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Old 20th Mar 2014, 10:40
  #20 (permalink)  
Al R
 
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Without insight and not as advice, my first instincts would be to make sure that the funds Mr TOFU are invested in, are as low volatility and as safe in terms of investment returns as she feels they need to be. She has grown the fund, what she needs to do now is ensure she doesn't expose it to volatility or the potential of loss in sight of the finishing line.

Assuming that you are both joined at the hip for life, the exercise would then be one of working out cash flow modeling for both of you, taking into account cash flow and some one off needs and then some reverse engineering to determine the best way and the best tax wrappers in order to achieve that.

If Mrs TOFU is inclined towards low volatility funds, maybe even parking in cash if the objective has been secured, then make sure that she has considered whether or not to place her money into a passive fund. The passive vs active debate is a hot topic right now, and although the jury is still out, why would you need or want to be in an expensive active fund when you don't have to be. The a some seriously shocking passive funds out there mind. I am in London next week for another 2 day seminar on them - unless you're an investment wonk, it would be hell on earth.

Also, have her ensure that the actual personal pension fund provider that she is with offers her the flexibility to achieve what she needs it to achieve for her. If she doesn't take much from it, it is still going to be there for the long term if she is only 55, so is it a cheap one, or an expensive one? The pension wrapper itself is a filing cabinet, somewhere to simply deposit and arrange investments. Do you need or want Aldi, or is the rather pricy Waitrose the order of the day? Cheap is not always best, but for Mrs TOFU, it might be.

Finally, think big - work out the bigger picture.. work out your cash flow - think of the pension funds that you both have as money held by an employer who pays you. Since yesterday of course, you have far more choice in how that happens. Consider absolutely EVERYTHING - are you going to swim with dolphins for the next 3 years, then sail around the world followed by a period of calm, are you going to do the house up, take a part time job or buy a new car every 3 years? Paint a picture of what life over the next 25 years is going to be like, and over time, from that, extract backwards and identify the financial tactics required to achieve that.

Finally, finally right now.. think principles of defence (no, not offensive spirit, mutual support, logistics, interlocking arcs, good communications - you can take the boy out of the Regt, but you can't etc). Rather, have you got in place protection to cover you in the event the worse happens? The last thing you will want is for an accident to happen and your lifetime's hard work go on medical care and domestic ongoing help and rehab.

Look upon this phase as a 30 year plan - planning now is more complicated than it would have been when you were 25 - then, you were 'just' accumulating. Now, you also have to decumulate as well. And what about Inheritance Tax - what are your thoughts on that?(rhetorical). Lots to think about. You have time, and 2 years is about as short a time scale that you need.
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