Pension Alternatives for Retirement

Image courtesy of Frankieleon
Image courtesy of Frankieleon
There are many people who are looking for alternative ways to save for their retirement than pensions. Although a pension can be good, as you know that it will pay you an income until you die. They have been getting a bad reputation lately. People might be worried about them being lost if the provider goes out of business, that they may not be worth enough or that they may not draw enough out before they die to take advantage of their investment. It may be that they want an alternative or an additional investment.

Shares
The stock market is something that your pension fund would be likely to be part of anyway. However, you may prefer to put the money straight into shares yourself. This could give you more control; but if you do not choose wisely it could be a lot riskier. You can buy shares in individual companies, but also buy shares in a mix of companies, perhaps in a managed fund. These can be better as they spread the risk and they are managed by an expert, but there may be more fees associated with them. If you have never bought shares before it is wise to talk to a financial advisor first so that you know that your investment is a worthwhile one.

Premium Bonds
Many people choose to put their money in premium bonds. This is a UK government run scheme where individuals can buy up to £50,000 worth of bonds which are entered in a monthly draw with prizes form £25 – £1m pounds. It is all about luck and so it is possible to win a huge amount of money, but most will win a small amount or nothing at all. There is no guaranteed return, but the investment is safe and it can be a good alternative to the lottery as you can draw out your stake at any time.

Property
Recently a lot of people have chosen to invest in property. This could either be shares in property or actually buying a property to rent out. People have turned to property as they were not finding the stock market was doing as well as they had hoped. However, property prices can still fluctuate and so they are not totally safe. The safest way to do it is to buy a property where you can get a rental income that more than covers the property costs. Then even if the value of the property falls, you can still afford to hold onto it and keep the income coming in.

Government bonds
For a risk free approach some people choose government bonds. These do not pay out a very big return but they are very safe as they are guaranteed by UK government. They are most appealing to those people who do not want a pension because they would rather something more secure. There are other investments which have a low risk but a better return than these, so it is worth remaining open minded and looking hard for opportunities.

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Rachel Henderson is a professional freelance writer from the UK. She writes on many subjects but specialises in personal finance. As well as contributing to various blogs and websites she has her own website tracking her own money making process http://www.turnonepoundintoonemillion.com and sells her books through http://www.bowbridgepublishing.com.

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