Investment strategies for different life stages

When was the last time you checked in on your investment strategy?

If it’s been a while, now might be a good opportunity to put a little time aside to make sure your settings are still appropriate.

What works for an investor will change over the course of their life, and it’s important not to take a “set and forget” approach.

Here’s an overview of the stages.

Starting out 

When you’re a young investor, first starting out, you probably have a significant asset on your side – time.

When you’re investing with a longtime horizon, you not only have the ability to take on more risk because you can ride out market volatility before you need to access the funds, but you also have the opportunity to let your returns compound upon themselves, year after year, to help you hit your goals. 

If you’re starting out and saving for retirement, that can be extremely powerful. But even if you’re investing, perhaps in KiwiSaver, with the intention of buying a house, if that goal is likely to still be some years away, you may still be able to allocate more of your investment to higher-risk growth assets.

Generally, these assets deliver better returns over the long term than lower-risk cash type assets.

Buying a house

As you get nearer to buying a house, you will probably want to consider dialling down your risk on the investments you plan to use – such as your KiwiSaver.

As it gets to the point when you want to withdraw the money for a deposit, you might even choose to wind it right back to cash, so that you know exactly what you have available to you. This is not usually a time when you want a market fluctuation to change your balance.

Getting back into saving for retirement 

Once your house is secured, you might then turn your attention to thinking about your longer-term investments again. This is another time of life when many investors decide they can potentially take a higher level of risk, provided they have a couple of decades until they need the money.  

If you’re not sure, there are online calculators that can give you a guide to your risk profile, or we can help you assess what level of risk you may be comfortable with.

Nearing retirement

As you near retirement, you may want to move some of your investment into a more conservative fund, if you plan to start using that money as soon as you stop work.

At retirement

Signing off from work doesn’t mean signing off from your investments. Assuming you retire at 65 and might live well into your 90s, you’ll probably need to find a way to help your money last as long as you do.

You might move some to cover your immediate expenses into an account you can easily access and leave some in managed funds with different risk exposures. As the years go by, you can monitor your investment balance and risk exposure compared to your risk profile and make adjustments accordingly.

Ready to check in?

If you’d like to talk about your investment strategy, and any changes you might need to make, get in touch with us. We can help you develop a plan to bring you closer to your goals.

The information contained in this publication is intended for general guidance and information only. It has not been personally prepared for you. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult with us before making any investment decision. Historical market performance may not be indicative of future market performance.

‍