We regularly design investment portfolios for clients, considering their unique circumstances, individual requests, needs and objectives, as well as specific investment selection criteria like valuation, balance sheet health, earnings growth, governance, and overall quality. Below are some of the common circumstances, considerations and life events that are associated with the different stages of your personal and financial life and what we can do to ensure your portfolio’s optimal performance.
Accumulation (30 - 55 years)
At this stage of your life you most likely have a mortgage, some contents and some super, but maybe don't have a plan to generate wealth. We often see debt being the greatest restraint in terms of available cash flow to begin investing, not fees and ideas. But once you start paying your debt down and then begin to have a surplus cash flow, investing along-side or in your superannuation is a great wealth plan. In this age group, accumulation of investment wealth comes from surplus cash flow, investing in assets that offer reliable earnings growth, selecting a suitable structure and quality. There are still some fantastic investments available for investors with a 5-year time frame or more.
Some ‘leading’ Australian companies we see today may not be around in 20 years’ time due to innovation and technology, consumer demand and choice, foreign interest and ever-increasing operating costs, so it worthwhile considering those future leaders and investing into those opportunities via an expert. Investing ahead of the disruption is a clever thought process and investment strategy.
Top three tips for this life stage:
- Create a budget to determine your surplus cash flow.
- Plan for future investment.
- Invest in long-term options.
Pre-retirement (55 - 65 years)
We know that after many years of work and capital accumulation, individuals in this age group can visualise their future retirement, prompting a whole range of checks and discussion. This age group can benefit from sound advice including portfolio risk adjustments, identification of any restraints towards their ideal goals, accumulation acceleration strategies and opportunities, and easy to understand mathematical projections. Our solid planning methodology provides you with a reliable picture of your future and a degree of financial independence. This portfolio will usually have combination of structure, income and growth assets, and diversification to suit the risk tolerance of the investor, along with tax and other value-add factors that might be available.
Top three tips for this life stage:
- Establish if debts will be repaid by retirement.
- Optimise the use of superannuation.
- Start planning for an unforeseen event (risk) e.g. loss of job, poor health etc.
Retirement (65+ years)
Our retiree clients have good portfolios that have been built over many years of discipline and accumulation. They understand patience, volatility inherent in risk assets, but also performance and income to support de-accumulation of their wealth. These portfolios are generally diversified, and tax effective income focused, always on quality, not speculation, and reviewed constantly. We offer regular reviews for those who are inadequately resourced to manage their own. Risk is a constant focus, as well as a robust portfolio structure, using Cash appropriately and avoiding bubbles. Other income generators are sought to complement these portfolios to help preserve and extend the life of their capital and wrap in a legacy strategy if suitable. After all, one of the greatest legacies is wealth transfer and protecting this money for future generations.
Top three tips for this life stage:
- Determine if or when will your capital will exhaust (i.e. forecast).
- Determine investment return drivers and risks of capital drawdowns.
- Start estate planning.
The information contained in this article is of a general nature and does not take into account personal circumstances. Before making any decisions based on the factual information contained in this document please consult with your financial adviser.
