Well perhaps not destroy, but unless you are in the fortunate position of having an index-linked pension from a final salary pension scheme a return to higher inflation could significantly reduce your spending power over the years ahead.
UK CPI rose to 2.5% in June with the USA’S inflation figures even higher at 5.4%. Only a few months ago UK inflation was as low as 0.4%. Most commentators believe there is now no stopping inflation.
The good news is that this should result in an increase in interest rates. Much needed after a period of desperately low-interest rates. The bad news is that interest rates are still likely to lag behind inflation.
So, what can be done about it is the question.
Leaving more money on deposit will not be the answer. If higher interest rates result in more money being left on deposit the outcome will not be good if, as expected, interest rates lag behind inflation. What you can do is to give your retirement funds the attention they deserve. It is your responsibility not that of your pension provider, adviser, or anyone else.
Make sure that none of the funds you might need in the next 2-3 years are invested in funds that fluctuate upwards and downwards in value. Make sure your funds are well diversified. Know the principles behind the fund selection. Make sure the charges are reasonable and have a good monitoring process in place.
If you are doubtful about any of the above schedule a call here and let’s have a conversation. I am only able to take on a few clients at any one time, but I can probably set you in the right direction even if we don’t move on to an ongoing business relationship.
This document and our on going services are not personal advice. We'll give you all the help and guidance you need to make your investment and retirement decisions, but we can't advise you. If you're not sure whether you need regulated financial advice we can put you in touch with a suitably qualified and experienced regulated adviser. Because we are not regulated by the Financial Conduct Authority you will not have access to the Financial Ombudsman Service in respect of any complaints. If you use one of the "no advice" on line services to handle investment transactions they will be Regulated and you will have access to the Ombudsman and The Financial Compensation Scheme in respect of their services. The value of investments/pension plans can fall or rise depending on market performance. The Retirement Team and The Investment and Retirement Coach are trading names of Capture Success Ltd Reg No 01825075 Tel 07770575122