Ask the expert: how to rebuild your pension fund

The financial crisis has erased years and years’ worth of pensions savings as those who chose equity investments have seen share values tumble and returns dininish.

UK expert Adrian Boulding, pension strategy director at Legal & General and US expert Susan Breakefield Fulton, founder of FBB Capital Partners answered readers’ questions.

To learn more about this pressing issue, view the FT’s interactive feature on the pensions crisis.

Due to the high volume of questions we were unable to answer all individually, but tried to ensure that all major themes were covered

UK expert: Adrian Boulding, pension strategy director at L&G

I am relatively young with around thirty years to go until I hit state pension age and currently save substantial amounts into money purchase style savings schemes. I am concerned that by the time I eventually reach state pension age, the goal posts will have moved and the state pension will be effectively means-tested. What strategy best hedges this risk and should I adopt to ensure I really do see maximum benefit if I am prepared to make lifestyle sacrifices now to save?

Bobby, Cornwall

Adrian Boulding: The state pension was means tested when it was introduced in 1909, and around two thirds of people over age 70 were eligible. The others got nothing. But things improved in 1925, when the scheme became universal, giving an entitlement to all pensioners at age 65. Women had their pension age further reduced to 60 in 1940.

It is hard to predict the future 30 years ahead, but what we do know is that there will be more pensioners and fewer workers than today, so State pensions, which are paid out of current taxation, will be under severe pressure. My expectation is that a modest level of universal benefit will survive, but that we will all need to make substantial savings in addition to this to reach the standard of living we would find acceptable in retirement. I don’t think you can hedge against future means testing, other than by making sure that you save enough to retain your own financial independence.

I used to have a stake shareholding scheme type of pension with the company I worked for in London. Now I’ve been made redundant, should I continue to contribute into the scheme? Or should I cash it in? Thank you.

Gareth Bidaud, UK

Adrian Boulding:I suggest you ask about the level of charges. Many employer sponsored stakeholder schemes have charges that are even lower than the 1 per cent charge that Government mandate for stakeholder pensions. You may be able to continue the plan at these low charges, which could be something of a bargain.

Alternatively, you could consider moving on to a SIPP, where you would have much greater investment freedom for the accumulated funds.

There is so much timing risk is the UK pension annuity framework; do you think this will be addressed by the next Government, and, what is currently the best way to deal with this?

David Molyneaux, UK

Adrian Boulding: The one thing we can bet on is that future Governments will continue to tinker with the rules. Whether future changes will work in your favour or not is hard to say! So if you are happy with the annuity terms on offer today, why not take them while you can?

If you decide to wait, then I would keep a watchful eye on the market. Visit one of the price comparator websites regularly, and when annuity rates increase to a level you are happier with, then strike the deal.

What is the right asset allocation for future inflation: 50 per cent stocks, 50 per cent bonds? How much cash do I need to set aside? 6 months? 12 months? I have regular expenses I need to pay and do not want to sell stocks or bonds to pay for them.

Julie Geer, UK

Adrian Boulding: An oft quoted investment rule is to use 100 minus your age as the percentage of your assets to hold in equities, with the balance in fixed interest securities, namely cash and bonds. Following this rule has the advantage that you will reduce your exposure to the riskier equities as you get older.

As a minimum you should hold three months outgoings as cash, in case of a rainy day. You could hold more, but it is tempting to keep stockpiles of cash low while interest rates remain so poor.

At almost 50 years of age I have decided to start shopping for a pension plan. With very little saved (around £25,000) and earn £45,000. I would appreciate a few measurable objectives to pursue please. Thanks

James Lyons, Nottingham

Adrian Boulding: I use a rule of thumb as to how much to contribute to a pension plan, which my colleagues have now dubbed ”Boulding’s Law”. When starting a pension plan, you should divide your age by two and then contribute that percentage of your earnings to the plan each year until retirement. This will generate a reasonable level of pension. It demonstrates the benefits of starting early - someone who starts at age 30 needs to pay just 15 per cent of earnings throughout their working life, whereas someone who starts at age 40 needs to pay 20 per cent every year to retirement.

