31 billion reasons why your retirement may not turn out as you'd hoped

According to recent research by Bestinvest there are no less than 113 'dog' pension funds (over £2.5 million in size) that are serial underachievers. The total amount invested in them is £31 billion! Their underachievement is likely to have a serious impact on their owners' retirement plans. Whilst I have some sympathy, everyone should have realised by now that financial planning is a process and not an event, so you need to regularly review your pension funds and the amount that you're putting aside each month/year or you could find yourself 'enjoying' a retirement on the breadline.

To give an example, even 3% underperformance each year can make a huge difference. A simple example may help. Let's say you put £20,000 into a pension today anticipating your retirement in 25 years' time and that you have an adventurous attitude towards risk. You might expect to achieve a 9% per annum return on your money which (ignoring charges for the sake of simplicity) would result in a fund of £215,570 when you retire. If you had picked one of the dogs, however, your pension fund would only have grown to £107,297, so you'd receive LESS THAN HALF the pension you might reasonably have hoped for!!

Do you have any dogs in your pension investments? Unless they are professionally reviewed on an annual basis it's highly likely that you do, so get them checked out now.

How to afford that luxury car

I'm regularly emailed with the latest contract hire and contract purchase deals for new cars. One of today's deals is particularly good -

Audi A6 TDI S-line for an £1,842 deposit and £307 per month for the next 23 months, based on 10,000 miles per annum.

These figures include VAT, so if you can claim part/all of it back then they're even better value.

The total payments for the car are £8,903 over the two years. The Audi's list price is £32,300.

So, what are they worth when they're two years old? Well, a 14,000 mile example of the Audi is on the Autotrader website at £17,690, a drop of £14,610. The £17,690 price is to buy it from a dealer so you can bet that he paid no more than £16,000 for the car - the real drop in value is close to 50% of list - over just 2 years!

If I was in the market for a new A6 I'd be going for the finance option - saves a lot of money and you can just hand the thing back no need to listen to any insulting offers for it - that fact alone is priceless! Of course, you could argue that the even cleverer thing to do is buy the used one. My own car was bought from a BMW dealer at 2 years old and at a discount of over 40% on the cost of a new one. It had 4,500 miles on the clock!

It's not just Audi - BMW and Mercedes are at the same game. So if you're in the market for a new luxury German car at present - seriously consider financing it - you could save a fortune!