10 Tips about Retirement Investing

10 Tips about Retirement Investing

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Tip #1

Prepare a Budget

• Work out your monthly income from pensions, investment income, etc.

• Work out your normal monthly expenses

• Add in a “fudge” factor for expenses and divide equally by 12 to get monthly

• Include an annual travel amount and divide equally by 12 to get monthly

• Be aware of unexpected expenses (you can’t budget unexpected)

• Monitor this budget every week/month and adjust accordingly.


Tip #2

Analyse your pension fund statement.

• Make sure your pension provider sends you a statement monthly/quarterly

• Get to understand what all the lines and boxes and numbers mean

• If you don’t understand … ask. There are no dumb questions.

• Fully understand the difference between value increases and income.

• Compare this statement to last month’s, and last year’s same month

• Do NOT throw them away, use a file/folder, and hold on to them.


Tip #3

Understand your Pension Fund Portfolio Mix.

• The Portfolio Mix is the make-up of your shares, mutual funds, bonds, etc.

• Clearly understand what each asset class (above) is doing for you.

• Be clear on which asset class provides (cash) income and value increase

• As your needs change (check your Budget), change the Portfolio Mix.

• As you get older, the typical Portfolio Mix is to increase more Fixed Income.

• Fixed Income means income from a Bond for example which doesn’t fluctuate.


Tip #4

Self-Managed Pension Funds

• This simply means that you do not use an outside, or professional, manager.

• If you know what you are doing, this is a much more personal approach.

• This will more easily help you correlate your Budget and your Portfolio Mix.

• But this is not for the faint-hearted, or “know-it-alls”

• Be constantly watching your Portfolio and Financial News for change

• Be constantly updating your income/value projections.


Tip #5

The name is Bond

• Companies, Governments, etc issue Bonds.

• They are investments which pay a set interest rate (“Fixed Income “)

• If market interest rates go up, Bond Values go down, and vice versa

• Bonds will normally have a Call Date when the Borrower can call them in.

• Find out the difference between Coupon Rate, Yield to Maturity, Yield to Call

• Generally, Bonds pay better interest rates than Savings accounts etc..


Tip #6

Ordinary Shares (“Equities”)

• These are shares issued by companies on the NYSE for example.

• Shares have a Buy Price and a Sell Price - values fluctuate.

• Shares usually, but not always, pay an annual dividend (usually quarterly)

• Ordinary Shares are deemed higher Risk than Bonds - be aware

• Ordinary Share Prices are influenced by the company’s performance, and the economy

• Ordinary Shares are potentially high overall return investments - but NOT always.


Tip #7

Preference Shares

• Preference Shares are typically issued by companies.

• They will usually be quoted on the Stock Exchange e.g. NYSE.

• Preference shares typically have a fairly stable dividend payment plan.

• Generally speaking Preference Shares do not wildly fluctuate in value.

• Preference Shares typically rank higher than Ordinary Shares in terms of (less) Risk.

• Preference Shares from a quality company are usually good investments.


Tip #8

Mutual Funds.

• This a great way to manage your Pension Fund/Investment Portfolio.

• Mutual Funds come in all sorts of shapes and sizes… shares, bonds, cash, etc

• Mutual Fund Managers also come in all shapes … the good, the bad, and the ugly

• Track Record is a good indication of performance - but should not be THE sole driver

• Monitor the Fund and the Manager regularly.

• Mutual Funds, if chosen appropriately, are deemed to be lower Risk


Tip #9

Cash Flow versus Value Increase.

• Cash Flow means cash flowing into your bank account (or reinvested)

• Value increase means the portfolio goes up, but no cash inflows.

• If you don’t need the cash for living purposes then consider value increase.

• If you do need the cash for living purposes then seek Cash Flow.

• If you intend to leave money to the kids, balance between Cash and Value.

• If you expect to live long (hope so) then be cautious about that balance.


Tip #10

Drive carefully.

• It’s easy to Buy, but not so easy to Sell

• When someone tells you it’s too good to miss, it’s probably worth a miss.

• Watch all trading costs, including mutual fund fees

• If it’s a dud, cut and run

• Never be oversold by an enthusiastic manager, especially if he’s young

• And Remember … It’s YOUR MONEY – Got it...?? ……… YOURS !!!!!

Meet the Olderhood Team

Bill Storie, Founder

Robin Trimingham, Co-Founder and Editor

Roger Crombie, Lead Contributor

10 Tips about your Retirement Investments

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