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27/02/20202 mins

What does financial independence mean to you?

In Spanish, the word for ‘retired’ is ‘jubilado’. Sharing the same etymological root as the English word ‘jubilant’, it brings to mind pensioners brimful of joy at having escaped the daily grind. Who wouldn’t be more willing to regularly set something aside if an exciting future where travel, garden improvements and wall-to-wall hobbies was the main feature of life.

Often, when those in the financial services industry talk about retirement planning, it can sound boring, dreary, or complex. At worst, it’s all of the above. Tax advantages and pensions legislation are essential, of course, but these topics don’t fire the imagination. We think the best starting point for planning retirement is to adopt an aspirational mindset. What lifestyle do you want in retirement? How can your future be more, well, jubilant? From there, you can create a plan that encompasses not only the necessities of life, but also some of the luxuries that you’ll have more time to enjoy.

Creating a path to financial independence

 Ultimately, a good pension in retirement affords you the luxury of financial independence. If the jubilados have been prudent, they can retire in good time and afford a comfortable lifestyle, free from financial anxiety. For those only starting to think about retirement, the key is to work out how much you can afford to set aside, whilst balancing short- and long-term financial goals. If you’re in doubt about your plan, we suggest speaking to a financial adviser.

Self-Invested Personal Pensions (SIPPs) are popular with those investing for retirement. They give access to a wide range of investment options for a portfolio. These include investment trusts, such as The Scottish. Our structure allows us to make long-term investment decisions and we have one of the highest dividend yields in the AIC Global peer group. Dividend income can form a substantial part of an investor’s total return over the long-term, particularly when the effect of compounding is included.

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Please remember that past performance may not be repeated and is not a guide for future performance. The value of shares and the income from them can go down as well as up as a result of market and currency fluctuations. You may not get back the amount you invest.

 Please note that SIT Savings Ltd is not authorised to provide advice to individual investors and nothing in this article should be considered to be or relied upon as constituting investment advice. If you are unsure about the suitability of an investment, you should contact your financial advisor.

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