With factors such as tensions with North Korea and the US, and a threat of Nuclear War, a US President that’s unpredictable, never mind our own SA President, companies such as KPMG taking a knock due to ties to the Guptas, Brexit, Hurricanes etc., the world is in turmoil, and with it, so are our investments. So, the closer we get to retirement, the more this turmoil worries us, particularly as to what effect this will have on capital that must provide us with the income we need to live.
This leads us to ask how secure our retirement is, and what can we do to bubble wrap it for the bumpy ride we’re on…? Our retirement savings aren’t just influenced by the world economic conditions; there are other factors that can determine the value and timeline of our capital for retirement.
The 6 main factors to consider
These factors will determine the duration our retirement nest lasts.
The amount of risk we take to get a higher return
The more aggressive we are, the more the return or loss may be.
The amount of time we invest for
So, we can delay our retirement date and make the capital last longer. The quicker we retire and the longer we live, the more important the capital becomes.
The amount we draw at retirement
The more we draw versus the return we make, the quicker the capital will reduce.
If we don’t have to leave capital for children or other loved ones, we may then be comfortable knowing that we will be eating into capital and be fully aware that we may not be leaving a legacy or inheritance behind.
The amount we contribute towards our retirement savings
The more we contribute pre-retirement, the more we can have post-retirement.
Who we chose to guide us
from a Financial planning and asset management perspective. If we get bad advice or even no advice, we may not invest correctly, and our capital before and after retirement may reduce if it’s not correctly managed.
So, when we look at Retirement savings, what are the must-have features that we need to look for? What is the overall objective we want to achieve? If we had to ask ourselves what we would want as an investor in an ideal world,
If we had to ask ourselves what Stringfellow would want as an investor in an ideal world—highest return is top of our list. But, we most certainly would also want stability in that return.
To break it down we would need two things and they’re not the same
To get the return, you need the risk.
This can go against the other objective… stability. However, if we identify and manage the risk, we can still achieve returns and maintain a level of stability.