Select Page

Step 3: What to invest your pension in

Building a retirement income portfolio from scratch is easier than you might think.

The first step towards your income-producing pension pot is already in place: you have transferred all your available pots of money to a platform that is able to provide the service you need.

The next step is a crucial one: to deploy the money in your amalgamated pot into income-producing investments. In this part, we guide you through the steps you need to take to build the right income portfolio for your circumstances and present our three model portfolios, one of which should be suitable for you.

The need for an income portfolio

This part is arguably the heart of the website: the actual investment portfolios into which you will deploy your pension savings in order to generate a secure income that is sufficient to meet your needs in retirement.

We will now detail three portfolios, each of which contains assets such as shares and bonds, into which your pension money can be invested to produce this income.

But first we briefly explain why it’s necessary to take the trouble – and to some extent the risk – of investing in shares and bonds when two seemingly safe options, namely cash accounts and annuities, exist. If you have already decided not to consider either cash or annuities, you can skip these parts.

We also introduce the ‘cash buffer’ and why so it’s vital to have one.

◆ Why shouldn’t I just invest my pension money in cash?

◆ Or in an annuity?

◆ Introduction to our three income portfolios and how we constructed them

◆ The all-important cash buffer

◆ Portfolio 1: The high-income portfolio

◆ Portfolio 2: The inheritance portfolio

◆ Portfolio 3: The compromise portfolio

◆ When do I need to consider changing the investments in my pension income portfolio?

If your friends would find this page useful, share it with them using the buttons below left (if you use the email button, ensure you tick "I'm not a robot" before you fill in the other fields).

Do you have a question or would you like to give feedback about this website? Email us at at   

*Links marked with an asterisk can earn money for this website: the company involved may pay us commission if you follow our link to its website or transact on it. This does not have any effect on what we write. 

Nothing in this website constitutes personal financial advice. Its contents represent journalistic research and readers should ensure that any course of action they consider as a result of anything that appears on this website is appropriate to their own needs and circumstances, if necessary with the help of a financial adviser regulated by the Financial Conduct Authority. All investing involves risk: ensure that you understand the risks before you proceed.

Copyright © Richard Evans, 2019-20