I am 60 years old and contemplating retirement or possible retrenchment.
I have a sizable amount accumulated over the years in my pension fund. I will draw my monthly expenses from a living annuity retirement fund.
I would like to continue to invest in a medium to high risk portfolio. However, market slumps are a bother and I would like to invest 20% of my funds in a low risk portfolio.
The question is: When the market slumps, can I draw a monthly annuity from the 20% low risk portfolio and not touch the riskier investment until the markets are stable again?
Chris van Wyk of PSG Hermanus Portfolio Management & Stockbroking responds:
A useful general approach would be to:
- Keep 18-24 month’s withdrawals in money market fund(s);
- Invest 18-24 month’s withdrawals in unit trusts with risk ratings of around 3 (where 10 is the most aggressive/highest risk);
- Invest the remainder of your availble funds in a medium to high risk portfolio (a risk rating around 7).
However, an investor’s specific situation also needs to be acknowledged in the portfolio structure which is deemed most appropriate.
In the absence of more specific details about you, we would advise involving a reputable investment adviser to assist in structuring a bespoke investment portfolio, which will best address your needs and objectives.
- Fin24
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