Your investment choices

Before you choose a fund, there are some things you should think about.

Understand your investment options

When it comes to choosing investments there’s lots to think about. But it doesn’t have to be complex. Whether you’re considering cash or shares; mixing investments; or want to know how to match your fund choices to your attitude to risk; our short video Investing your money will help.

The following video is about Investing Your Money and has a transcript (see below).

Making it easy to choose

To help get the retirement you want, we have a small but perfectly formed range of funds to choose from, each designed to match different risk levels.

Retiready Stability, which matches risk level 1, is designed for those who may be close to retirement and want to preserve the value of the pension pot they've built up.

Our Retiready Solutions match our risk levels 2 to 5 and have an added safeguard built in that aims to cushion you from extreme and sustained market falls. 

And, because your attitude to risk may change as life moves on and you get closer to retirement, we’ve made it easy to switch between funds.

Please note: Retiready Stability is only available to pension investors.

According to the 2014 BlackRock Investor Pulse Survey, 68% of UK investors' savings are in cash. After the credit crunch, this is hardly surprising, but cash may not give you the growth you need because increases may be cancelled out by the rising cost of living, especially if you still have some time to go before you need your savings. But what if you could invest in the stock markets and still avoid the worst of the falls you worry about? 

Retiready Solutions 2 to 5 were designed to do just that.

Here is an example

The chart below shows two funds with the same investment mix, one with the added risk management safeguard (purple line) and the other without (grey line). As you can see the safeguard is designed to soften the effects of a stockmarket crash, not prevent falls altogether. This is for illustration only.

Risk graph on stock market

During the credit crunch, UK equities (company shares) fell by over 30%.

So, when are crashes likely to happen? In the past, market crashes have tended to follow a period of high volatility (when markets go up and down a lot). With this in mind the Retiready Solutions have a built-in safeguard that triggers a move into safer investments (we call it ‘de-risking’) when the fund’s volatility rises and we think markets will fall.

When things calm down and we think markets are likely to go up again, the solutions gradually move back (re-risk) into a mix of investments appropriate to their risk level. 

Things you should know

This safety mechanism is designed to reduce the impact of a sharp and sustained market fall. But it may mean you miss out on potential growth that similar funds without the safeguard might benefit from because they:

  • Re-risk gradually, making them slower to react if markets bounce back quickly
  • Can de-risk when markets are growing, if volatility is high.

The added safeguard doesn’t mean your Retiready solution won’t fall in value. There is a chance you could end up with less than you invested.

When you’re about to retire, your savings are likely to be at their peak. This means a market fall can have a bigger impact in monetary terms than it would have had when your savings pot was smaller.

That’s why the main aim of our Stability fund is to preserve the savings you’ve already built up, even if this means that the fund takes less risk and so grows at a slower rate. If there’s a sudden fall in markets, we wouldn’t expect this fund to fall by more than 5%. To achieve this, the fund uses sophisticated investment strategies to help it reduce risk and generate positive returns, over the medium to long term.

Below you can see the biggest loss in a single month for the major types of investment over the last 10 years. The green line shows the biggest loss we’d expect for Aegon Stability so you can compare.

Graph depicting Retiready Stability against the single bigget losses for the main types of investment over 10 years to illustrate the stability of the fund choice

Source: Lipper. Produced by Aegon using performance for the main types of investment over 10 years ending 31 December 2014. The biggest loss expected for Aegon Stability is just an illustration and not guaranteed. Past performance is no guide to future performance.

There’s no guarantee the fund objectives will be met. The value of these investments can go down as well as up and you may get back less than you invested.

Fund options

Apply for ISA / Pension