Retirement Fund Choices

Charting the Path Forward: Preqin, the leading data service and analytics firm serving the Alternative Asset universe just released a special report with some very interesting insights. Private credit has emerged as the standout performer vs. all other alternative asset classes, in terms of the step-up in return expectations for the next 6 years as shown in the chart below. Preqin’s analysis forecasts an impressive 12% Net IRR for private credit over the next six years, a substantial increase from the 8.1% achieved during the previous six-year period. Other alternative asset classes also look promising; however, many sectors face downward pressure on returns, According to Preqin's forecasting model, private equity, venture capital, natural resources, and fund of funds are all projected to experience diminished returns compared to the past several years. In contrast, secondaries, real estate, and infrastructure join private credit in the positive column, though none match private credit's dramatic improvement. Private Credit has come of age given its growth, the emergence as a major alts asset class that joins the ranks of Private Equity as a leader that is capturing the capital allocators wallet. Private Credit is comprised of three sub-sectors: Direct Lending, Asset-Based Lending, and Opportunistic strategies. What makes private credit particularly compelling is its risk-adjusted performance. Although Preqin's analysis doesn't explicitly address volatility-adjusted metrics, it's evident that private credit would rank first in this category since it has consistently delivered attractive absolute returns with the lowest level of volatility compared with the other alternative asset classes. Creating an attractive risk-return profile for investors who seek both yield and relative stability is the hallmark of private credit. This re-rating positions private credit in a strong position for the coming years to come as capital allocators evaluate their alternative asset allocation model. Where do you intend to allocate your capital?

To spend $100,000 in retirement, some may need to withdraw $140,000+. Others may only need around $105,000. The difference? Not investment returns. The type of accounts they used along the way. This is one of the biggest misconceptions I see with investing. People spend years focusing on picking stocks and chasing return. But often spend very little time thinking about where those investments should actually live. And over time, that decision can create a massive difference in: - Taxes - Flexibility - Withdrawal strategies - Long-term wealth preservation The 4 major account types each behave differently: 1. Traditional IRA / Pre-Tax Accounts These accounts may help reduce taxable income today. That’s why many high earners prioritize them during peak earning years. The tradeoff? Future withdrawals are generally taxed as ordinary income. Which can become important later for people trying to create retirement income efficiently. 2. Roth IRA No upfront deduction. But qualified withdrawals can potentially come out tax-free later. A lot of people underestimate how powerful decades of tax-free growth can become. Especially for younger investors and high earners with long compounding timelines. 3. HSA One of the few accounts with potential triple-tax advantages: 1) Tax deduction going in 2) Tax-free growth 3) Tax-free withdrawals for qualified medical expenses Some people even choose to pay medical expenses out of pocket today, while leaving the HSA invested long term. 4. Taxable Brokerage Accounts No upfront tax break. But a huge amount of flexibility. No early withdrawal penalties. No required distributions. No contribution limits. And in many cases, long-term capital gains rates may be lower than ordinary income tax rates. Which is one reason taxable accounts often become important for people pursuing financial independence before traditional retirement age. Most strong financial plans don’t rely entirely on one account type. They use different accounts strategically together. Because years later, there’s a big difference between: * Needing to withdraw $140,000 to spend $100,000  vs * Needing to withdraw $105,000 to spend $100,000 And that gap often starts long before retirement even begins.

Europe’s pension funds are playing it too safe.. and it’s costing us all. While US and Canadian pension giants are generating 8–11% annual returns, most continental European funds (excluding the Nordics) are stuck in the 4–6% range. Why? Because they’re avoiding the one asset class that’s consistently outperformed: private markets. Compare the numbers: 🇺🇸 US: 15.2% from private equity; 14–20% in private markets 🇨🇦 Canada: 10.9% returns (CPP); 45% in private markets 🇪🇺 Europe: 4–6% returns; 60–70% in bonds, <5% in private equity, almost no venture The takeaway is clear: Illiquidity isn’t the enemy - it’s the unlock. Private equity, infrastructure, and venture capital offer long-term value creation and compounding that bonds and public markets alone simply can’t match. Europe’s pension capital is massively underused. Imagine what reallocating just 5–10% into venture and private markets could do:  - Better pensions  - More innovation funding  - Stronger economic resilience It’s time we bring long-term capital back to long-term investing. #PrivateMarkets #VentureCapital #PensionReform #AssetAllocation #Europe #LongTermCapital