You might find the rule a little hard to swallow at age 50, as it would require you to set aside 25 per cent of your earnings each year, which might be a bit of a shock starting now. But start with whatever you can afford, and try and build up the contributions as you go along.

As you are late starter, I suggest a serious objective to pursue is retirement at age 70. But address this in a positive light. You have twenty years of your career still ahead of you, so although some colleagues may be telling you that they are counting down their last few years now, you need to be planning your ongoing personal training and career development with a view to enjoying twenty years more fulfilling employment.

I have been advised my pension is changing to a Flexible Retirement Plan. This plan apparently has lower charges, plus a wider choice of investment and retirement options, including a self-investment option as well as a Pension Exchange facility. Do you think this is a good time to start changing to a pension of this kind? Many thanks

Ann Greenwood, London

Adrian Boulding: It sounds as if you are not being given a choice in this matter. The high costs of old final salary pension plans have caused many employers to abandon them, and the latest wave are not just closing the final salary scheme to new entrants but moving existing staff over as well.

Whether it is a good idea or not, it’s the way the world is moving. And with all this choice and flexibility comes a lot of responsibility on you to manage your own pension.

Modern pension plans are not things that you can just buy, shut in the cupboard and forget about for twenty years. If you do that, you will probably be disappointed with the outcome.

I think you have two options. Either you can take much more interest in financial and investment matters, and manage the pension yourself, which many people find very stimulating. Or you can pay a financial adviser to do this for you. After the initial set up, he will only need to visit you two to three times a year to review investment progress and your ongoing situation. The important thing, particularly in current times, is to ensure that your pension choices are being managed.

I have a Standard life pension plan and the value has gone down by 35 per cent it is in managed fund would it be good idea if took it out and invested in SIPP as I seem to have done better in my portfolio then the Standard life fund managers? I am 51 years old. Thanks for your advice.

Raj Parmar, Solihull

Adrian Boulding: Fund managers sometimes behave like a herd of sheep, and all go down the same track together. This can be because their fund has a benchmark, they know their peers will be close to the benchmark and they don’t want to get out of line or financial advisers will tell clients to drop them.

If you decide to build your own portfolio in a SIPP, then I recommend a ”core and satellite” approach. Here you can make a large core holding out of index tracker funds, but UK and international trackers, which will deliver diversified investments at very low cost. Then supplement this with a selection of specialist funds according to your view of global investment opportunities. So if you feel that, say, China offers good long term potential, make a China Growth fund one of your satellite choices.

My wife and I have pensions with Zurich in the same managed Personal Pension Fund. Our plans statements show the value of our funds in two parts ie Capital Units and Accumulated Units. We took the plans out in 1991 at the same time. Over the course of 18 years my Capital units have shown an increase of about 2 per cent whilst my wife’s show an increase of 60 per cent. I am at a loss to understand why this should be and despite numerous enquiries I still have not been able to ascertain the reasons for this. Are you able to help please?

AJ Pegg, UK

Adrian Boulding: Capital units are a now old fashioned way that insurance companies used to collect charges. Typically the first two years of contributions were invested in capital units, and contributions after that into accumulation units. The capital units bear much higher charges than the accumulation units in order to pay for the financial advice provided at the time the policy was sold.

The most likely reason for the difference is that you are invested in different funds. If your pension is invested cautiously, perhaps in a with profits fund or a cash or bond heavy fund, the performance will have been slow but steady. Whereas if your wife has been invested in a more adventurous managed fund, it may have done much better over the eighteen years even if the last twelve months has been disappointing.

Other reasons could include changes you made to the plan. Increases in contribution levels may have triggered the need for more capital units, or decreases in contributions, missed contributions or a change of retirement age could have triggered penalty clauses under which some of your capital units may have been cancelled.

