Most people have some money saved for their retirement. Whether this is in superannuation or across other investments, they have generally thought about their retirement and are preparing for it. The issue is that many people are not proactive about their super. Each year, or each month, they get a balance statement, and if they see it has gone up, they are happy and think ‘I’m on track’. Unfortunately, that is not enough. The fact that the balance has gone up is actually irrelevant to whether or not it will be enough for them to retire with.
Everyone knows that company share prices go up and down – that’s a fact. What we don’t know is why they do – that is, what external events will affect the share market and when. Of course, there are people devoted to doing this for a living, and some people are more informed than others about trends in the market. What we are saying is that it’s not possible to predict exactly when a crash or a boom in the market will happen – the only thing we know for sure is that it will.
This is a pretty common question we get from our clients. It’s an understandable fear, given that market volatility is real. Fortunately, the situation is not as dire as it seems – even if you happen to retire the day before a big crash in the market.
Sequencing risk is when the order and timing of your investment returns are unfavourable. This risk is hidden to some degree and is a subset of market risk / volatility.
Dallas Davison, Michael Hogue and Ali Hogue.
Money Over 50 Financial Advisers
Tel 07 4772 0938
45 Ingham Road West End Townsville Qld 4810
Money Over 50 Financial Advisers Pty Ltd ABN 26 146 225 505, 45 Ingham Road, West End Queensland 4810 is the holder of an ASIC Australian Financial Services Licence (AFSL) #471826.
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