The WSJ's editorial this morning was very positive on private market assets in 401k's. What's actually happening with retirement plans, and what are the risks/trade-offs to know? Last August, the President signed an executive order pushing government agencies to "democratize" alternatives. That opened the door for private assets like private equity, private credit, real estate, and crypto in 401k retirement plans. Last week, the Department of Labor published proposed regulation that brings this one step closer to reality. Why does this matter? 1️⃣ Alternatives have historically earned higher returns. Over the past 20 years, private equity has annualized ~14% vs. ~10% for public equities. 2️⃣ Low correlation to stocks & bonds can reduce portfolio volatility over time. Real estate, for example, has been used in retirement plans for decades to smoothen returns. 3️⃣ Access to more opportunities. Public markets are getting more concentrated and expensive — there are fewer public companies today than in the 1990s, and some of the most exciting companies may stay private for a long time (or forever). But there are real trade-offs: ⚠️ Alternatives are illiquid. You can't sell a portfolio of properties in a matter of days. It takes careful planning to maximize returns. ⚠️ Private assets are complex. They require specialized diligence and research. There is a big gap between the top performing managers and the bottom-performing managers. ⚠️ Some alternatives, like gold or crypto, can be highly volatile and probably shouldn't make up a large share of your portfolio. In many ways, retirement plans might actually be the ideal home for alternatives. For long term illiquid assets, the investment timeline matches well. People naturally avoid dipping into their 401k's until retirement because of the withdrawal penalty. Most public and private pension plans use alternatives today. So how do you manage the trade-offs for everyday investors? ✅ Target Date Funds (or "Glide Path" strategies) — these shift the burden of planning and research onto the asset manager, so individuals can "set it and forget it." You decide when you plan to retire and what your risk tolerance is, and the fund invests in a mix of stocks, bonds, and alternatives targeting your goals. ✅ Modest allocations to alternatives: enough to move the needle on better returns and lower volatility, but not so much that illiquidity becomes a challenge. ✅ Investor education. Incredibly, there are still savers who are not availing of 401k matches and maximizing their contributions. The opportunity set is getting larger, so we have a lot to do to make sure investors know what tools they have and how to use them. Lots happening in this space — I plan to put out a video and more content as things evolve! 🎬 👇 Follow the Guide to Alternatives for more on private markets, alternatives, and retirement investing. #alternatives #markets #401k #retirement #privatemarkets #investing

Married, but only one of you has a paycheck? You can still supercharge retirement—together. Here’s how a Spousal IRA helps: ☑️ How it works: You must be married and file a joint federal tax return, and that joint return must show earned income. ☑️ 2025 limits & Roth eligibility: You can save $7,000 if under 50, or $8,000 if 50+; for a Roth IRA, couples with joint modified adjusted gross income (MAGI) below $236,000 can contribute the maximum. ☑️ Why choose Roth: Qualified withdrawals are 100% tax-free (after age 59½ and 5 years); contributions can be withdrawn any time; and no annual required minimum distributions (RMDs). ☑️ What this can mean: Saving $8,000/year for 10 years at a 7% annualized return can grow to more than $230,000 in 20 years—a powerful boost to household retirement security. Small, steady deposits today = a more secure retirement for both of you. #suzeorman #spousalira #retirementplanning #rothira #financialwellness

If you've got a Legal and General (L&G) pension, this ones for you... I've come across a few clients with the default fund - L&G PMC Multi-Asset Fund 3. Looking under the bonnet, it has 40% in equities and the rest into alternatives such as bonds. There is a lot of evidence to suggest someone with a long term investment horizon should be weighting their investments heavily in favour of international equities. Equities are the good companies of the world and have proven the ability to maintain pace with inflation. Just look at how supermarkets have been able to up their prices and maintain profitability. You wont notice it, but inflation is the major risk to your retirement plans. Put simply, if you were planning to spend your retirement buying a load of freddos at 10p, it's gonna be really disappointing to find they are 30p when you retire. Over the last 3 years, the multi asset fund has returned 3.10% per year to the end of Jan vs some alternatives around 8%. Now, don't lose faith in Legal and General, but do go and have a look at the alternative fund choices. Take this opportunity to have a read around, learn and have a think what is best for you. Your future self will thank you.

This Pension mistake nearly cost £644,044: Simon, 36, earns £78,000 annually and contributes 5% to his workplace pension, which his employer matches. He assumed he was on track for a strong retirement. But here’s the problem: he was invested in the default fund. Many workplace pensions automatically place you in a default fund, designed to be low-risk and conservative. But low risk often means lower growth—and over decades, that can cost you hundreds of thousands in lost returns. Simon’s original pension projection at 65 was £766,597. Not bad, right? But when he switched to a growth-focused fund, aligned with a higher long-term return strategy, his projection jumped to £1,410,641. That’s an extra £644,044, without increasing contributions—just from choosing a better fund. What can you do? 📌 Check where your pension is invested—don’t assume the default is best. 📌 Understand your risk tolerance—younger investors can generally take more risk for higher potential growth. 📌 Look at long-term performance—growth funds historically deliver better returns over decades. 📌 Review regularly—pension schemes change, and so should your approach. Your pension could be your biggest financial asset, but only if you make it work for you. When was the last time you checked yours?

