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5 Alternative Ways to Fund Retirement

Research the Right Investment

Making arrangements for retirement and ensuring a secure investment for your money is a pertinent plan. It’s advisable to conduct some research in order to choose the right path for your personal financial situation. There are a variety of options to consider alongside a traditional pension when looking at saving for and funding retirement.

Property Bonds

Property is a favourable sector in terms of an astute retirement investment, with Property Bonds offering the investor the potential of sound returns in the UK market. Property Bonds provide an excellent way to invest in property, giving the retiree with no prior knowledge of this market an accessible and straightforward route into this prevalent sector.

Property Bonds are essentially loans; a legally binding agreement between the property developer and the investor and are often referred to as ‘loan notes’. Property developers secure finance from investors to buy land and/or to finance the construction work for planned developments. They are an alternative source of finance for the developer which offers the investor a secured return on their money, normally after a fixed term, once the construction is completed. This type of investment is known as asset-backed because the investors’ money is secured against assets that will be sold to return the investment, such as the land the property will be built on.

The contract between the investor and property developer will explain to what use the investors’ capital will be put; detail the assets against which it will be secured; state the annual interest due on the money invested; and provide a date at what point the investment will be repaid.

Investors can often benefit from a higher-rate fixed annual interest and the peace of mind and security provided by an asset-backed investment.

Enterprise Investment Scheme (EIS)

A UK government incentive to encourage private investors to channel their capital into small up and coming UK businesses through the application of offering tax reliefs, the EIS is an attractive tax prudent way to invest money towards a retirement fund. The investor can put up to £1,000,000 individually per year into qualifying businesses.

The idea behind the scheme is to gain investment for early-stage, high risk companies. For the investor, the scheme offers significant tax reliefs (specifics of which are dependent on the individual’s circumstances) in an effort to minimise the negative risk involved in investing, while increasing the potential favourable return on a flourishing, prosperous investment.

It’s crucial to invest in the right business when considering EIS as a retirement fund option and it would be shrewd to gain expert advice to find the best investment opportunity for your personal situation.

Innovative Finance ISA (IFISA)

The IFISA is a government scheme introduced in 2016 which enables an individual to use their annual ISA investment allowance to lend funds through the Peer-to-Peer lending market, commonly referred to as ‘crowdlending’. The attraction of this type of investment is the potential generous tax-free interest and financial gains.

Peer-to-peer lending, known as P2P, is a fast developing market operating in four major investment areas; property loans; small business loans; and personal loans. The fourth area of investment, introduced later, is debt based securities, whereby an investor can invest in a business by buying it’s debt, receiving a fixed rate of tax-free interest over a period of time.

This gives the investor wishing to supplement a retirement fund a variety of choices to consider when deciding where their capital might best be entrusted.

Investors can hold one Innovative Finance ISA account each tax year with the option of opening a new account with a different P2P lending site at the start of each new tax year.

As an individual you may choose to use all of your ISA investment allowance in an IFISA or divide it across several types of ISA investing, for example, IFISA, Cash ISA, Stocks & Shares ISA. It’s the investors responsibility to ensure the combined amount invested in any tax year is within the ISA investment limit, which is determined by the government annually. An investor may choose to only invest part of their allowance and can decide to invest in a single lump sum or in some cases in installments across the year. Deciding to use all of the annual ISA investment allowance potentially gives the investor the opportunity to conceivably maximise on their investment when capital is spent wisely, significantly increasing their ISA funds over time.


In terms of a retirement investment Buy-to-Let doesn’t hold the same attractive tax-free incentives as some alternative financial investment routes; but it can offer a secure and regular retirement income when capital is invested wisely in the right property in an area with a high letting yield.

Not only is the prospect of a regular monthly income a favourable aspect of investing in a Buy-to-Let property, there is the potential of making money if the house price increases in the future which could lead to a profitable lump sum should you decide to sell the property down the line. This, of course, can work the reverse way and the value of the property may decrease, but with rental properties in high demand and rental prices continuing to increase annually, it would be wise, under less favourable house price circumstances, to continue to rent the property out and continue to receive a regular monthly income from your investment.

It’s sensible to seek an expert in the property field and the Buy-to-Let market to advise you on the best property to invest in which will produce the income you forecast. Also vital to consider is the work involved in renting a property and the downside risk of rents not being paid on time or in full by the tenant, damage to the property, cost of repairs and maintenance and so on should all be factored in to your decision as to whether this is the best retirement funding option for you. Looking at the prospective return you could receive from a Buy-to-Let investment in comparison to the amount you could potentially receive from other alternative pension investments is an essential part of this decision-making process.

Select a Sound Investment Path

A combination of investment options may suit those who are willing to spread their capital amongst a variety of opportunities and broaden areas of financial interest. Research the pros and cons and the right type of investment opportunities for your own individual financial and life circumstances. A single, well-informed investment could also be the way to proceed, with the potential to offer a steady, regular attractive return or a profitable lump sum for your investment risk. It’s crucial to consider all of the upside gains and downside risks of each type of retirement investment and above all to feel both comfortable and right about your decision. The right retirement investment should be both an exciting and profitably rewarding experience. While you will be taking on some element of risk in most investment opportunities, it should above all be a financial decision which brings financial security and it’s important to get it right.


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