I agree that it is important that you should get to the bottom of this. I suggest that you approach The Pensions Advisory Service (TPAS) which is an independent organisation dedicated to helping people resolve pension problems. Their experts can liaise with Zurich to establish why the disparity has happened, and they will be able to explain it to you in a way that will give you confidence that the problem has been solved and you have not just been fobbed off. You can contact TPAS at

I have been retired for about three years. My previous employer has and is suffering a pension deficit. Does that mean my pension is unsafe? Thanks,

George Lee, Scotland

Adrian Boulding: Assuming that you retired at or after your scheme’s normal retirement age, then your pension would be covered in full by the Government’s Pension Protection Fund. However, although it will cover the current level of your pension, future increases would be restricted to indexation up to 2.5 per cent maximum, and then only on post 97 service. Your wife would be entitled to a pension of only 50 per cent after your death, even if your scheme had been more generous.

If however you have early retired and not yet reached your scheme’s normal retirement age, then the PPF would cover you only for 90 per cent of your pension, and only up to maximum of around £25,000 pa.

I have £5,000 in my current account and my ISA allowance is full for this year. However, I am behind on payments to my private managed savings account, which is effectively my pension. This has been hit hard in recent months due to the economic downturn. Would you recommend using money from my current account to pay into the managed savings account, or should I wait until I feel more secure about my job and regular monthly payments?

R Anderson, London, UK

Adrian Boulding: There is an important hierarchy to savings, which is to have rainy day money available for short term emergencies first, then to save for the medium term (sunny day money) and then long term for our retirement (twilight day money).

But this needs hierarchy can sit at odds with the rewards on offer. Cash in your current account is probably earning a very low rate of interest, whereas investing in a pension plan can offer you valuable tax relief and the long term rewards of buying equities at today’s low valuations could be very big.

Ensure that you have enough cash to meet your short term needs, then grab the pension opportunity before you are tempted to spend the money elsewhere.

Variable annuities seem to give the capability to protect savers and annuitants against stock market falls. But their charges seem to be very high. And I am concerned about the amount of commission that goes to the person that sells them. Could you set out the pros and cons of variable annuities?

Gerard, London

Adrian Boulding: The big attraction of variable annuities are the valuable guarantees that the charges provide. They enable you to continue to invest in the stockmarket with some downside protection, so all is not lost if markets turn South again. This is particularly important to pensioners, who otherwise have limited opportunity to rebuild savings lost to falling markets.

It’s because these guarantees are valuable that they are expensive. The insurer has to find counterparty in the market place that will carry the downside risks, and while markets remain volatile and uncertain these guarantees will cost a lot. You may feel that the cost is so high it’s not worth pursuing this vehicle.

You also raised your worries about commission, which I see as a healthy concern. Today’s rules require the seller to disclose to you the commission they will receive before you put pen to paper and sign the deal. I encourage you to have an open and frank discussion with the seller about this. Talk about the financial advice they have given you, and the amount of behind the scenes work they have done for you. You are receiving professional advice on a complicated matter, so you should expect to pay appropriately for this, but if during the discussion you feel the amounts are too high - perhaps because you are buying a large annuity - then ask for a commission rebate. Your adviser can waive some of his commission, and show you how this is invested back into your plan as extra benefits or lower charges.

My pension fund is invested into 17 different funds with coverage across industry sectors and geography’s. I have exposure to Europe, UK, Asia and the US and small companies and global commercial property. Is now a good time to re-balance the mix of funds and which areas should be sold off and which bought? Or should I sell and keep cash?

Tony Martin, Weybridge, Surrey

Adrian Boulding: Two of my favourite sectors at the moment are oil and overseas cash. As the world emerges from recession, demand for oil will increase, and we will be ever more determined to extract even the last drop of oil from hitherto uncommercial places. There could be great opportunities for companies in the oil technology businesses that help extract the black stuff. But choose a fund rather than a single company as individual winners will be hard to predict.

The attraction of overseas cash is that sterling, and other Western currencies, could be hard hit if the quantitative easing gets out of hand. By printing money, Western Governments are moving into unknown territory. If they print too much, Governments will damage their currency. A fund that invests in overseas currencies, particularly outside the Western block, could offer some protection against this risk.

