You’ve taken the first big step by opening and funding your pension account with AJ Bell Dodl.
Now, it’s time to take the next step in your financial journey and invest those funds to make sure you’re maximising your future retirement benefits.
Why Invest Your Pension?
There are numerous reasons why you should invest your pension funds. So, we’ve done the hard work for you, saved you the research, and have highlighted three of the most convincing arguments for investing your pension.
1. Boost Your Retirement Savings
Investing your pension funds can increase your retirement savings. Cash might feel safe, but it doesn’t offer the same growth potential that investments can provide. By investing, you can aim for higher returns, helping your pension pot grow more over time, and potentially providing you with more to enjoy in your retirement.
2. Get the Tax Benefits
Pension investments come with fantastic tax advantages. You can pay up to £60k per year into your pension and receive tax relief, and any growth within your pension is also tax-free. This means more of your money stays invested, enhancing any overall returns and hopefully building a larger nest egg for retirement.
3. Take Advantage of Compound Growth
Investing your pension allows you to benefit from compound growth. Compound growth occurs when you earn returns not only on your initial investment but also on the returns your money generates. This compounding effect can help boost your retirement savings, snowballing over time. If that isn’t an incentive, we don’t know what is.
When to Invest the Cash in Your Pension
You’ve opened your account. You’ve put money into it. We’ve highlighted why to invest but now you need to know when to invest.
1. Get An Early Start for Maximum Growth Potential
It may sound like common sense, but the earlier you start investing your pension cash, the more time your money has to potentially grow. Starting early allows you to take full advantage of compound growth, which can make a huge difference in the size of your pension pot by the time you retire. We know it can sometimes be overwhelming but the best time to start is today.
2. Real Growth Requires Regular Contributions
Making regular contributions to your pension can help smooth out market fluctuations and allow you to take advantage of pound-cost averaging. When you put aside the same amount to invest each month, as you do with monthly investing, you’ll be buying more units or shares of an investment when its price is low, and less when the price is high. So you’re averaging out the price you’re buying at, reducing the risk of putting all your money in at the wrong point i.e. a market peak.
3. Benefit from Professional Expertise
If you’re not confident in picking investments yourself, you are definitely not alone, and Dodl offers ready-made options to help ease you in. They are built and balanced by the experts at AJ Bell (so you don't have to!). All you need to do is choose the risk level that best suits you, then you’re away.
Ready to Invest?
Investing your pension funds with Dodl is a smart step toward hopefully securing a comfortable retirement. Don’t let your money sit idle when it could be making the most of the tax benefits, compound growth, and ready-made options available to you. Start investing today and build and grow the financial future you deserve!
Read next:
How to begin investing the cash in your pension
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🔔 Remember investing carries risk – you could lose money as well as make it. Nothing in this article should be taken as advice - Dodl doesn't give advice, but we do hope the info is helpful!