Self Select
With Self Select, you can choose where your retirement account is invested from a range of investment options. These options have different aims depending on where they invest. For example, some options will aim to significantly increase in value whereas other options will aim to protect the value of your retirement account.
There are four main areas where the Self Select options invest – these are known as asset classes.
| Asset Class | Risk and Reward |
| Equities are shares in companies that are bought and sold on the stockmarket. The price goes up and down depending on how well the company is doing and how many people want to buy its shares. | Equities offer the potential for significant growth over long periods so they could boost the value of your retirement account and help to reduce any damage caused by inflation. However, equities can go up and down in value dramatically over short periods of time. |
| Bonds are loans to a company or government. The company or government will pay a fixed rate of interest on the loan and repay the full amount at the end of a set period. | Bonds go up and down in value but not as much as equities do – they offer a degree of stability. There is a risk that the organisation could fail to pay interest or repay the loan. Investing in bonds means you give up the opportunity for the higher returns that could be available with other investments. The value of your retirement account is also more likely to be eroded by inflation. |
| Property involves investing in business premises, such as office blocks and shopping centres or in the shares of property companies, such as builders. | Property has the potential for good levels of growth in the long term. Historically property has been less volatile than equities but more volatile than bonds or cash. |
| Cash means leaving money on deposit, as you would in a bank or building society account. | Cash investments are secure – their value is unlikely to go down, which makes them suitable for short-term saving. However, the returns on cash investments over long periods of time tend not to be as good as you could receive from other investments. |
Action Point
Find details of the Self Select fund options online at http://mychoice.towerswatson.com or in Fund factsheets