Would you agree that those over 50 who have suffered substantial losses are now faced with a dilemma - take more risk in an attempt to gain value recovery or take less risk and face up to the prospect of an eventual diminished revenue stream?

Andrew Litchfield, London

Adrian Boulding: I think we have to accept that the market falls we have seen are permanent. Asset values will improve from here - my economist colleagues are forecasting around another 9 per cent rise this year - but they won’t be racing back up to the high levels we saw before the crash. Those levels were artificially high and were built on an unsustainable amount of debt. The countries with big surpluses like China and the Arab nations have learned their lesson the hard way and will not lend so willingly to us again.

As you say, many people will have suffered losses in their pension schemes, and the over 50’s have less time to rebuild those losses than younger people. I would advocate a balanced approach going forward, so retain some market risk as many equity valuations look attractive today, but keep that risk in proportion. You may also be able to rebuild your pension by saving more or working longer, but don’t risk money you can’t afford to lose in a vain attempt to make up yesterday’s losses.

In view of the poor performance of the pensions industry, not just during the ’crisis’ but previously, do you think it likely that the government will relax rules on having to buy annuities rather than allowing people to manage their own money through 100 per cent cash release as happens in New Zealand? This can hardly be seen as more risky than being locked into annuity purchase with everyone taking a cut before the poor old pensioner.

John Burke, Malaga, Spain

Adrian Boulding: The good news is that these rules have already been relaxed. For pensioners below age 75, income drawdown is available as an alternative to buying an annuity. You have to accept the investment risk yourself, but you retain control of your pension pot and the levels of income you choose to take from it.

Income drawdown stops at age 75. The Government expect people to have purchased an annuity before then, because by this age the primary need of most pensioners is to secure an income for life, which uniquely is what an annuity does. I have talked to Ministers about this issue, and it is their clear view that pension savings were provided with valuable tax relief for the purpose of securing a lifelong income in retirement, and to ensure that this public money is spent in the manner it was provided for they will be retaining the age 75 rule.

The exception to the age 75 rules is another option called Alternatively Secured Pension, or ASP for short. This concession was allowed by the Treasury to meet the needs of pensioners who have a religious or moral objection to buying an annuity as they don’t want to profit from a fellow human’s early death. (With an annuity, those of who live a long time benefit from the payments that those who died early missed out on). The ASP is available to everyone, religious objectors or not, but it’s terms are not particularly attractive as Government quite deliberately want annuitisation to remain the preferred option for the reasons above.

I am 62 and find that I can live quite well on my current income and wonder if I would do better to delay the taking of all or any of my future pensions? What are the risks and rewards of delaying a pension?

Tony Cave, Sutherland, UK

Adrian Boulding: Generally speaking, if you delay taking a pension then it will give a larger income when you start drawing it. Especially if you continue to contribute to the fund in the meantime. With your State pension you will have a choice - you can either take a larger pension or you can take the deferred payments as a cash lump sum when you are ready to start your pension.

The main risk of deferring a private pension is an investment one. If you are in a money purchase scheme with assets invested in the stock market, you could do well by deferring your pension if markets continue to recover. But the reverse could happen if markets fall. You can largely avoid these risks by moving your fund into long dated gilts and bonds, which will move broadly in line with annuity rates.

There is a further risk, which is that if you don’t get on and spend the money then you never will. In the early years of retirement, pensioners can hope to be fit healthy and active, and so able to take up new pursuits funded by their pensions and accumulated savings. But in the later years, as health and enthusiasm wane, then most pensioners find that their expenditure drops away, often well below the level of their pension income. After age 75, you don’t even have to pay the licence fee to watch daytime TV.

I am former employee of, now defunct BCCI. Our pension fund was transferred to Legal and General. The last time I heard from the Company was more than 10 years ago. What are my chances of receiving a pension when I retire at 65 years? Please note that my employer was forced to shut its doors in July1991, therefore, no employee contributions would have been received after that date.

