Low growth environments like those we are experiencing now make the choice of retirement investments increasingly important if we are to enjoy any real growth.
Retirement investments like retirement annuities in low growth cycles need to be selected by carefully evaluating the fee structures of the RA provider to be sure that any growth is not dissipated in the fees. When evaluating the total fees charged you need to take into account the following:
The fund cost
The financial adviser cost
The RA cost
These costs should all be added together in order to get a total cost which, in a low growth environment should be very close to 2% and certainly no more than 2.5%. A very small reduction in your fees can make a significant difference to your growth and while the pressure to perform is on the financial product companies, fees become a very important part of their ability to retain customers or garner new business.
A qustion to ask your financial adviser when considering retirement annuities linked to unit trusts are which companies offer investments in their own unit trusts on a no fee basis when investing in their Retirement annuities. It is also important to determine which unit trusts form part of the Retirement annuity you are considering investing in as these are the unit trusts that will be offered on a no fee basis. Selecting any unit trust outside of those in the retirement annuity will attract a fee.
Retirement annuities that are offered by Unit trust companies carry a very attractive allowance of 75% of the value that can be invested in shares with the balance of 25% being invested in guaranteed or very low risk investments like bonds. When planning for your retirement in low growth environments it is essential that you talk to your financial adviser regularly to discuss opportunities to improve growth by switching to different unit trusts, the market changes all the time and unless you are kept informed you may miss an opportunity to improve your returns.
Always discuss the options available with your financial adviser and if he has proven to be a reliable financial adviser, stay with him. If you feel uncomfortable with your financial adviser, interview others, this is after all your money we are talking about and your future lifestyle you are trying to protect.
Overall retirement annuities offered by Unit trust companies offer lower fees and the flexibility to take advantage of market movements which are ideal for low growth environments.