When is the right time to give your retirement savings a boost? The answer is always right now. Whether you’re just starting out in your career or eyeballing giving up work in the next ten years, it’s never going to be a bad time to make sure your pension pot is topped up, after you’ve sorted out any debt you have.
The power of compound interest means you’ll be better off overall if you’ve started out on your savings plan early, but a boost is always welcome.
As we are all living longer and being much more active in later life, we need to become even more careful with our money, and make sure that we have a comprehensive retirement plan in place to manage our investments and any business ventures to generate additional income.
Here’s how to maximize your nest egg in the short to medium term..
1. Reduce The Costs Of Investing
Costs related to your investments are eroding money from your return, so it’s a good idea to look at reducing them as far as possible. If you have investment in mutual or exchange traded funds then there will be hidden fees associated with them.
In particular, there is an expense ratio attached to each fund – essentially the fee you pay for it’s management. If you pay an Independent Financial Adviser to help you in your purchases, that is on top of the costs you pay them.
When you also add on transaction fees and loads, it’s suddenly a lot of money. So it’s worth looking out lower cost options with a similar profile, or checking with your Financial Advisor they they are also using the lower cost options.
Even a small percentage, when looked at over the lifetime of your investment, can make a big difference to your future profits.
And sadly, it’s a common scenario for investments to be put into higher expense funds simply because they yield a bigger commission for the broker!
2. Get Into Property Development
Housing is a good way to make your investments work harder, especially in these days of rising property demand. You don’t have to be a tradesmen to transform a run-down property into a desirable new home – you just need a good network of contractors with CIS registration and a good head for a business case.
Pick up properties at auction and let location be your main guide – most other factors can be changed. Make sure that you have familiarized yourself with average selling prices in the area and factored in what you are likely to make as a profit margin once the sale and legal costs, plus the cost of the development work, are taken into account.
3. Add In A Lump Sum
You can top up your retirement income by adding lump sums to your pension plan. Any random windfall, tax refund or bonus at work – add a few thousand and with the power of interest rates it will make a big difference over a few years.
A few thousand at five per cent can be a really welcome sum to add to your retirement package.