepared for retirement" (presumably those who were not yet retired!).

Regular readers of this blog will know that you really can be prepared!

13 March 2012

Should you worry about charges?

Periodically the Sunday papers pick up on "the scandal of charges" that are applied to investment and pension products as though it's hot news. The fact is that charges are important and it's worth being vigilant about what is being deducted from your money, but in general things are slowly going in the right direction, with general awareness and transparency increasing.

Cutting the value of your money
Although there may be some up-front charges - an initial charge for the product, a bid-offer spread, commission or an Advice Fee, perhaps - the most significant charges are the ones you pay every year.

I've always looked to keep the costs down for my clients (of course), but it's only recently that I've tried to visualise the effect of those charges. The fact is that a 1% annual charge will reduce the value of your investment or pension by nearly 20% over 20 years. Obvious when you think about it, but that's a big chunk of your investment to "lose".
The hope is that investment growth will dwarf the charges of course!. But in times when growth is harder to come by, as in the past few years, those charges loom larger in significance.

The answer is certainly not to keep your money under the mattress (or even to leave it in the bank). But a healthy consideration of the costs can only be a good thing.

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