How should I invest my Approved Retirement Fund?

Financial reserve approved retirement fund

Choosing a suitable ARF Fund in which to invest your retirement fund can be a daunting prospect at the best of times. Believe or not choosing an investment fund or strategy over the past decade has been quite easy as pretty much any ARF or investment fund you picked would have made some kind of positive return for you.

However, we are entering a new phase in 2021 and beyond, and investment decisions will become more problematic for many reasons.

1. Fixed Rate Deposits

Leaving ARF money on deposit or in cash will lead to a loss and can’t be considered to be a low risk strategy anymore. Most cash and deposit funds now offer negative interest rates on top of annual management charges on the ARF itself.

2.  Financial Markets & Equities

Believe it or not most financial markets have been performing very well since about 2011 even allowing for the dramatic crash and subsequent recovery in 2020 due to the pandemic. However financial markets and asset classes are cyclical and trying to predict when the next crash might happen is a futile exercise. The only certainty is we are entering into a period of change which may be good or bad in the short term.

3. Property

After years of substantial property price inflation (especially in major urban areas) property as an investment, whilst still attractive, may be starting to lose some of its obvious appeal. Many property funds are invested in commercial property (Offices, Industrial Units and Retail Units). The most dramatic financial effects of the pandemic have been experienced in property funds as the nature of the office and retail environment experiences dramatic change.

If all that were not enough, ARF investment decisions present a unique set of circumstances because

  • most ARF investors will require some level of income from their ARF for the rest of their lives.
  • most ARF investors are at a stage of their lives when capital preservation and modest investment growth is all they require
  • most ARF investors will be, in some way, financial dependent on their ARF to ensure they have enough money to do all the things they plan on doing in retirement.
  • Most ARF investors will not have and do not want to have to venture back into employment / self-employment in order to provide for more income

The importance of getting the ARF investment decision making process will be key for your future.

If you have any questions, you can call Joanne or Michael Coburn on 01 5267770.


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