If you’re in your 50’s, you have probably thought that the closer you are to retirement the more you should be invested in low risk. This usually translates to you believing that you should be avoiding the volatility of growth assets such as companies.
As an investor, you’ll have experienced a fear of losing money and/or a fear of missing out on potential gains.
A lot of new clients who come to meet Lighthouse Financial Advisers get worried when they hear that they will be invested in the most diversified companies around Australia and the world.
“Should we get out now and come back in when things settle down?” is a question that usually finds its way into investment conversations when the value of one’s investment has dropped.
When we see our superannuation, balance rise and fall due to volatility, we as humans instinctively think that there’s something wrong and feel that we have done the wrong thing by putting ourselves in that situation.
The week of 28 February 2020 the ASX200 had dropped by around 10%. This has taken many people by surprise. But should it?
Often people invest based on a prediction the price of their chosen asset will eventually rise.
This must be the case, otherwise they’d just wait until the price drops to buy.
Their predictions are usually based on a range of information sources, some credible, some not.
But is it possible this information is already factored into the price?
When planning for retirement, everyone can agree that it makes sense to minimise risk.
It sounds like one of those things that no one can possibly disagree with.
However, ‘risk’ is one of those words that can mean many different things. So, in this series of articles, I want to break down the various types of risk that can affect retirement planning.
Often when I tell people I’m a financial adviser they ask me ‘what do you think the share market will do this year’ or ‘what do you think about NAB shares’ or something similar.
When I say that I have no idea they either think I’m holding out by not letting them know the ‘good oil’ or that I’m a terrible financial adviser.
“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch
Dallas Davison, Michael Hogue and Ali Hogue.