Like all savings, fixing post-retirement investment plan needs to be done sooner rather than later
There are a lot of news stories about this man that you can Google and find out more but it goes without saying that this kind of a ‘retirement solution’ is not on the cards for the salaried amongst us. Retirement is a scary thing. By the time salaried people reach that age, they’ve typically been working for close to 40 years. For most of them, their existence is pretty much defined by the routine of their jobs. More importantly, their finances are defined by getting that salary every month.
Except for a small fraction of people who are lucky enough to have an inflationprotected income—for example, rent or a government pension, or those who have generated enormous wealth during their working years—the spectre of post-retirement financial problems and impoverishment haunts most retirees. Nowadays, lifespans are long and most people have two or three decades of lives left at retirement. During these long years, a lot can happen. For example, even though lifespans have become long, the rise of chronic diseases has meant that ‘healthspans’ have become short and many of us will face ruinous medical bills at some point in the latter part of our lives.
This fear of the unknown—the spectre of risk that comes with retirement—makes it a natural instinct to be conservative with post-retirement investments. This is perfectly understandable. Once you stop earning, there is no plan B. If you make big losses in your investments, then that money is gone forever. You will not be able to earn more and make up for the losses. This makes people extremely conservative in their outlook. A considerable number will trust only bank deposits, sovereign schemes and perhaps .
This feels safe but actually it is not. The problem is that your savings can face a sudden, hard disaster, or they can face a long, gradual disaster. Like the proverbial frog in boiling water, the latter cannot be felt. Those who face this long, slow disaster do not even know that there was an alternative.
In fact, I’ve come to realise that some people choose this disaster knowingly. Why so? I’ve spent years explaining that after retirement, equity is a must in order to avoid this slow disaster. There are those who understand this very well and yet are so scared of the quick disaster that they willingly choose it. This is the worst of all worlds, and it comes entirely from a lack of confidence. This confidence is hard to gain, and the only route to it is through knowledge and experience, coupled with real life examples. That’s the part I try to play in this publication, along with resources you can find online, including a very comprehensive set on Value Research Online. However, I must point out that like all savings, fixing your post-retirement investment plan is something that needs to be done sooner rather than later. It may be a slow disaster, but the years roll by quickly and it does not take time for the slow one to arrive.
(The author is CEO, VALUE RESEARCH)