“I’ll sort it later. I’ll be fine.” Those were Jeff’s words until he saw his projections…😳 This was Jeff’s mindset when it came to his pension. At 30, he was automatically enrolled in his workplace scheme, putting in £250 a month. His pot sat at £30,000, and he assumed that was good enough. Fast forward to 40, and his pot had grown to £100,000 but he had never really paid attention to it. Then, at a work event, a colleague mentioned they’d reviewed their pension investments and were targeting 8% growth per year. Jeff was curious so he checked his own pension statement. It had been growing at just 4% per year. The wake up call: Jeff ran the numbers. If he stayed in his default pension fund, his pot at 65 would be worth £420,000. His colleague, who had taken advice and optimised their pension, was on track for £1.1 million. Same contributions. Same starting balance. But a £700,000 difference 🤯 That’s when it hit Jeff. How much money had he left on the table because he kept saying, “I’ll sort it later”? The fix - taking control of his Pension 🙌 Like many people, Jeff had fallen into a common trap: assuming his pension was working for him, without checking. He realised he had never: ❌ Assessed his risk level—was he being too cautious for his age? ❌ Reviewed his investment strategy—was he missing opportunities for growth? ❌ Considered his lifestyle in retirement, what bucket list things does he want to do? ❌ Thought about his retirement goal - was he even on track? With expert guidance, Jeff took action: ✅ Moved to a diversified portfolio suited to his long-term goals ✅ Increased contributions through salary sacrifice, boosting his pension while reducing tax ✅ Ensured he was maximising employer contributions The Outcome: A smarter future Jeff’s new strategy put him on track for over £1 million in retirement savings without drastically increasing his contributions. It wasn’t about paying in more. It was more about making his money work harder. The biggest lesson? “Later” is the most expensive word in finance. Start now 👊

Vodafone people, past and present - you need to read this If you have worked at Vodafone after 2010 then you likely have contributed to the Lifesight defined contribution pension scheme.  It's a decent scheme with low costs and the ability to manage your investments online - although most people tend to leave it to Lifesight. That's where the problem starts. The standard settings mean that 15 years out from your expected retirement date - when you reach your early fifties - your funds start to be moved to a "safer" mix of investments.  Less in company shares, more in cash and bonds.  This process is called lifestyling and it's long established.  But is it right for you? On average, 3 out of every 4 years sees stock market growth.  Over 5 to 10 years, the stock market has historically beaten cash and bonds.  So the question is whether locking into lower growth in your fifties - potentially your highest earning years - is really protecting you, or just costing you. Since 2015, pension freedoms have opened up alternatives to simply cashing in your pension on retirement day.  Drawdown, lump sums, flexible income - your options are much wider than the default settings assume. You can change your fund choices yourself within Lifesight.  But don't do it blind.  This isn't financial advice as I don't know your circumstances.  It's a call to action: don't let a default process determine your retirement wealth.  Please get advice, whether that's from me or someone else you trust, and take control. This will apply in principle to DC pensions from BT, EE, O2, Virgin Media and other ICT employers too - the details will vary but the message is the same.

A pension manager recently told me: “We don’t really invest in alternatives. We keep most of our portfolio in T-bills. It feels safe.” I nodded — because I understood. Safety is comforting. But when inflation hovers near 18%, and one-year T-bills yield around 19–20%, safety can be an illusion. The math doesn’t lie: when inflation outruns your returns, capital isn’t safe — preservation becomes erosion in slow motion. So I asked him, “Is the goal just to preserve capital, or to activate it…to put it to work for growth?” I already knew the answer. Then I told him about one asset class that I know can protect and grow long-term capital — in real terms. Infrastructure. Done right, it offers what few assets can: • #inflation-linked returns: revenues indexed to rising costs, preserving real value • #FX-resilient cash flows: natural hedges that reduce exposure to currency volatility • #Long-term stable alignment: predictable income streams that mirror pension and insurance liabilities And now, the broader system is catching up. #PenCom has increased the allocation limits for alternatives and infrastructure, a bold, long-awaited reform that can redirect part of Nigeria’s ₦26 trillion (≈ $20 billion) pension assets toward productive, nation-building investments. At ARM-Harith Infrastructure Investment Limited, we’ve been preparing for this, designing blended-finance structures that de-risk and provide early yields to domestic investors, essentially flattening the J-curve without compromising long-term value creation. That manager has now joined our growing domestic LP family. He saw what I hope many more will see: that true safety doesn’t lie in money that sleeps, but in money that #builds. #MoneyThatBuilds #InfrastructureFinance #PensionReform #InvestInAfrica #Innovation #BlendedFinance #SustainableGrowth ARM-Harith Infrastructure Investment Limited