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Learn To Think Like An Investor And Secure Your Income In Retirement

Screen Shot 2015-03-09 at 2.41.30 pmUnless a person is expecting to inherit a million dollars or more, the fact is that the only way to ensure a happy retirement is to plan for it. This planning necessarily involves investing for the future (cash simply won’t cut it as a long term option). For many, the idea of being an investor fills them with fear and dread. However, with a little financial education it is entirely possible to understand risk and the need for asset diversification.

Think like an investor, profit like an investor

Fear of investment markets is why people make the mistake of not investing for their future. People who think like an investor understand that markets go up and down. Over the longer term these fluctuations present investment opportunities, and whether investing actively or passively this realisation is the first step to profiting from investment markets.

Active investors may make their own decisions, but it is equally as valuable for passive investors to understand the principles behind wealth creation. Only then can a person investing for their retirement work successfully with fund managers, financial advisors, and wealth managers to build the desired financial future.

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Building a nest egg for income

The ultimate aim of a retirement nest egg is to produce the necessary income to support the desired retirement lifestyle. In this context, the investment decisions made today directly impact the potential income of tomorrow and throughout retirement.

However, today’s retirees face a problem that previous generations did not experience: longevity. Just a few decades ago, a new retiree could allocate all their nest egg to create income, safe in the knowledge they would not outlive it. That is not the case now. The possibility of living well into the 90s necessitates a portion of a retiree’s nest egg to be allocated toward growth. In a word, investment for, and in, retirement needs to be dynamic.

Know your assets

Different assets provide investors with different types and levels of return. Balancing these assets within a portfolio requires these assets to be held in appropriate proportions to meet short and long term objectives. Asset allocation is a key strategy for growing and maintaining a nest egg.

  • Growth assets

Stocks and real estate may be higher risk, but they also provide higher potential returns. Short-term, investments in stocks can be extremely volatile. Both stocks and property offer the two types of investment return: capital growth and income (shares paying dividends and property paying rental income). In retirement this duality of return provides the opportunity to accumulate wealth while also receiving an income, and the capacity to beat inflation provides some insurance against depreciation of spending power.

  • Fixed interest securities

These investment products provide a fixed amount of income, though unless index-linked they provide no protection against inflation. They are generally considered safer than shares, though they can still fluctuate wildly in adverse market conditions. Asset allocation strategies tend to concentrate on holding lower levels of fixed interest products at the early stage of investing for retirement, and then moving a greater proportion of a retirement portfolio into fixed interest as retirement approaches.

  • Cash and deposits

Term deposits and cash accounts provide immediate access to emergency funds. As with fixed income products, allocation to cash tends to rise as retirement approaches and the need for emergency cash rises (for example, for medical expenses).

  • Managed Funds

Managed funds vary widely, offering professional management of investment capital in line with an investor’s needs. These funds can be targeted to geography (for example, Australian markets or European funds), asset class (for example, shares or commodities), or any combination thereof. They can include real estate, shares of different types of companies, fixed interest products, and investments from different countries and continents.

Screen Shot 2015-03-09 at 2.41.37 pmOur series of free reports brings retirement investing into focus. They will help you to identify your needs, the risks to your long term wealth, and how to think like an investor and create a wealthier and stress free retirement. Your nest egg will need to provide you with the income you need in retirement, and then work to make sure this income doesn’t lose its spending power. Download the free full six-part series today, and take a step closer to a financially secure future.


Look forward to a brighter, and earlier, retirement by getting our full report

Get Our Full Report:Can You Afford NOT To Be An Investor?

Or book a free Strategy Session through the form on the right and you’ll get access to our Successful Retirement series “Can You Afford NOT to be anInvestor”
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