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‘Get old and aggressive,’ Integral advises senior saver-investors

12 October 2016 Integral Asset and Wealth Management

Getting old? You better start getting aggressive with your investment planning if you’re anything like the average senior saver-investor.

This reversal of traditional advice to greying financial service clients comes from Integral, a fast-growing Illovo-based asset and wealth management company with an expanding book of advisory business in the pre-retirement and retirement space. 

“Aggression is traditionally regarded as the exclusive preserve of young investors,” says Lara Warburton, chief executive of Integral’s wealth management firm. 

“But longevity trends and failure to make timely retirement provision are changing all that for financial service clients entering their 50s and 60s. 

“Waking up broke aged 80 is the biggest fear facing the average senior saver-investor. The only way to address that danger is to take on greater investment risk.” 

Net unencumbered assets and investment build-up are typically inadequate for the average South African when pre-retirement planning begins, she says. 

Several factors are to blame, including … 

  • Lifestyle lunacy – the compulsion to maintain an upmarket lifestyle when a more modest lifestyle would enable higher savings
  • Deferred sanity – deferring tough savings and investment decisions for too long, ensuring that pre-seniors and seniors continue to live beyond their means
  • Feather-bedding for kids – supporting the next generation for too long and getting them out of financial scrapes.
  • Long-term debt – taking on obligations that impede personal saving, including educational costs for children and grandchildren 

“Those in good health can expect to live into their 90s,” says Warburton. “Gainful employment may end at 60. That means provision for perhaps 35 years without full-time employment. 

“A low-risk investment portfolio is unlikely to deliver the necessary capital growth. ‘Low risk’ actually heightens the risk of ‘waking up broke at 80’. Higher levels of apparent, but manageable risk are essential. 

“Fortunately, time in the market is usually a reliable risk manager. A more appropriate risk profile over a 35-year horizon creates opportunities for meaningful capital growth. So, to get old with improved financial security you have to get more aggressive.”

Quick Polls

QUESTION

Is relying on a primary home as a source of retirement equity still a viable strategy for South Africans?

ANSWER

Maybe, depends on location
No, too unpredictable
Not sure, 50-50
Yes, always
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