M. Tariq, UK

Adrian Boulding: When an employer collapses, one of the options the trustees of the pension scheme have is to wind up the scheme and secure the benefits with an insurance company. You would at that time have been informed which insurance company now held your benefits, and most importantly, what pension was now promised to you. This may of course have been less than your employer had been hoping to provide, but without continuing financial support from the employer, the trustees have just had to secure the best they could with whatever assets were in the fund.

Unlike the banks, insurance companies have come through the credit crunch unscathed. So you can still feel very confident that you will get the pension that was promised to you. Shortly before your pension becomes payable, you will hear from your insurer reminding you that they hold this pension for you and requesting bank details as to where to send the money.

But if you would like a reminder as to how much pension is promised to you, or you have mislaid the original paperwork, then do write in, quoting your national insurance number and date of birth. In the case of Legal & General, the address is Customer Services, Legal & General House, Kingswood, Tadworth, Surrey, KT20 6EU

I am now 65 years old, but due to very low annuity quotes I have deferred my retirement date by two years. Do think this is the best thing to do since I am still in full time employment?

Shri Skarve, London

Adrian Boulding: It will depend on where your assets are invested. If your fund is largely invested in gilts or corporate bonds, it will move in line with annuity rates. So even if rates do improve as a result of higher interest rates, then your fund value will have fallen by a similar amount, and your pension will be about the same. But if you are invested in cash then you would benefit from an improvement in annuity rates, and if you are invested in equities then you might get a double win if the stock market continues to improve and annuity rates get better.

Economically, it depends on who you believe. The Chancellor is targeting a stable environment with continued low interest rates and low inflation. If he achieves this, then annuity rates won’t move much over the next two years anyway. But if the quantitative easing (or printing money, to use the common parlance) runs away from him, then we could have a period of high inflation and high interest rates, and you might be very glad you didn’t buy an annuity today.

As you are still in work, you are fortunate to be able to have this choice - many people don’t.

I am just coming up to 65 and have several pension plans and a fairly significant investment portfolio and no debt. The present annuity rates do not look very attractive and I have been looking at an option offered by Hargreaves Landsdown of an income drawdown. This could provide a slightly higher income and leave me in control of the invested capital, which I would prefer. I realize that this is riskier than an annuity, but would welcome any comments on these alternatives.

Damien Abbott, UK

Adrian Boulding: Many people are finding income drawdown an attractive option at the moment. As well as the higher income and ongoing control of capital that you correctly cite, it also enables you to delay the decision as to what sort of annuity you want to purchase. Once you have purchased your annuity, that’s it, you are fixed for life, and there is generally no going back. So it can be a good idea to delay that decision until you have retirement well underway, and you are in a better position to make long term plans.

It sounds as if you are sufficiently well off to be able to take the extra risk. But on the other hand, as you also have a significant investment portfolio, then you might take the view that buying an annuity with your pension fund is a good way to introduce some diversification to your total holdings, so that all your eggs are not in one basket.

If you are happy with continuing equity market exposure, then you will find a good number of pension providers offer income drawdown, as well as the popular Hargreaves Lansdown option. But if you are looking for peace of mind in retirement and want to stop worrying about the markets are going up down, then steer clear.

I converted my personal pension plan into a lifetime index linked annuity with the Pru in 1996. How vulnerable are the annuity payments to default?

Mark Cheyne, UK

Adrian Boulding: Fortunately you can sleep soundly on this one, as insurers are very different financial animals from our banks that got themselves into such a mess.

Banks tend to borrow short and lend long, which is why when the overseas credit markets dried up they found themselves struggling to meet their short term obligations, and the queues of worried depositors formed outside their branches.

Insurers however are able to match the duration of their assets and liabilities. Prudential will have backed their annuity liabilities with gilt edged stock and good quality corporate bonds. Today’s market price of these bonds may well have fallen, but that won’t worry the Pru as they are not intending to sell them. They will have bought bonds of long duration and locked them in the cellar, intending to hold them to maturity. So they are not exposed to the same crippling pressures that banks are.

