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Prepare for retirement with our top asset picks

How to invest when you're approaching retirement
Prepare for retirement with our top asset picks

Fund choice: Jupiter Strategic Bond (GB00BN8T5935)

Unit price: 115.06p (03/03/2021)

Fund size: £4.3bn (26/02/2021)

As you approach retirement it could be time to start taking some risk off the table, especially if you are going to buy an annuity. Even if you are going to continue running your investments it makes sense to consolidate some of your gains of many years – as well as continuing to grow the pot.

Jupiter Strategic Bond Fund (GB00BN8T5935) aims to provide income as well as capital growth by investing in debt including high-yield, investment-grade and government bonds, and floating rate notes. This means it could continue to grow your savings – especially if you hold the accumulation share class that reinvests the fund’s payouts. And, importantly, this fund could also help to consolidate your gains because its managers, who are led by highly experienced bond specialist Ariel Bezalel, are prepared to sacrifice yield to preserve capital. Bezalel is quite cautious in his approach and emphasises limiting potential losses in tough markets. He recently commented:

“Although the market consensus of a slow but steady economic recovery continues, some caution is warranted. A flexible approach that allocates to carefully selected credit alongside a significant allocation to developed market government bonds should be a prudent way to balance risk and reward in 2021.”

 

Share choice: Garmin, Games Workshop

Garmin share price: $124

Games Workshop share price: 9888p

Garmin market cap: $23,7bn

Games Workshop market cap: £3.24bn

As you build your pension pot to retirement, it is important to strike a balance between growth and reliability: play it too safe and your retirement may not be filled with the luxuries you desire; seek too much excitement and your portfolio could come crashing down at exactly the wrong time. 

Garmin (US:GRMN) offers exposure to burgeoning trends without taking on too much risk. Its portfolio of navigation-based products ranges from consumer fitness watches (26 per cent revenue growth in 2020) and nautical tracking equipment (29 per cent revenue growth in 2020), which have generated an average operating margin of 22 per cent in the last five years. 

Games Workshop (GAW) offers similarly compelling growth characteristics, but in very different markets. The strength of the company’s intellectual property means its brands are being talked about by Hollywood movie-makers and blockbuster gaming studios. Licensing its brands would provide a nice boost to the product suite, which has delivered compound annual revenue growth of 20 per cent in the last five years. 

IC model asset allocation – road to retirement

Your children have left home (or have at least stopped absorbing all your spare income), you’ve taken a decent chunk out of your mortgage and your monthly savings are starting to look a lot healthier. These are the prime accumulation years for a self-invested personal pension (Sipp) – a chance to take plenty of risk, which combined with regular contributions can see it achieve steady compound growth, and set you up for a comfortable retirement. 

Click here to read our model asset allocation for those in their prime pension accumulation years.

How risky is this asset allocation?

Unless you need to sell your portfolio right away then a fall in its value doesn’t equate to a realised loss, when you sell at below the value you invested at.

If you are within a few years of retirement, you might be better using our lower risk model asset allocation.