SAVE YOUR RETIREMENT… BUCKETS ARE THE ANSWER!
It’s amazing how a few weeks can feel like a few months… It feels as though we’ve been living through this coronavirus nightmare for a long time already!
I’ve been working in financial services since 2002, so I’ve seen a few financial crises during those two decades and in that time, I’ve learnt a lot. Not only a lot about how investment markets work, but also how human emotions work.
With all the craziness going on at the moment, many people are understandably concerned about their retirement savings. Sadly, many people are making the wrong decisions in how to deal with this crisis, acting on emotion and not realising the long-term implications of their decisions.
I love helping people get their financial futures on the right track but also helping them make sure they don’t derail from that track when the going gets tough. I can guarantee you this won’t be the last time we see dark economic times… in fact, I guarantee all my clients there will be times when their money will go down. Moments like these are a good opportunity to remind my clients why their money is invested the way it is.
Many people will be finding themselves simply sitting in a ‘balanced’ fund within their superannuation. This can be particularly dangerous for those in the retirement risk zone, that is, five years either side of retirement.
As you move closer to retirement, at retirement and during retirement, it’s important to put some strategy behind how your retirement savings are set up. A retiree with all their money sitting in a balanced investment option in retirement would mean that right now they are being forced to sell shares at the worst possible time in order to meet their income needs.
Sadly, many people are flooding super fund call centres to move all of their super savings to cash, robbing themselves of seeing their money recover when things go back up again… which they will!
A better strategy is to break up retirement savings into short, medium and long term ‘buckets’ to ensure that when something like this happens, there is no need to be selling out of growth assets (i.e. shares and property) while they are down.
This type of strategy ensures that when a downturn occurs, those growth investments have time to recover.
While nothing can protect us from feeling some emotions when we see our life savings going down, it’s incredibly reassuring to know that when it does happen, a strategy had already been put in place to deal with it.
Now, imagine if that strategy was combined with saving thousands of dollars a year in investment fees!
If these sound like the sorts of things you want when it comes to your retirement savings and you value independence when it comes to advice, then head to wealthtrain.com.au and book an online appointment today.
There is no mistaking the seriousness of the coronavirus crisis, both from a health and economic perspective. However, the decisions you are making right now will have a huge impact on what your future looks like in 5, 10 and 20 years from now.
Stay safe!
Daniel
If you’d like to find out more about how INDEPENDENT financial advice could help you manage cash flow, pay off the mortgage faster, get the most out of super and invest wisely, then get in touch on 0411 484 464 or head to wealthtrain.com.au.
Daniel McGregor is the man behind Wealth Train and is a member of the Independent Financial Advisers Association of Australia. This advice may not be suitable to you because it contains general advice which does not take into consideration any of your personal circumstances. All strategies and information provided are general advice only.
Daniel McGregor and Wealth Train are authorised representatives of Independent Financial Advice and Education AFSL 520963