If the unthinkable did happen, and a big insurer hit an iceberg, then your annuity is protected by the Financial Services Compensation Scheme. This pays out the first £2000 of policy value at 100 per cent, and the rest at 90 per cent. Importantly, this scheme has no upper limit to it, so no matter how large your annuity is, it is all covered.

US expert: Susan Breakefield Fulton, founder of FBB Capital Partners

My wife and I are in our 50s and our youngest kid is just about to finish high school – the older one is already in college. Considering the pension problems that many US citizens find themselves in, we are thinking of starting retirement plans for our kids now, before they start working. Is this a good idea? And are there any tax-deferred saving plans we can use on behalf of our kids?

Bert Weitzman, Chicago

Susan Breakefield Fulton: Do either, I assume from your note you have two, of your kids have part time jobs or jobs in the summer? Or, alternatively, do either of you or your wife have the ability to ”employ” them at your business? The best choice for retirement savings is to start an IRA for each child BUT it needs to be funded with earned income. I have a number of clients with working kids who gift the children money to fund an IRA and let the kids spend what they earn. Just moving buckets but it works! It’s a GREAT idea! The other tax-deferred savings plans I am aware of our ”insurance” products and carry high fees and have limited access; not my choice for investing.

I have a few of my own investments, which I run in my spare time - some invested for growth, some with a bit more risk. Should I move into a formalised 401k if they are basically going to flatline for the next few years?

Rob, NY

Susan Breakefield Fulton: Are your investments currently within a tax-deferred vehicle or would moving them to a 401k allow them to grow tax-deferred till retirement? I prefer self directed IRAs to 401ks so if that is a choice it would allow you to keep doing your own investing, defer taxation and not pay big fees. We don’t know if the markets ”are going to flatline for the next few years” so I would not take an ostrich approach in any case! You need to always be invested though you may change your asset allocation to reflect the current situation.

I am a 33 year-old self-employed graphic designer and due to the shortage of work right now I have not thought at all about retirement plans or saving for the future. If I start out investing now will it be too late? And how do I know where to begin?

Stacie, Boston

It is never too late to start saving for retirement. The power of compounding was said, by Albert Einstein, to be the only miracle he had ever experienced! Start putting away a monthly amount in an IRA...most brokerage firms will let you ”dribble” money in if you use their mutual funds. I would pick an S&P index fund and a discount broker (Schwab, E-trade, TD Ameritrade) and set up an automatic withdrawal. You want to keep costs LOW and contributions REGULAR. If you don’t buy your future no one else will!

I am 67 years-old and self employed still working and collecting social security. I have $350,000 in my retirement plan ($300,000 on fixed and $50,000 on mutual funds). My wife is 64 still working and she has $600,000 on her 401k plans ($50,000 on fixed and 100,000 on growth funds).What is the best way to protect your principal and earn a five to seven per cent income?

Younes Soufi, USA

Susan Breakefield Fulton: The rule of thumb is that you can spend approximately four to five per cent of the value of your portfolio annually when you retire. You also need to earn, on your portfolio, at least two per cent above inflation and taxes. With the ten year treasury earning three and a half per cent you will need to allocate at least 50 per cent of your portfolio to equities if you hope to achieve your goal…

Given the volatility in the equity and bond markets, has there been any change in thinking about what the proper distribution between stocks and bonds should be for people near or in retirement?

Bert Silverman, US

Susan Breakefield Fulton: I think that the recent market sell-off has definitely affected the level of risk investors are willing to take in the securities markets. Unfortunately, both bonds and stock were dramatically affected by the volatility in 2008. For most investors having at least ”your age” in bonds makes sense and research indicates that up to 50 per cent in bonds does not affect long term return dramatically and DOES dramatically affect your portfolios volatility!

