What factors should influence my investment strategy?

When choosing an investment strategy, there are a range of issues that will influence your decision. It is advisable that you think about the following points:

• How familiar you are with investment matters. If you have a lot of experience in the investment world then you will probably feel confident enough to create your own investment strategy. But if you are not comfortable with investing you will need to research alternative investment choices (within the range offered by the trustees) before changing from the LA Retirement Fund default lifestage investment strategy. This will ensure that you choose an investment strategy that suits your specific needs. Remember, if you have the wrong investment strategy you could lose a lot of money.
• The length of time your investments will remain invested. Even if you are thinking about leaving employment soon, you should keep in mind that those assets represent your retirement savings. Your intended date of exit should therefore determine your investment horizon. Remember that if you decide to leave the fund before you retire, you will have the chance to preserve your benefit by leaving it in the fund or transferring it to another retirement or preservation fund.
• What you intend to do with the proceeds of your benefit, either at retirement or at earlier withdrawal? Members should match their pre-retirement investment choices with their intended annuity and investment choices on retirement. This means that if you are close to retirement you should carefully consider what kind of annuity you are likely to select when you retire. You should then try to match your investment strategy in the fund to your post-retirement plans. A professional financial adviser will provide valuable assistance here.
• Your personal tolerance for risk. In this context, ‘risk’ means negative returns. The higher the exposure to equities, the most volatile asset class, the higher the probability of negative returns in the short term. However, this risk is counter-balanced by a higher probability of stronger performance in the longer term. If you are willing to take more risk (i.e. greater probability of negative returns in the short term) you are likely to be rewarded in the longer term by higher returns. If you decide on a more conservative option, your annual returns will be more stable but your longer-term performance is likely to be significantly lower.

Your investment risk profile will be determined by the above aspects. It will also be influenced by such personal factors as your other provisions for retirement, your health, the age of your dependants (should you have any) and your financial expectations after retirement.

All members are strongly advised to seek the guidance of a professional financial adviser before making any decisions. Your adviser will complete a full needs and risk analysis before giving you advice.