Home' The Great Southern Star : June 7th 2016 Contents “THE STAR”, Tuesday, June 7, 2016 - PAGE 19
By AMP financial planner Luke Jones
SELLING shares when prices have tum-
bled or buying a house at the height of a
property boom only to dispose of it when
the market falls are among the financial
set-backs that can happen to anyone on
the road to retirement.
Everyone makes mistakes during their invest-
ment lifetime; the trick is to avoid them when you
can and learn from the ones you can’t.
Have a plan
Failing to plan for retirement and build up sav-
ings is one of the most common mistakes. Having
adequate retirement funds can be undermined by
unrealistic expectations about future lifestyle and
the savings needed to fund it.
Many retirees are unable to access the age
pension because they are asset rich despite being
Putting well thought out investment plans in
place to boost your retirement income well before
you reach retirement age is the best strategy to
overcome such a problem.
It’s probably no surprise you are more likely to
achieve your financial goals if you have a plan.
In the construction of a financial plan you
should take account of your risk tolerance, your
financial commitments, and financial and lifestyle
goals. This will give you the confidence to know
you can get to your desired destination.
A comprehensive plan should also take ac-
count of tax, cash flow, superannuation, insurance
needs and estate planning issues.
Impulsive decision-making at the first sign of
trouble can undermine your investment goals. If
a quality share investment or rental property sud-
denly falls in price due to a market correction, it is
often not the best time to offload.
As one once put it, “Don’t just do something,
Staying the course and letting time work its
magic will often leave you in a stronger position.
Equally, investment inertia can be problematic.
Strong or poor performance can lead to your in-
vestment portfolio moving outside your required
risk tolerance over time.
Regular reviews to rebalance investments back
to your target asset allocation will more likely
bear fruit in the long term.
Spend less than you earn
Drawing up a budget is vital if you want to
discipline yourself to spend less than you earn.
Failing to budget makes it difficult to keep track
of spending and set aside regular savings to fund
a comfortable retirement.
Bank transaction accounts are ideal for daily
spending money but not investment money.
In order to beat inflation and produce the re-
turns you need to fund your financial goals over
time, you need to build a diversified investment
portfolio to match your capital requirements.
Spreading money across the major asset
Offering insight: from left, Luke Jones, John Murdica and Matthew Hams are the compe-
tent financial planners at Retire and Wealth Planners, Korumburra.
Planning to avoid financial mistakes
classes of cash, fixed interest, shares and property
helps minimise risk.
It also helps produce consistent returns from
a combination of income and capital growth over
the long run.
The precise combination of assets is depen-
dent on your risk profile. Your adviser should un-
dertake comprehensive research and implement
proven portfolio construction principles.
It’s never too late
It’s never too late to start planning for retire-
ment. Paying off the mortgage is often considered
the first step to wealth creation so increase repay-
ments where possible to speed up the process.
Once you have built up equity in your home, other
investment options can be investigated concurrently.
Topping up your super through salary sacrifice
is one such option, provided you stay within your
annual contribution limits.
Your employer pays a proportion of your pre-
tax salary into your super fund, reducing tax and
boosting your savings at the same time.
Financial planning is a dynamic process. Regu-
larly reviewing your investments, refraining from
knee-jerk reactions, understanding market volatil-
ity and staying the course can lay the foundations
for a prosperous retirement.
*Luke Jones of Retire and Wealth Planners
Pty Ltd are authorised representatives and credit
representatives of AMP Financial Planning Pty
Limited, Australian Financial Services Licensee
and Australian Credit Licensee
This editorial contains information that is gen-
eral in nature. It does not take into account the
objectives, financial situation or needs of any par-
ticular person. You need to consider you financial
situation and needs before making any decisions
based on this information.
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