At 68 years old, I regret not learning this important money lesson sooner

Andrew Greenaway loved tinkering, but it wasn’t until he was 68 that he put those skills to the test with his life savings.

‘I’ve always been a little nervous about managing my own pension,’ says the 70-year-old retiree.

‘They are all passive funds and managed by my independent financial advisor. Then Liz Truss and Kwasi Kwarteng’s mini-Budget in 2022 which I realized I would have to tackle myself.’

Like most people whose savings are invested in default funds, Andrew’s money was gradually moved from equity funds to bonds as he got older. Known as decumulation, this strategy has long been considered a safe bet.

The theory is that as you move into retirement, it makes sense to keep more of your money in less volatile bonds.

But as Andrew experienced, received wisdom is not always the best advice.

‘I lost a lot of money because of Truss and the disaster,” said the Belfast-based father of two. “However, I know lots of other people who have been more badly affected. I remember people saying – where have all my pension funds gone?!’

After speaking with his IFA, he chose to open a self-invested personal pension fund with Bestinvest.

‘There was so much information available that it was a bit confusing, but gradually the fear started to dissipate as I found out more about where my pension funds were actually invested.’

Andrew started reading about the funds he had.

“I was shocked to see that more than 70% of my retirement funds went to US companies and most of it was covered by big tech companies like Meta and Apple,” he said.

‘I immediately started selling it so I wasn’t too exposed to one sector in one country.’

The next question is what he is saving his savings for.

‘Before I retired, I worked in a high security public sector environment and I was interested in investing in more defense companies. This was actually much more difficult than I expected, because so many funds have environmental, social and governance constraints.’

After doing a lot of research, Andrew found several funds that tracked a group of companies exposed to the defense sector.

‘I started building my holdings in the area and now have about 25% of my retirement fund in defense.’

Andrew has also focused on diversifying his geographic exposure, reducing his US holdings to 23% of his portfolio and putting the rest into funds invested in Asia, Japan, India, Europe and the UK.

‘I also started looking at the size of the companies I was investing in,’ he says. ‘I don’t want to own too many large shares, so now I make sure that there is a mix of small companies with growth potential and also medium-sized businesses.’

When Andrew first opened his Sipp, his pension was worth £185,000.

‘In just two years I’ve grown it to £245,000. There were some big drops during that time but most of the value remained intact. When Donald Trump announced all his tariffs, it was quite scary, but I managed to hold myself together.’

What advice would he give to others who have pensions they don’t fully understand?

“I’ve learned a lot over the last few years, but there are some things I wish I knew sooner,” says Andrew.

‘I didn’t come across PensionWise until I was 62, but I was eligible for free help from the government from the age of 55. That would really help.’

Andrew also suggests looking at all your pension funds and considering combining them into one Sipp.

‘If it was all in one pot it would be a lot easier to deal with – I had five different pension funds before I moved them all to Bestinvest. I couldn’t possibly fully understand where I was being charged by funds and sectors in multiples.’

He also recommends asking a financial advisor to help you get started.

‘And don’t do the traditional rule of 60% in bonds and 40% in equities – you need to break away from that mantra.’

Finally, Andrew says: ‘It may seem scary, but there is a safety net when you invest. As long as you are careful about having mixed funds, even if one fund has problems, you will still get the other funds.

‘There’s nothing to be afraid of – the only regret I have from doing this alone is that I didn’t do it sooner.’

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