Investing over a long-term period through your Pension is one of the most popular ways to build wealth for retirement, but how will rising inflation impact your goals?

The key is having a long-term mindset.

Regular investment into a Pension helps to build your retirement pot, alongside the growth in value of the investment. Regardless of what the markets are doing today, think about what growth you may see between now and the date you plan to retire.

It can be uncomfortable during times of market volatility to maintain your regular investments, but it remains important to stick to your goal. Otherwise, you might be taking a step backwards in getting to your goal and may need to keep working longer than you had initially planned to.

In addition to volatility, the global economy is also experiencing a period of rising inflation, which can make it feel like you have less money to invest due to rising prices. However, continuing to invest is important, as not doing so only means you’ll take longer to reach your goal, or retire with less money than initially projected.

Instead of seeing inflation as off-putting to your investment, consider the fact that inflation is a reminder of why people choose to invest.

The reality is that cash is losing buying power when prices are going up quicker than the value of your money. Investing is a way to see your money potentially out-perform inflation over the long-term. Leaving your money in a cash account offers less investment risk but doesn’t provide the same growth opportunity – gaining 1% interest while inflation is at 8% is an immediate 7% loss.

Maintaining regular contributions into your Pension gives you the building blocks of a healthy retirement. One strategy could be to set a direct debit into your Pension for the start of every month, ensuring a disciplined investment plan is kept to regardless of inflation or market performance. This also works to ‘pound cost average’ your investment, ensuring any highs or lows in the unit price of your investments are smoothed out.

Instead of cutting your investment, potentially stealing from your future, consider the budget cuts you could make elsewhere. Inflation is a reality, so saving and budgeting does become more important. Consider as well that wages tend to increase in line with inflation, so what can seem more expensive in the shops or sensationalised in the news doesn’t always necessarily mean you are worse off.

In conclusion, you can’t control inflation, but you can control your reaction to inflation. Saving and budgeting in your everyday spending means you could maintain your regular investment into your Pension, ensuring you can stay on track to your goal retirement date with the goal amount you want to retire with. Reacting to inflation or market volatility by decreasing your Pension investments is taking away from your future self. Do more with your money, maintain a direct debit into your Pension and retire with the future you aspire towards.



True Potential Wealth Management offers restricted financial advice. Our service is specifically designed for clients wishing to access their financial affairs online. With investing your capital is at risk. Investments can fluctuate in value and you could get back less than you invest. Tax rules can change at any time. Please be aware that this communication should not be considered as financial advice investments referred to may not be suitable for all investors.

True Potential Wealth Management LLP is authorised and regulated by the Financial Conduct Authority.  FNR Number 529810.  Registered Head Office: Newburn House, Gateway West, Newburn Riverside, Newcastle upon Tyne, NE15 8NX. True Potential Wealth Management is a Limited Liability Partnership. OC356611.

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