Investors Chronicle has reviewed the investment portfolio of a 53-year-old NHS surgeon.
Adam earns £220,000 a year from NHS and private work and his wife earns £12,000 a year as a personal assistant.
They want to retire in 7 years’ time on two-thirds of current income, funded from NHS and private pensions and their £560,000 investment portfolio. They also want to have £400,000-£500,000 in surplus savings to purchase a holiday home at the time of retirement or a couple of years before.
Investors Chronicle’s expert commentators say that Adam is holding too many actively managed investment funds and is therefore paying too much in fees to investment managers. He should consolidate his holdings to between 30 and 40 investments, ditching some of his investment funds in favour of simple tracker funds or exchange-traded funds which are lower cost.
He should also transfer the investments that he holds outside an individual savings account into his wife’s name to reduce the amount he pays in income tax.
They also point out that the reduction in the lifetime pension allowance to £1.25 million from £1.5 million that comes into effect in April 2014 will directly affect Adam’s income in retirement. However, Adam could apply for protection from HMRC before April 2014 to secure a higher pension.
To buy the retirement property, the advice is that Adam should move some of his investments into dated fixed interest securities with a five to seven year maturity and a gross redemption yield of at least 5%.
You can see all of Adam’s investment portfolio and read the full review on the Investors Chronicle’s website.