Reviewing your investments

It's a good idea to take a long, hard look at your finances when you retire. If you have a lump sum of money, whether from savings, tax-free cash from your pension fund or a windfall of some kind, you should think about how you can get the most from it. It's also worth looking at any existing investments you have.

Your first step should be to pay off loans and credit cards because the interest on them is usually much higher than you will be able to get on your savings and will eat away at your money over time.

The next step could be for you to put some 'rainy day' money in an easy access account for emergencies. As a rough guide, three to six months worth of living expenses is usually enough. Be strict with yourself and don't be tempted to use it for anything other than real emergencies though.

For the rest of your money, cash accounts are safe and accessible, but, due to inflation, you'll be able to buy less and less with your money over time. The good news is you can do something about it by making your money work much harder for you.

Make the most of your money

There are a number of ways you can invest your money, including but not limited to:

ISAs
Investment bonds
Structured and fixed rate bonds
Collective investments (these are pooled investments such as unit trusts)
Shares
Property

Each of these types of investment offer different returns on your money and different risks. It's important to understand that the higher the potential return, the greater the risk you run of losing money. It's sensible to spread that risk across different investments and not put all your eggs in one basket. You should also always bear in mind that the value of your investment can go down as well as up, and you may receive less than you invested.

As well as considering the level of risk you're happy to accept, you should also think about whether you can afford to tie up your money for some time. Generally, the longer you invest, the more likely you are to receive better returns, so you should only invest money that you think you can do without for a considerable length of time. You should talk to a financial adviser to find out which type of investments would be suitable for you.

Choose the right investment for you

Choosing the right investments also depends on what you want to achieve by investing. How long do you want to invest for? Which investment is most tax efficient? Will you worry about how your investment is doing? What happens if things don't go as well as you expected?

Some types of investment will offer you the potential for growth, some will provide you with an income and some will offer a combination of both. We're all different, so what's suitable for somebody else might not be for you. Make sure that you get some professional advice and that you're happy with your decisions. Feeling secure about the choices you have made is perhaps the most important thing in the end.

If you're worried about how secure your money will be, there are some investments that offer guarantees. However, before you hand over any money, check that you're investing with a reputable company and seek independent financial advice.

Whatever your needs, there are products out there that can meet them, so why not have a look at what's available.

If you want to learn about the products we offer, take a look at our savings and investment website.

Get help from an expert

We strongly recommend that you talk to a financial adviser about how to invest your money, especially if you're considering moving an existing investment. They can help you assess your situation and recommend the best course of action. If you don't have an adviser, you can find one at www.unbiased.co.uk or call us on 0800 068 4076. We can only advise on our own products.

Related FAQs

How will inflation affect my savings and investments?: Inflation reduces the buying power of your money. This means that as inflation causes prices to rise, you will be able to buy less and less with the same amount of money. So, while you will still have your savings and investments, the money won't go as far as it once did.
Can I take regular withdrawals from my investment to supplement my pension?: It depends on the type of investment you have. With collective investments, you can invest in a fund specifically designed to provide you with an income. You can also make regular withdrawals from some investments such as bonds, but you may have to pay tax on these withdrawals. You also have to remember that you may be eating into your original investment.

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