Diversification across asset classes and regions is important for pensions, not just for good returns but also to manage the risks inherent in different asset classes and geographies.<\/p>\n
Buffer of cash<\/strong> This can help to protect them from \u2018pound-cost-ravaging\u2019 where, as stock prices drop, retirees are forced to sell more investments to achieve the same level of income, depleting the capital of their pot more quickly and reducing its future growth.<\/p>\n Safeguard pots<\/strong> If markets tumble, it pays to be more cautious by scaling back your income or turning off the taps altogether. Alternatively, limiting the level of withdrawal to the \u2018natural\u2019 income from share dividends or bonds leaves the underlying investment intact, giving it a better chance to regain lost ground when markets recover.<\/p>\n Shielding drawdown savings <\/strong><\/p>\n Diversify to avoid stretching income<\/strong> Have a safety net<\/strong> Invest in multi-assets<\/strong> Number of buckets<\/strong> Rebalance<\/strong> Source data<\/strong> The law and tax rates may change in the future. These details are based on our understanding of the current 2018\/19 tax laws and HM Revenue & Customs\u2019 practice, which is subject to change. The amount of tax you pay and the value of any tax relief will depend on your individual circumstances.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Pensioners \u2018in the dark\u2019 over how to protect their pots if markets tumble Many retirees are at risk of overlooking their pension finances by falling into an avoidable trap, according to new research[1]. A third (36%) of people keeping their pension invested through retirement could be hit harder by falling markets, as they do not… Read more »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"_links":{"self":[{"href":"http:\/\/www.ashleighcourt.com\/news\/wp-json\/wp\/v2\/posts\/2510"}],"collection":[{"href":"http:\/\/www.ashleighcourt.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.ashleighcourt.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.ashleighcourt.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.ashleighcourt.com\/news\/wp-json\/wp\/v2\/comments?post=2510"}],"version-history":[{"count":0,"href":"http:\/\/www.ashleighcourt.com\/news\/wp-json\/wp\/v2\/posts\/2510\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.ashleighcourt.com\/news\/wp-json\/wp\/v2\/media?parent=2510"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.ashleighcourt.com\/news\/wp-json\/wp\/v2\/categories?post=2510"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.ashleighcourt.com\/news\/wp-json\/wp\/v2\/tags?post=2510"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nSome retirees in drawdown will hold a buffer of cash which they can call on in volatile markets. By taking income from cash held inside their pension instead of from their invested assets, they are not forced to sell investments at lower prices.<\/p>\n
\nRecent volatility in the market could have left some retirees feeling unnerved, but there are steps you can take to safeguard your pot. It\u2019s good to check regularly that you\u2019re not taking more income than you need and that your pension is well diversified.<\/p>\n
\nDiversification is essential to protecting your assets in a market crash. As ever, picking a portfolio of non-correlated investments, diversified by geographical region, asset class and sector, can help to reduce a portfolio\u2019s overall volatility and create greater stability of returns.<\/p>\n
\nBuilding up a cash buffer can protect against falling stock markets and means you might not have to reduce your standard of living while the market corrects. Holding two years\u2019 cash means you won\u2019t be forced to sell when prices are falling, thereby locking in losses. Instead of cashing in funds, you can dip into cash reserves, giving your pot a chance to regain lost ground.<\/p>\n
\nMulti-assets, as the name suggests, invest in different types of assets, from equities to property. In a downturn, some asset classes may not fall by as much as others, meaning multi-asset funds can help to smooth out the effects of a market crash while offering investors a greater level of protection.<\/p>\n
\nHaving a medium-term investment bucket and longer-term investment bucket can help to manage the mood swings of the stock market. The cash bucket is fed by the medium bucket, which is in turn fed from the long-term bucket.<\/p>\n
\nRebalancing can help to maintain the overall risk of a portfolio in line with your needs. Rebalancing won\u2019t necessarily provide a greater investment return, but it is a protection mechanism against creating undue or unanticipated risk.<\/p>\n
\n[1] All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 660 adults whose pension is in drawdown. Fieldwork was undertaken between 3rd – 15th October 2018. <\/em><\/p>\n