Knowledge hub

Transition to retirement with smart investments

Back to insights

By Rakesh Shah Ambitious Retirees

Retirees often create obstacles for their investment plan, simply through their own behavioural approach to investment decisions. While it is impossible for a comprehensive investment guide to apply to every individual, there are a few smart investment strategies that can help you overcome your personal obstacles to reach investment success!

Transition to retirement = Think long-term, not short term 

Many investors tend to think in the short term, so they either expect instant wealth or they are constantly nervous when the price of their investment drops slightly. However, short term changes are not a good indication of long term returns. It is almost impossible to predict market fluctuations, and it can be costly and exhausting to respond to all the shifts in the market.

Establish some long term goals relating to what you want to achieve from your investments throughout your retirement planning process – this will help divert you from reacting to short term fluctuations.

Diversify your portfolio

It can feel safer to stick with the investment strategy you know, whether it is real estate, shares or stocks, but you can maximize your return by diversifying your investments into different sectors.

While this is not a guarantee against loss, each different sector will react differently to a specific market event, giving you a stronger chance of achieving your long term retirement planning goals.

Understand the difference between “saving” and “investing”

Most people think saving is priority in their ideal transition to retirement. Saving money is the act of regularly setting aside a certain amount from your income. It basically involves living within your means, while accumulating a nest egg for later. This is the cornerstone of successful money management and retirement planning.

Investment takes your savings a little further by building up interest, although there is also a higher level of risk involved. When you are retired and no longer earning, you want your investments to start creating income for you. You might feel safer keeping your nest egg in a secure high interest bank account, but this strategy severely limits your financial possibilities. For example, if you have an emergency that cuts into your savings, your long term income will also be compromised.

Ideally, you should eventually reach a point where your investment return is higher than your regular contributions – this is when you can see that your investments are earning money for you.

Assess the costs of your investments 

When you set out to make an income through investments, don’t forget to keep track of the costs involved, as fees and tax costs can cut into your investment profits. Make sure that any potential costs are clearly outlined upfront before you decide on a certain investment opportunity.

Rely on expert advice for Retirement Planning  

A qualified professional financial adviser can help you create an investment plan that suits your temperament and your long term goals for your transition to retirement. Your investment plan can consolidate your retirement income while providing an extra layer of long term financial support.

While you may rely on guesswork or good luck to navigate your investments, your financial adviser has the experience and judgement to plot a financial course that is right for you. This in turn gives you valuable peace of mind, as you will have more confidence in your overall strategy, and you can rely on an expert to modify the plan if your circumstances change.

While you may not have the expertise to create the right investment plan for your needs, you can count on a financial adviser to steer you in the right direction, ensuring your transition to retirement gives you peace of mind, whilst boosting income and your security.

If you would like a second opinion on your retirement plan, email Rakesh or call 6163 6107.

Rakesh Shah is a Certified Financial Planner working in Perth, Australia.  Rakesh specialises in retirement planning and helping people make the most of their retirement.

The information provided on this site is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if these strategies and products are right for you.

Ideas & insights

Knowledge Hub

Do you need a financial health check? Here’s how to tell

Wealth Planning • Article

Discover the power of a living legacy in intergenerational wealth planning

Wealth Planning • Article

Preparing for Australia’s great wealth transfer | A roadmap for families

Wealth Planning • Article