The bigger issue in regard to asset allocation is not how near you are to retirement but what percentage of your assets you will need to draw on annually to live when you retire. If you will need less than four per cent of the value of your portfolio annually then you can lean toward a larger equity allocation. If you will need more than four per cent then you need to grow your cash and bond allocation in lock step with the increase in draw down. If you need more than six per cent of your assets annually then you need to consider whether this is a good time for you to retire; you may need to keep working at least part-time to achieve your lifestyle.

I am nearing 63, still working in a professional non-profit job, have about $180,000 in my IRA (50-50 stock & bond funds) and another $150,000 (80-20 bond and stock funds) in savings, and am still contributing 10 per cent of my income to a 403(b) plan, about $600 a month. At 65, I will get about $2,000 in Social Security and another $285 from a public pension (which started at 55). If I want to retire at 65, would I be better off drawing down my savings first and then my IRA to supplement my income, or invest about $250,000 in a fixed-income annuity paying about 5 per cent a year?

J. Ram Ray, Silver Spring, MD, USA

Susan Breakefield Fulton: An annuity is not an investment; it is a promised stream of income. To get the promise you give up access to your cash, depend on the good will and financial security of the selling insurer and pay a huge commission to someone. I would never let some one lock up my money for the promise of a future; unless of course it was the government and had the ability to tax others to pay its promise! I lived through the implosion of a number of annuity insurers in the early 1980’s and it left me jaded. My choice would also be your first choice: savings first and IRA when you are required to begin to draw it down.

My 83 year-old husband and I are retired. On March 9 we made a mistake and panicked. I sold most of our holdings of equities and preferred stock, an action that locked in our large losses. We are left with our large portfolio of bonds and cash equal to 30 per cent of our entire portfolio. I do not want to be 100 per cent in bonds. It seems to me that I am stuck unless the market within the next few years retests or comes close to retesting the low of March 9. I would not be surprised were the market to retest the low.

Nancy Wulwick, Vestal NY

Susan Breakefield Fulton: The glass is never only half is also half full. You and your husband have a large portfolio of bonds and the cash you received from the sale of the stock when you ”made a mistake and panicked” on March 9th. Your chance of buying at the ”bottom” of any market is problematic. So take a look at the stock market again and begin to nibble back into your stock positions. At your husband’s age, you probably do not want more than 30 per cent in stock in any case and there are still some compelling values in the equities market. Since we never ”know” I would suggest that you begin repurchasing by taking 5 per cent of your ”equity allocated” cash in three or four week intervals to test the waters.

What percentages of emerging markets and precious metals do you expect to be necessary in your future portfolio allocations? Which of the emerging markets vehicles (such as stocks, bonds, currencies), and which of the precious metals vehicles (such as mining stocks, exchange-traded funds, or physical stock) would be most congruent with your overall recovery strategy?

Philo Farnsworth, US

Susan Breakefield Fulton: We are more sanguine about moving percentages of our portfolios into commodities, including precious metals, than into emerging markets. The world is now ”flat, hot and crowded” and emerging markets seems to be mirroring the larger markets but with more volatility. We have moved about five percent of portfolios into commodities using un-leveraged ETFs.

Why buy a pension when the very currency it is denominated in devalues? The gains are often offset by the inflation making only the pension companies rich. And rich they are! Pensions themselves are risky as they are subject to government regulation, market volatility, currency devaluation and tax. It almost seems a vain hope that it will work out in the end. Why bother? Would it maybe simply better to buy gold every month…?

James Howard, US

Susan Breakefield Fulton: I am not a gold bug. And if you plan to retire in the country in which you hold your pension, then worrying about currency devaluation also seems fruitless. Where are you putting the gold, and how do you plan to realise a profit in it if you need ”money” and what use is it, to anyone, while it sits in where-ever you have it? If you are worried about ”outside forces” impacting the value of your assets, remember the Bass brothers and their manipulation of the silver market. China buys treasuries, not gold, because, if they horded their treasure in gold they would ”make the market” and have no way to liquidate. A diversified portfolio is always the safest choice.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from and redistribute by email or post to the web.