What is the Best Retirement Investment Plan for You?

Tuesday, January 16, 2024

When you are still working, but planning for your retirement, your investment strategy may be quite different than when you actually retire.

Typically when someone consults financial investment advisers for planning their investment strategy the advisers will initially make an assessment of your tolerance to risk (how comfortable you are with market movements over time) known as a Risk Profile.

When you are still working, but planning for your retirement, your risk profile will likely be different than when you actually retire. If you have a few, or several years, to go until retirement there is still time to take some calculated risk within the share market. You can continue to build capital in your portfolio by not only receiving capital gain, but also earning dividends and reinvesting those to take advantage of the cumulative effect. Sometimes investors have high tolerance to risk and choose to invest in significant high-growth assets – ones that could potentially maximise their return over a longer term view but also have higher downside risk.

Upon retiring, your investor profile may change to one of lower risk, maintaining capital and providing a regular income over the long term.

Some people prefer a very low risk situation no matter where they are along the retirement time-line – everyone is an individual and it is important to invest according to your needs so you feel confident and relaxed about your investment plan.

In assessing your tolerance to risk your financial investment advisers will ask you a series of questions and based on your answers will place you in one of these broad categories:

Defensive Investor:  Your risk must be very low and you are prepared to accept lower returns to protect capital. The negative effects of tax and inflation will not concern you, provided your initial investment is protected.

Moderate Investor: You are seeking better than basic returns, but the risk must be low.  You are seeking to protect the wealth which you have accumulated, and may prefer less aggressive growth investments.

Balanced investor: You are seeking a balanced portfolio that works towards medium to long term financial goals and require an investment strategy which will cope with the effects of tax and inflation. Calculated risks will be acceptable to you to achieve good returns.

Growth investor: You are prepared to accept higher volatility and moderate risks and your primary aim is to accumulate assets over the medium to long term. Your portfolio may include more aggressive investments, earning some income but focussed predominantly on capital growth.

High Growth investor: You are prepared to compromise portfolio balance to pursue potentially greater long-term returns. Your investment choices are diverse, but carry with them a higher level of risk. Security of capital is secondary to the potential for wealth accumulation.

Once you have agreed on your comfort level with risk, then the financial planning for your specific investments can begin. The investment strategy will depend on the current state of regional and global markets combined with a professional view of the medium to long-term movements according to a range of experienced financial analysts.

It is best to consult with a qualified financial investment adviser who can expertly assess your tolerance to risk, your investment timeline and personal situation, one who is educated in a current view of the markets, so that they can design a tailor-made investment plan for you. Maher Digby Securities Sunshine Coast are specialists in retirement investment planning. We provide excellence in personalised, professional financial services. Our advisers can work with you to design the best retirement investment plan for your specific circumstances. 

For more Information contact Mark Digby at Maher Digby Securities Pty  Ltd - Financial Advisers – AFSL No. 230559 – Ph: 075441 1266.  This document was prepared without taking into account any person’s particular objectives, financial situation or needs. It is not guaranteed as accurate or complete and should not be relied upon as such.Maher Digby Securities does not accept any responsibility for the opinions, comments, forward looking statements, and analysis contained in this document, all of which are intended to be of a general nature. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend consulting a financial investment adviser.