With investment markets at all-time highs. Do you really know the risks you are taking?
Exceptional share market growth and the rise in the value of risky investments has led to increased risk in portfolios.
Nest eggs are now at risk of blowing up and destroying retirement dreams.
How are you prepared for the below:
· A 10% loss will require a 11% gain to recover.
· A 25% loss will require a 25% gain to recover.
· A 30% loss will require a 43% gain to recover.
· A 47% loss will require a 67% gain to recover.
· A 50% loss will require a 100% gain to recover.
While one and two are achievable and reasonable, the remaining three could be fatal to your retirement dreams.
The true secret to investing success is avoiding large losses.
Easier said than done.
Sure, you can re-balance and this is the advice provided by most advisers and experts. Sell your winners and allocate those funds to more conservative parts of your portfolio.
While it will address part of the problem, it’s fundamentally flawed.
Why be forced to sell what’s doing well to then invest in what’s done poorly?
It’s widely considered portfolio management 101. Don’t put all your eggs in one basket.
Diversification is having investments that behave differently from each other. It’s good to not have all your investments going up at the same time.
Many investment portfolios are stuck in the dark ages with fixed asset allocations.
You’re forced to hold investments that may struggle to generate adequate returns for the risk taken all because you’re following these fixed allocations.
Would you reallocate assets in a business to a poor performing arm? I think not, you’d focus on your most profitable products.
You’re told to be patient, wait it out, but when you experience large losses, it hurts.
Even more so when you’re near retirement or newly retired.
After the experiences of the Global Financial Crisis and other market shocks, we needed to find a better way of investing for pre-retirees and retirees.
We decided we needed a solution where we were not limited to specific investments or pre-determined investment allocations unlike the majority of the industry.
So now, we use an approach, where instead of sitting on our hands and hoping for the best, our portfolios respond pro-actively to changing market and economic conditions by modifying asset allocations accordingly.
The goal, to move out of the way of market bubbles, minimise clients risk while taking advantage of opportunities to increase client's returns when prudent to do so.
This approach offers the freedom to invest in the most favorable investment opportunities while maintaining appropriate risk levels set by our clients.
It’s part of our Retire Ready Framework.
If you’re reading these posts, the reality is you're wanting to safeguard your retirement nest egg or because there is a gap between where you are and where you want to go. If you don’t take action and correct this discrepancy, you are destined for some negative feelings and some.
We’re not promising that Jigsaw Private Wealth is a perfect fit for you. We can’t help everyone and don’t pretend to. However, you have nothing to lose by hoping on a Secure your Retirement call with me and discussing your particular retirement planning struggles and needs. If we can help we will. That’s a win for everyone.
It’s time to make a move.
P.S. With the growth in nest balances, they are now at risk of blowing up right in front of you.
There is a way to reduce this risk if you follow a few simple rules we discussed in this blog.
If you want to safeguard your retirement, it's time to book your Secure your retirement call here and we'll discuss your particular retirement struggles and needs.
While we can't help everyone, if we can we will and at the bare minimum, you'll know where your focus needs to be. That's a win for you.
Here’s to living an incredible retirement!
Glenn Doherty – CFP – Founder & Financial Organiser at Jigsaw Private Wealth
Helping busy professionals, business owners, and pre-retirees retire ready in better financial shape because living your best life is what matters most.
Advice Disclaimer: Any reference in this publication to the provision of advice refers to advice of a generic nature, and should not be taken as product or investment recommendations. Before any action is taken based on the information provided, independent financial advice from a licensed financial adviser should be sought. Financial Freedom Project Pty Ltd ATF GA & DC Doherty Family Trust Trading as Jigsaw Private Wealth is a Corporate Authorised Representative of Exelsuper Advice Pty Ltd. The information contained in this publication is of a factual nature only and is not intended to constitute financial product advice. Information is current as at January 2020. This is an online information blog. It does not imply an offering of securities.