Being an investor in the current financial environment is like taking a ride on a fast and scary rollercoaster.
What is up today is down tomorrow, and when you think the ride’s about to stop, the Reserve Bank announces another interest rate increase. This doesn’t change the fact that planning your retirement investments should continue, so we’ve looked at the best retirement planning options for retirees.
First things first - inflation
Whatever investment design you make as a retiree must consider potential inflation risks. As the cost of living increases, the effect on retirement investments can be significant, as these amounts will not replenish.
Looking at a lump sum investment that can earn you a retirement income is an excellent way to weather inflation fluctuations over extended periods. Be sure to work with your financial planner to determine how your retirement strategy will fare against inflation over a three, five and 10-year period, so you will know how to forecast and protect your retirement investment.
Term deposits
The great thing about term deposits is that they are generally lower risk and earn you fixed interest that is not affected by market performance or fluctuations.
However, where to invest in a term deposit requires industry knowledge and financial planning expertise to decide which term deposit investment is best for you, given the deposit amount, investment period and financial institution.
Stocks and shares
Stocks and shares are ways to own small pieces of a publicly listed company. They are generally larger corporations, and your yield is based on the company’s share performance.
Investments can be made by directly purchasing shares in companies, or by purchasing units in managed funds or accessing them through Exchange Traded Funds (ETFs), with assets allocated to a particular index, sector or commodity. Please keep in mind that returns can fluctuate and future performance is not guaranteed.
Combination of growth and defensive
A balanced portfolio of growth and defensive assets is often attractive to retirees to manage short-term income requirements while still enabling the long-term growth of the portfolio. Holding up to three years of pension payments in defensive assets such as cash or term deposits ensures that income needs will continue to be met without having to withdraw from growth assets that may suffer short-term losses.
Property
We’ve said it before and we’ll say it again (and again and again and again), property is a great high-yield investment over a long-term period and can offer significant returns that could prove invaluable at the time of retirement or as a form of stable retirement income.
Regardless of where you plan to invest, it is essential to build your retirement strategy with expert advice from financial planners, so contact us to make an appointment.
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