How does your pension work with different risk profiles?

When it comes to investing your assets, there’s always a risk. Even if you decide to do nothing and hide your cash around your house, there’s still the risk that it will lose its value due to inflation. However, the more risk you’re willing to take, the more chance you’ll have of growing your investment. On the other hand, bigger risks also come with the possibility of bigger losses.

This is why assessing our clients’ attitude to risk is so important when we advise them – particularly in relation to pensions. Why? Because your pension should, if invested wisely, allow you to retire from work when you want to and still enjoy all that life has to offer.

Assessing your attitude to risk

Every one of our clients has a different attitude to risk – and each individual’s attitude can change as they go through life and their priorities or personal circumstances change. That’s why, when you’re thinking about your pension and how it should be invested, we’ll sit down with you regularly to determine how your situation has changed, so we can advise you on the most appropriate approach.

It starts with identifying what level of risk you’re most comfortable with. Based on your answers to a series of questions, we’ll advise you on the level of risk you could realistically take. This will include an overall assessment of both the short-term and long-term demands on your savings. For example, if you’re in the earlier stages of your life, you may be thinking about getting married, buying a home or starting a family. These plans will all have an impact on the amount you can put into a pension.

So, if you have less to invest in your future, we may discuss looking at taking slightly more risk than you might usually, because you have more time to build your pension pot before you retire. Of course, we’ll regularly assess how the strategy is going and, if your investments look like they may not be growing as you’d like, we’ll have time to change strategy and move to a lower risk approach.

Your assets and how they affect risk

As well as looking at the demands on your savings, your risk profile will also depend on what other assets you have available. For example, if you own assets such as rented properties, that are likely to provide you with a regular income going forward, we may advise that it’s not worth taking a higher risk with your pension, because you have the income from your properties to fall back on.

By looking at your entire asset portfolio, we’ll be able to develop a personal plan for you that both suits your circumstances and matches your attitude to risk. And if you decide to sell any assets, meaning that a regular source of income is no longer available to you, we’ll reassess your risk profile and advise you on the best approach.

Talk to us

Assessing your risk profile in relation to your pension is about more than just your personal attitude to risk. It can depend on a number of factors, from your age and other priorities to your existing portfolio of assets.

We’ll help you to balance all the different demands on your savings, so we can develop a personal pension plan that matches your attitude to risk, while giving you the best chance of building a pension pot to meet your current and future needs.

PLEASE NOTE: Grosvenor Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority. The value of investment can go down as well as up and you may not get back the original amount you invested.