Johannesburg – Volatility is part and parcel of investing, so if your retirement plan, or indeed any other financial planning goal, is reliant on investing in equities, it is something that you are going to have to deal with at some point or another.
If retirement is imminent, within five years, and you have reached your target investment goal, it is time to think about cashing out some of your more risky investments
There are a number of strategies you can use to not only keep your money stable, but also keep it growing.
These include having a high-water mark guarantee to insure your money against market dips, yet still benefit from market gains.
Experts from Liberty share the following tips:
A guarantee against volatility
“For those invested in more aggressive portfolios pre- or post-retirement either through a retirement annuity or through a living annuity, a high-water mark guarantee provides a unique tool to protect against market slumps,” says Vimal Chagan, a divisional executive for investments at Liberty.
“For an upfront fee of 1% of your investment lump sum, it protects 80% of the highest value that your investment reaches at the end of each quarter, over a five-year period. It also protects your income drawdown, because if you are below the guaranteed level, part of your income will be paid for by that guarantee throughout the fiveyear period that it is in effect.
“There is an element of growth sharing in years when markets perform really well. If at the end of five years your investment is below the guaranteed level, your investment will get topped up to that level,” adds Chagan.
Embrace diversity
“Your money must always be working for you. This applies to investing in all forms. Our ever-changing world makes us more aware of how quickly things can shift, and this is more so in our current markets. We need to stay on top of our investments and relook our investment strategies,” according to Carlo Gil, a wealth advisor at Liberty.
“Diversification is always the initial approach for a well-man-aged portfolio.
To have both local and offshore exposure is an important step in diversifying risk, even more within your portfolio. It’s for this reason we at Liberty believe in both local and offshore investments that allow clients to have a good spread, with different currencies, such as the US dollar or euro-denominated exposure.”
Multi-strategy investment portfolios, he points out, are actively managed for a market- based fee by top professionals whose specific mandate is to deliver performance during any market cycle.
The five different approaches range from conservative (target of CPI+ 1%- 2% over 0 to 2 years) to aggressive (CPI +6% over 5+ years) and include the client in a co-creation exercise to find a solution that matches their particular needs.
Get advice
Financial advisers are there to help consumers navigate tough economic times.
Gil says: “When faced with volatility and wanting to temper it, consumers should start by discussing the multitude of options with their adviser. “Everyone’s lives and retirement ambitions are completely unique, so it helps to know what your full range of options are,” adds Gil.
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