#retirementsavings #personalfinance #kiwisaver #finance #bitcoin #wealthplanning – Page 3

Investing for seniors

Written by R. A. Stewart

Your age is a crucial factor in establishing your savings and investing strategy. Your 20s, 30s, 40s, and 50s are your savings years. It is these years when you build up your assets.

Your 60s and 70s can be considered your spending years. It is when you tick off items on your bucket list while you are able to.

That does not mean that you do not have to work, a lot of older people are taking this option, not because they cannot make ends meet on their pension, but because they enjoy what they are doing.

In New Zealand, retirees will have access to their kiwisaver account once they reach the age of 65. Money invested in kiwisaver will be in growth, balanced, or conservative funds. Most people during their working life opt for growth or balanced funds.

It is time to decide whether to stay with the status quo or invest in more conservative funds.

Your age and your health are the two most important factors in deciding which fund to invest your money in.

Older people do not have time on their side to overcome financial setbacks such share market falls and so forth, therefore if you are 60+ it is a good idea to lean toward more conservative investments but still retain some exposure to risk.

It is worth mentioning at this point that New Zealand financial advisor and writer Frances Cook has a formula for calculating how much exposure you should have based on your age, and it is this…

Subtract your age from 100.

If for example you are aged 60 then only 40% of your portfolio should be invested in the share market.

I do not necessarily agree with this formula and my exposure to the share market is more than her formula suggests I have.

However, that is a personal choice; one that I do not necessarily recommend to you because your circumstances will be different as they are for different people.

If you are connected to the internet and you have a lot of spare cash in your account then I suggest that you place most of your money into an account that is not connected to internet banking. This is to reduce your chances of becoming a victim of internet scammers.

With internet banking being the norm, this could be difficult in the future though.

In any case I still believe that it will pay to arrange your finances so that if you fall victim to a scammer then not all of your money will be lost.

Don’t leave all of your money in the one account for goodness sake as some victims of scammers have.

If you are traveling then make sure you don’t have access to your life savings because if you do then so will be a scammer if they manage to get hold of your login details.

Scammers have all kinds of ways to trick people into handing over their login details.

Anyone can be a victim so don’t be proud by saying “I am not that stupid.”

As you get older you will have to invest more conservatively; that does not necessarily mean transferring from growth to conservative funds but investing some of your current savings into low risk accounts. The deciding factor is your timeline. How soon you need the money and funds which are going to be used within 12 months are best invested conservatively.

www.robertastewart.com

ABOUT THIS ARTICLE

This article is of the opinion of the writer and may not be applicable to your personal circumstances. Feel free to share this article. You may also use this article for your website/blog or as content for your ebook.

The bandwagon effect!

“Safety in numbers” is an old saying which is the downfall of many people. We have seen it so many times throughout history that when the share markets are on the rise investors jump on the bandwagon; this pushes the share price up even further. It is the same story that something is only worth what others are prepared to pay for.

During the 1980s when the markets were humming along investors kept jumping on the bandwagon; some even borrowed money to purchase shares using their current share portfolio as collateral. Higher share prices meant that investors could borrow more. One person told me at the time that he knew someone who took out a mortgage on his home to buy shares.

Then the crash happened on Black Monday 1987; the result was that shares were worth less than the loans taken out to purchase them. In many cases they were ot even worth the price of the paper they were printed on.

The same bandwagon effect which pushed the prices of the shares up also caused the crash as investors jumped off the bandwagon.

We have also seen it in other industries. During the early 1970s farmers were buying bobby calves to hand raise for beef. Prices for beef were high but then prices took a huge dive and prices for some beef cattle did not even recoup the money which was spent raising them. Over supply of beef was a factor. I am speaking from experience here because my father was rearing calves for beef.

Back to the present, it is no secret that cryptocurrency has seen the same kind of bandwagon effect. It has experienced swings and roundabouts and will continue to do so. It all boils down to the fact that something is only worth what others are prepared to pay for.

What often drives the markets is often the fear of missing out or as it is often called “FOMO.” Others see the success others are having with their investments and decide to jump on the bandwagon without any thought to whether their investment fits in with their goals. The young ones who are not tied down with commitments are mainly guilty of this but not necessarily. A couple of years ago one particular share was on a roll. Its share price increased ten fold and a lot of young investors jumped on the bandwagon; then the share price slid and it fell to one tenth of its peak. The media claimed that investors lost 90% of their money but honestly that isn’t true because it all depends on when they bought their shares. It may be true if one purchased their shares at the peak.

The Global Financial Crisis led to several finance companies going belly up. There were heartbreaking stories of retired folk losing their entire savings after having everything invested in the one company. The TV advertising for these companies were aimed at the older folk. Many jumped on the bandwagon but investing everything into the one company, well, did they ever hear about diversification?

It is worth pointing out that if there is an opportunity for capital gain then there is also an opportunity for a capital loss.

All investors must be aware that markets go up and down; a cool head is needed during the periods of volatility. The risk you are taking on must be factored into your investment decisions. It all boils down to your timeline and whether the loss of your capital will cause you any distress. It is no good investing in something if the risk of losing your money is going to cause you to lose sleep.

Feel free to share this article. You may use this article as content for your website or ebook.

www.robertastewart.com

Thinking about giving cryptocurrency a go? Here is something which may interest you:

https://coinbase.com/join/gochwv