Investing in Your Retirement – What are the Best Asset Classes?

Investing in Your Retirement – What are the Best Asset Classes?

We’re undoubtedly at the precipice of a pensions crisis in 2023, with one-in-six Britons who are within sight of their retirement having absolutely no private pension savings at all.

This issue appears to be exacerbated for female savers, with the gender pension gap established at 17% at the beginning of women’s careers.

Incredibly, this increases to 56% at the time of retirement when compared to men, creating a pressing need for savers (and particularly women) to take considered and proactive steps towards optimising their long-term savings.

But what are the best assets to consider for your retirement? Here are some options to keep in mind:


Let’s start with the basics; as it’s crucial that you retain some cash in your pension pot, especially given the current economic climate and market volatility.

Precisely where you keep your money is up for debate depending on the value of your cash holdings and underlying appetite for risk, with ISAs, term deposit accounts or cash funds offering viable examples.

This can offer you a significant advantage and viable financial safety net, as it minimises the risk of loss and accounts for the fact that most investment assets become marginally less liquid during times of economic contract and recession.

Liquidity refers to the ease with which assets can be bought, sold and converted to cash in the market, and corporeal money is obviously the ideal financial instrument in this respect.

This certainly helps to diversify your pension pot and safeguard the total value of your pension pot over an extended period of time, so long as you keep accumulating wealth through this method and top up your cash funds as and when required.

Topping up and constantly rebalancing your cash funds is crucial, and there are two key reasons for this.

Firstly, it lets you maintain a diversified and generative portfolio as the distribution of your capital changes over time. Secondly, it helps you to account for inflation, as you look to create a pension pot that can cope with price hikes and broad cost-of-living increases.

Income-Generating Investments

If you’re a little closer to your retirement, you may want to consider income-generating investments that can significantly boost your pension pot.

The most common options in this respect are bond, income and mutual funds, which usually account for an increased share of your investment capital as you continue to age.

Particularly popular are government and corporation-backed bonds, which are inherently secure and enable you to bank consistent (and predictable) gains with a designated timeframe.

Perhaps the biggest advantage of these types of funds is that they automatically spread your capital across a broad range of companies and assets. This automatically minimises your exposure to risk and provides greater certainty, even during periods of volatility and increased economic contraction.

Most funds are also managed, which means that your capital is overseen by a professional manager and investment team who’ll regularly review your holdings and make the necessary readjustments in line with your expectations and the market’s movements.

The income generated through this type of investment is typically stable and relatively risk-free, enabling you to accumulate wealth steadily and supplement any cash holdings that you already possess.

Growth Investments

If you’re on the cusp of your retirement and want to create funds that can last for 20 years or more, you should also look to move some of your capital into asset classes that can sustain continued growth.

Certain mutual funds are also a viable option in this respect, as is share trading and investing your money directly into targeted stocks and indices.

Of course, you can learn how to buy shares and balance this alongside government bonds, while taking viable steps to minimise the risk that share values will go up and down over time.

The key here is to seek advice and tailor your stock portfolio to suit your appetite for risk. For example, risk hungry investors can trade equities more aggressively and pursue more significant gains, while retaining cash and bonds as financial safety nets.

Conversely, those of you with a risk averse outlook can target so-called “dividend “ stocks, which tend to appreciate incrementally in value over time and enable your pension pot to grow consistently and well into your retirement.

If you adopt this strategy and embrace such assets soon enough, you can also increase your risk safe in the knowledge that there’s still time to recover if your chosen stocks depreciate in value.

Just try to be proactive and research your preferred stocks in detail, before looking to balance this element of your retirement portfolio with the other assets that you trade.