The image of your James-Bond-type character poised at the roulette wheel, ready for that final double or nothing spin is not one we usually associate with our retirement.
And, to a large extent, with good reason! But are we people being too conservative with our retirement investments for the current low interest rate environment?
“The biggest risk we all face is running out of money and outliving our savings”, says Jason Andreissen from StatePlus. The only real way to negate that risk is to fight against inflation. The only way to fight against inflation is with growth-style assets. And that inherently means a little bit of risk.
So how to we embrace our inner Bond in a responsible way? Here is Jason’s best advice:
Don’t chase returns that are too good to be true. In this current low interest rate environment, you’re unlikely to get a 10% return. If this is what’s advertised, you’re right to pile on the skepticism. The old adage “if it’s too good to be true it’s probably not” definitely applies.
Invest in what you understand. Can you explain your investments to your partner or a close friend and have them understand you? If so, great. If not, it’s either time to study up or switch up your strategy.
Focus on cash flow, not nest egg. The total value of your investments moves up and down, but If you’re set up well in your day to day, you’ll be in good stead. You might not need to calculate your exact monthly spend but have at least some idea.
Balancing short term with long term. Invest in quality assets that are diversified. Separate the money you might need in the short to medium term and invest that conservatively, but diversify for the long term.
Don’t Panic. Going through the GFC taught us a lot. If things take a dive, there is a strong impulse to cut and run, but if you pull the plug on everything, you likely won’t participate in the market recovering.
For more on each of these pieces of advice, have a listen to the podcast, and for the best advice and plans no matter what your financial situation, see our sponsors StatePlus.