In my last two posts I looked at the personal cases of the Young Professional , the Rising Executive, the Manager and the Senior Executive and how they can diversify their resources across different resource. In this post, I will consider the case of the Retiree.Retiree
Characteristics
Age: 60 plus Income: GHc 15,000 (Ghana) $100,000 (US)
Net Worth: GHc 225,000 (Ghana) $1.5million (US)
Risk tolerance:
Low Goals: Preserving capital
Assert Allocation
Cash and cash equivalents………….…………………..…..10% to 20%
Fixed-income vehicles……………………………………….40% to 50% Equities………………………………………………………..25% to 35%
Hard assets…………………………………………………... 5% to 15%
Financial Profile
Since you no longer take home a salary or pay cheque or expect to in the future – your tolerance for risk is low. For the same reason, your need for current income from your investments have increased.
And your planning time is shorter, so you can afford to reduce your inflation hedges. Also, you might find yourself needing some ready cash – for unexpected illnesses as an example.
Investment Strategies
You’re satisfied with a modest return on your cash, since you want to reduce the volatility of your portfolio and maintain readily accessible cash reserves.
You expect a lower return on you fixed-income investments than you’d get on shares or common stocks. But their lower volatility and higher current income make the trade-off worthwhile.
You still want to keep a significant portion of your portfolio in equities. You like the growth potential.
You also want to stay diversified in the event of a drop in the value of your fixed-income vehicles.
Since you’re more concerned about predictable income and your need for inflation hedges is low, you have few funds committed to hard assets.
Besides, most hard assets have low – or – no current income and liquidity, making them particularly unattractive for a retirement portfolio.
Subscribe to Financial Intelligence by EmailSince you no longer take home a salary or pay cheque or expect to in the future – your tolerance for risk is low. For the same reason, your need for current income from your investments have increased.
And your planning time is shorter, so you can afford to reduce your inflation hedges. Also, you might find yourself needing some ready cash – for unexpected illnesses as an example.
Investment Strategies
You’re satisfied with a modest return on your cash, since you want to reduce the volatility of your portfolio and maintain readily accessible cash reserves.
You expect a lower return on you fixed-income investments than you’d get on shares or common stocks. But their lower volatility and higher current income make the trade-off worthwhile.
You still want to keep a significant portion of your portfolio in equities. You like the growth potential.
You also want to stay diversified in the event of a drop in the value of your fixed-income vehicles.
Since you’re more concerned about predictable income and your need for inflation hedges is low, you have few funds committed to hard assets.
Besides, most hard assets have low – or – no current income and liquidity, making them particularly unattractive for a retirement portfolio.
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