For many you are just about to retire or just have retired watching the markets fall or crash is exactly what you don’t want to happen – right now
A few things go through your mind
- Of course, this would happen to me!
- I’ll have to go back work
- We can’t take that trip we have been planning for so long!
Your super is most likely one of your major assets, as well as your home and maybe you also have other investments such as shares or a property
Interest rates are going up, inflation is soaring, and shares and property values are falling.
It seems like the worst time to retire!
But is it?
The short term may look bad, but from here things get better for retirees
Ill assume you have a diversified super fund that is well managed and a house with little and hopefully no debt. Maybe you have an investment property as well.
The good news is that markets always revert to levels higher that they were before.
The other good news is that the media has no forecasting ability, so while they are reporting now that this is all doom and gloom, they don’t know what happens next. No one really does so listening to forecasts is interesting but does not help. In fact, money managers trying to predict markets have been shown to be less accurate with forecasts than monkeys and dart boards.
Bad news will dominate the headlines, and our mate Peter Tuchman will be on the front pages for a while looking worried. (I interviewed Peter in our podcast, what an amazing and interesting guy he is – the most photographed person on wall street!)
You can’t control markets, but you can control a few things which is what we focus on when advising retirees
- You can control your asset allocation and investment mix, in times like this is very important
- You can control your costs and investments – at Arch capital we see investment managers that have been around since the late 70s and 80s that have performed well through all conditions and are also low cost
- You can switch off some of the media
- You can control how much cash and fixed interest or bonds that you hold, with rates going up we are not seeing term deposit rates back near 4%
These are worrying times, but nerves can be settled by having a concrete plan, a well-documented and thought through investment structure, and good independent advice
Get a copy of our ten investment principles here