Baby Boomers to Boost their Super
- By Dale Gillham
- Investing
- Unrated
How to safely increase your income...?
With some 4.1 million baby boomers due to reach retirement within the next few years it is imperative for many to look at boosting their super and retirement income. That is the opinion of Wealth Within Chief Analyst Dale Gillham, who said many imminent retirees will be asset rich but cash flow poor.
“One of the reasons for this is the fact that compulsory superannuation at current levels has been the norm for the past 10 or so years,” Mr Gillham explained. “Other contributing factors include the current economic climate, the shortfall in pensions and a higher standard of living.”
Instead of just jumping into share trading and investing to boost their retirement fund Mr Gillham’s advice to those nearing their golden years is to adopt specific strategies relative to their situation.
“My number one rule for anyone investing or trading the share market, and notably retirees, is to reduce risk – because how much you make in the market is very much dependent on what you do not lose. Many people play in the share market trying to win big and because of this they take huge risks, but this usually results in big losses,” he said.
“Smart investors and traders, on the other hand, look at the potential risks and invest accordingly so that the profits take care of themselves. As I always say, it is not how much you make on any one investment that makes you wealthy, it is how much you do not lose over time. Many people in the past 12 months have suffered un-necessarily because they failed to sell shares that were falling heavily in price.”
Mr Gillham believes another important aspect in the long term viability of an investor is to always have the majority of capital invested in safe investments and to only place a small percentage of capital in high risk trades.
“Breaking this one rule has generally been the biggest downfall of the many people I have met over the years,” he explained.
“Often I have seen people in or nearing retirement, who make bad investment decisions and take higher risk in order to achieve higher returns as they believe they have no choice. What many do not realise is that with a little knowledge they can still take low risk and achieve superior returns.”
Mr Gillham said that diversifying your assets is essential not just in shares, but across your whole portfolio. “I suggest that individuals include blue chip property and shares in their portfolio to set down a solid base for long term growth and income. And, with the volatility of the share market, investing ought to be carried out carefully and with some underlying principals.”
He warns of investing in high risk stocks unless you have a done your home work or can actually afford to lose your investment. “A sound strategy with a mix of ‘buy and hold’ and quick turn-around stocks is recommended,” Mr Gillham said.
“Baby boomers nearing retirement shoud adhere to some basic principles,” he stated. “A simple trading suggestion is that if your goal is to replace your income of $100,000 per year, it does not mean you have to make around $2,000 per week from trading. It just means your total trading profits over one year need to equate to $100,000. Looking at it like this rather than the micro view of generating $2,000 per week will make a dramatic difference to your psychology and how you trade the market.”
“One of the reasons for this is the fact that compulsory superannuation at current levels has been the norm for the past 10 or so years,” Mr Gillham explained. “Other contributing factors include the current economic climate, the shortfall in pensions and a higher standard of living.”
Instead of just jumping into share trading and investing to boost their retirement fund Mr Gillham’s advice to those nearing their golden years is to adopt specific strategies relative to their situation.
“My number one rule for anyone investing or trading the share market, and notably retirees, is to reduce risk – because how much you make in the market is very much dependent on what you do not lose. Many people play in the share market trying to win big and because of this they take huge risks, but this usually results in big losses,” he said.
“Smart investors and traders, on the other hand, look at the potential risks and invest accordingly so that the profits take care of themselves. As I always say, it is not how much you make on any one investment that makes you wealthy, it is how much you do not lose over time. Many people in the past 12 months have suffered un-necessarily because they failed to sell shares that were falling heavily in price.”
Mr Gillham believes another important aspect in the long term viability of an investor is to always have the majority of capital invested in safe investments and to only place a small percentage of capital in high risk trades.
“Breaking this one rule has generally been the biggest downfall of the many people I have met over the years,” he explained.
“Often I have seen people in or nearing retirement, who make bad investment decisions and take higher risk in order to achieve higher returns as they believe they have no choice. What many do not realise is that with a little knowledge they can still take low risk and achieve superior returns.”
Mr Gillham said that diversifying your assets is essential not just in shares, but across your whole portfolio. “I suggest that individuals include blue chip property and shares in their portfolio to set down a solid base for long term growth and income. And, with the volatility of the share market, investing ought to be carried out carefully and with some underlying principals.”
He warns of investing in high risk stocks unless you have a done your home work or can actually afford to lose your investment. “A sound strategy with a mix of ‘buy and hold’ and quick turn-around stocks is recommended,” Mr Gillham said.
“Baby boomers nearing retirement shoud adhere to some basic principles,” he stated. “A simple trading suggestion is that if your goal is to replace your income of $100,000 per year, it does not mean you have to make around $2,000 per week from trading. It just means your total trading profits over one year need to equate to $100,000. Looking at it like this rather than the micro view of generating $2,000 per week will make a dramatic difference to your psychology and how you trade the market.”
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