Compiling a sound risk profile is a very useful way to find the optimum level of investment for you. It takes into account three factors:
- Risk Required - the risk associated with the return to achieve your financial goal
- Risk Capacity - the level of financial risk you can afford to take
- Risk Tolerance - the level of financial risk you are comfortable to take
Creating a risk profile is the first step in formulating a plan based on what you want to do with your money, how long term you want to be invested and what kinds of funds you will need to be invested in.
We want to assist you in generating the best outcomes possible and our KiwiSaver specialists are here to help navigate your way through this process.
Age Based Investing
An aged based investment programe involves investing into more growth assets while you are younger, such as shares and property. As we age it makes sense to reduce our exposure to riskier assets to preserve our growing capital base so that our investment mix is suitably matched to our time horizon. Many schemes offer an automated process for this which takes away the risk of miss timing the market
It is important to understand this is not suitable for all investors as some people have different objectives for their savings or they may be more risk adverse. As always it is best to seek advice from a qualified financial adviser to see if this strategy is right for you.
KiwiSaver has been the most successful public private partnership in New Zealand’s recent history and has persuaded more than 1.7 million New Zealanders to commit to long term savings for retirement, well beyond the initial expectations of Government. (FSC, 2016).
Albert Einstein famously said, “compound interest is the eighth wonder of the world, those who understand this, earn it… those that don’t, pay it.” The simple truth of compounding returns is the most important thing that matters for the long-term investor. Yet in today’s world we are consistently bombarded with distractions, become pre-occupied with other things, and we forget this simple truth.