Existing clients can use these links to log in to the Infinity dashboard. Not a client? Why not get in touch to find out about our services.
If you are investing for your retirement, you are apparently in the minority and can give yourself a big pat on the back. However, one huge risk that retiree investors face is running out of money. If you spend all your working life accumulating enough wealth to have a comfortable retirement, it would be a tragedy if you come up short. Here are five considerations to bear in mind to minimise the risk of this happening.
Projections made by the UK Office for National Statistics indicate that someone in their 50s will likely live until they are 82 or 83, although life expectancy is increasing all the time as medical advances are made. It is worth bearing in mind that those are average figures too – some people will not make it to their eighties but others will last a century or more on the planet. Health and hereditary factors will play a part but it would be a big risk for anyone to assume that they won’t last past average life expectancy. A wise financial plan will leave you with enough funds to keep you comfortable for a whole lot longer.
Historically, equities have produced an average return of 10% and you might therefore assume that taking 10% from your investments per year is playing it safe. However, that figure is reached by averaging out highs and lows over a very long period of time, and, as we have seen above, trusting to averages is unwise. When the market is experiencing a downturn of say 20%, taking 10% out of your fund will have a significant negative effect on the value of your investments – you would need a subsequent gain of 39% to regain the same value.
The silent enemy of inflation can have an extremely damaging effect on your pension pot if you are not careful. Over time, inflation can decrease the value of your savings and investments and consequently your purchasing power. Currently, inflation is low and predicted to remain so in the US, however there is no guarantee that it will not rise to the highs seen in the 1970s and early 1980s – it peaked at 13.58% in 1980. Over the last 100 years or so, inflation has averaged at around 4%. Based on that figure, if you squirrelled $500,000 away under your mattress today, in 30 years time it would be worth just $150,000. The return on your investment must exceed inflation to simply hold its value.
Everyone is different. Some investors will be looking to increase the purchasing power of their assets while others may be content to maintain their value. You may be planning to leave assets to your children or have no desire to leave anything behind. The strategy you adopt will depend on these factors and should take into account your tolerance to risk. If your requirements and goals don’t tally you might need to adjust one or other of them. For example, if you are not meeting targets, you might need to look for investments offering a higher return, which will inevitably require you to take a greater risk.
Diversification is the cornerstone of all investment portfolios. Putting your eggs in several baskets will spread your risk and ensure that losses in particular areas are balanced out by gains in others. Diversification across asset classes to create a balanced portfolio encompassing equities, bonds, property, cash and commodoties is the best form or protection against events such as bankruptcies and stock market crashes.
Getting your retirement planning right can be tricky with so many elements to take into consideration. That is why having an experienced professional on board is invaluable and will give you the peace of mind of knowing that whatever the future brings, you will be able to maintain your desired lifestyle as long as you need to. Our consultants at Infinity provide first-class financial advice for expats in Asia and would be happy to help you so if you would like an appointment get in touch today.
This Site and the Content are not directed at or intended for distribution to any person (or entity) who is a citizen or resident of Hong Kong (or located or established in) any other jurisdiction where the use of the Site would be contrary to applicable law or regulation or would subject Infinity Financial Solutions Limited to any registration or licensing requirement in such jurisdiction.
Persons (or entity) who is a citizen or resident of Hong Kong please click on the link below to access our Hong Kong Site.