Investing retirement cash funds

7 June 2017

For those many people who have been lucky enough to have either retired or will soon be retiring with a good value pension there is a dilemma about investing retirement cash funds.

Typically, up to a quarter of the overall pension entitlement can be commuted for a tax-free cash sum.  For some this will be used to pay off outstanding financial commitments such as mortgage repayments but for others it can be “surplus” money which needs to be invested wisely. 

In the years since the financial crash the low rates of interest (currently at an all-time low) has meant that leaving the money in cash (i.e. in a bank or building society account) has resulted in a gradual decline in value as savings have grown even less than the low rate of inflation.

Investing in stocks and shares will have realised a much higher return but can be volatile with stock markets rising and falling often with little regard to the actual economy.

Another alternative is investing retirement cash funds in residential buy to let property.

This can realise significant returns, both in actual income through the collection of a monthly rent and potential capital growth as the value of the property increases.  Of course, property values can decline as well as rise but in the long-term the UK property market has always risen overall despite the occasional blip along the way.

As an example of how you might consider investing retirement cash funds that you hold we currently have access to properties in Yorkshire and the North East which are selling for £60,000 and yielding a guaranteed return of 8% per annum for the next 3 years.  Alternatively, you may prefer to invest £60,000 as a  deposit and purchase a £200,000 plus property in the south east for an average yield of around 5% and a potentially higher capital growth return.

Whichever you prefer if you are considering investing retirement cash sums that you either currently hold or will shortly be receiving please get in touch to discuss the options. If we consider that property investment is not right for you we will say so. But there are many ways in which property investment is a good fit and an initial, no obligation meeting, might be your way toward reaping a healthy financial return.

Please contact us at Source Investments