How to create a second retirement fund

While many retirees rely on annuities for income, having a reliable share portfolio is a handy back-up. Phil Oakley explains the best way to build one.

For most of us, saving for retirement comes in two parts. There's the years of working to build a pot of money. Then, when you retire, you have to turn this pot into an income to live on. Traditionally, the way to do this is to buy an annuity an income for life with your pension pot.

These can be good if you get a decent rate and you live long enough. But it makes sense to have back-up. This is where an individual savings account (Isa) is very handy. Unlike a pension, you don't get tax relief on the money you put into an Isa. But once it's in there, any money you withdraw is free of tax. So all you need is to find a cheap and effective strategy that allows you to build up your Isa savings, then pays a decent tax-free income when you need it. Thankfully, one exists it's called dividend compound investing'.

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Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.

 

After graduating with a MSc in International Banking, Economics & Finance from Liverpool Business School in 1996, Phil went to work for BWD Rensburg, a Liverpool based investment manager. In 2001, he joined ABN AMRO as a transport analyst. After a brief spell as a food retail analyst, he spent five years with ABN's very successful UK Smaller Companies team where he covered engineering, transport and support services stocks.

 

In 2007, Phil joined Halbis Capital Management as a European equities analyst. He began writing for MoneyWeek in 2010.