The Bank of England has raised interest rates from 1.75 percent to 2.25 percent – the highest level for 14 years. They have warned the UK may already be in a recession. The central bank had previously expected the economy to grow between July and September but it now believes it will shrink by 0.1 percent.
Britons are urged to review their finances as this could save some cash in the long term.
Journalist Robin Powell and Jonathan Hollow, a former Government Money and Pensions Service worker explained that if someone has a guaranteed (“defined benefit”) pension, inflation could erode its long-term value, but a recession alone is unlikely to have a big impact.
They said: “If you have an investment-based pension (these are technically called “defined contribution” pensions), its value is likely to fall during a recession.
“However, if you are not spending it, its value could easily recover.
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“Don’t be afraid of ups and downs before you actually spend your pension.”
Most pensions cannot be accessed until minimum aged 55, this is to give it as much time as possible to grow and compound.
By stopping or withdrawing contributions in a time where inflation is high could be detrimental to one’s total retirement fund.
They continued: “However, when the stock markets fall, this means shares are cheap.
“It may seem odd, but a recession can be a really good time to buy more shares for your pension, if you do it at a
“You will get your new shares at a steep discount, and there’s a good chance they will grow in value when the recession ends.”
Both experts explained that Britons should have a plan in place for their financial future for a chance of freedom.
Their new book ‘How To Fund The Life You Want’ shares ideas and suggestions about how people can make sure they are best equipped for their future.
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People need a purpose and plan in order to fulfil their desires.
They said: “Money is for life, not life for money. Work out what kind of lifestyle will make you happy in the future, and write down a plan to get there.”
Additionally, they suggested Britons invest in thousands of different companies across the world as this will spread their
It should be noted that with investing there is no guaranteed income and one’s money will go up and down.
“Index investing makes this easy and inexpensive,” they added.
Over the long run, the evidence has shown that company shares have always grown.
The longer people invest, and the less they fiddle with their investments, the more likely they are to beat inflation.
The only thing people can control is the fees for the investment platform.
They urged Britons to “keep them low”.
They concluded: “You can’t control market movements. Don’t pay too much attention to them.”