Most of us have plans for our retirement money. It may be to take a dream holiday; Move to the seaside, the country, or simply to be able to live comfortably without the fear of having to struggle in order to make ends meet.
Whilst some of us will be lucky enough to achieve such goals, the sad fact is that many of us won’t. The reasons for such poor success rates is simple, and comes down to the fact that most of us do not have the time or skills to be pro-active when it comes to our retirement money.
Most people’s only investment towards their retirement is super, which sadly is normally in a default investment fund on a default risk profile that is based on your age. It was probably set up using their “formula” instead of taking your situation into account.
We say, ‘BEWARE’.
Can you sleep at night, not knowing how your life’s savings are invested, or are you like so many others and these boardroom formula’s are just too generic or risky for your circumstances but you haven’t a clue what to do about it!
That’s why David Loughnan thinks it’s time for you to take responsibility for your future. If you are not absolutely certain what they do with your money, then it’s in your best interest to find out. There is risk involved in every investment, and you need to make sure that you’re comfortable with whatever option your employer or fund manager has orchestrated on your behalf.
In order to get started it is important that you understand that a risk profile is simply an evaluation of an individual willingness to take risks. For example;A Moderate risk Profile – You want your money to produce regular income and minimise capital losses. As for a Growth profile – You are focused on building wealth for the long term. You wish to get the most out of your investment and are aware that the value of your investment may rise and fall with the daily fluctuations of Australian and international share markets.
4 critical questions you need to ask yourself in order for you to fully understand your risk profile;
1. How long are you planning to hold this investment? If you’re over 40 years old, your retirement is not that far away, and you have some debt, then you need to plan your exit strategy for your investment.
2.Investment values move in cycles. How frequently could you handle your investment generating a negative return over a 20-year period?
3.Imagine you had $100,000 invested and the market nosedived. How much could your investment decrease in value in 12 months before you should consider withdrawing your money?
4.In general, the higher the expected return, the higher the risk that you won’t achieve the return at the time you need it. Keeping this in mind, what level of volatility in the value of your investment would you be willing to accept to achieve your objective?
These are four simple questions that most people don’t ask themselves as often as they should–if ever. You need to understand your risk profile, as nothing gives you greater peace of mind than knowing your threats and your options.
We recommend you book a free consultation with David Loughnan to discover if you are taking too much or not enough risk.