Planning for a comfortable retirement
JOHANNESBURG – Amid all the uncertainty created by trade war(s), Brexit negotiations, and the noise around possible land claims, planning for a comfortable retirement can be scary for investors.
However, making impulsive investment decisions based on these current events could have a negative effect on retirement savings.
History has shown that over time investors can weather the storm by not losing money in a downturn and by taking advantage of the upside when the market turns.
Investors who do not make impulsive decisions will be better placed to meet their long-term objectives. But, of course, that may be easier said than done. That is why we always advise investors to partner with financial experts.
Here are five ways retirement fund members can stay on track in their retirement planning:
- Make sure you are diversified: Diversification remains one of the most important tools to reduce risk in investments. Make sure that your investments are diversified across countries and asset classes – this will help to manage the political and socio-economic risks locally.
- Stay the course: Throughout the history of financial markets there have been periods of turbulence and uncertainty. Just in recent history, markets have been through some severe shock events like the small-cap bubble, the Asian financial crisis, the tech bubble and 9/11 – and through all of these events, investors have managed to weather the storm and not lose money by staying the course. To help take the emotional aspect out of your investment decisions, create a long-term investment plan and stick to it.
- Make sure your retirement portfolio is making use of an effective life-stage strategy: a good retirement strategy is positioned according to the life-stage of the investor and not the current market conditions. A life-stage retirement plan is one that is designed to adjust the asset allocation to have a higher allocation to equities when retirement is many years away, and typically hold a decreasing allocation to equities as retirement approaches.
- Use the tools available to you: Investors have access to may very useful tools when it comes to investments these days. Technology has enabled fast, simple record-keeping so that investors can have real-time access to their investment information – and some robo-advisers can even calculate exactly how much you need to save now to meet your retirement objectives. Nedgroup Investments has launched an automated online investment platform that calculates exactly how much an investor should save, recommends the best investment products to invest in to achieve that – while taking tax considerations and efficiencies into account.
- Stay informed: Many investors have little to no idea of the current state of their retirement planning. By staying informed and reading each fund statement and update you receive, you are taking very good steps towards a healthy retirement. Maintaining contact with your financial adviser is crucial as you can discuss any concerns or issues you have as you go and also avoid making impulsive decisions by using them as a sounding board.
Have a long-term investment plan that is linked to your objectives, stay educated about your financial portfolio and rely experts to remove emotion from the decision-making.
Quaniet Richards is the head of institutional at Nedgroup Investments.
The views expressed here are not necessarily those of Independent Media.
– BR MONEY