Survive and thrive through the bad times

Retirement miniseries – part 3

Risk strategies are a key part of a retirement plan, but that does not mean taking a permanently defensive stance.

You can expect that there’s going to be unexpected events. Perhaps not when or how bad, but they will come.

But if you position your portfolio on the off chance there’s going to be a catastrophic crash to insulate against loss, you are going to underperform over the long-term for sure.

Even in the big crashes, and the GFC is the biggest I’ve seen, the last thing you want to be doing is selling. That’s particularly the case in retirement because you want your investment to continue working for you. Selling will simply destroy wealth.

In fact, we want our clients to be in a position to capitalise on those crashes because there’s a lot of wealth to be made by buying quality shares that are cheap.

Even in the GFC, the crash was sudden and the pain persisted for about a year and yes, it took about six years to fully recover. But a lot of people did very well during those six years by investing at the bottom and riding the wave as the market appreciated in the following years.

The parting message

Fundamentally, all of this is not overly complicated. The key is to find an adviser you can grow to trust and one that you can rely on to make you act when it is required.

That means when decisions need to be made, you are made aware of them and supported to act.

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