Investment Strategy 60 year old

[Michaelll]

Hi
Hit 60 in Feb ... Small excution only Zurich Prsa worth about €75000 (employee contribution only)
I contribute €600 per month to the Prsa highest rate tax 20% current salary €43000
Currently invested, 40% 5* Euope, 40% 5* Global, 10% 5* Americas, 10% Asia Pacific,
Should i now be investing in safer options considering my age. I am hoping to retire at 65

Thanks
Michael

 

[Brendan Burgess]

No. At 60 your investment horizon is 20 to 30 years, so equities is the right investment vehicle for you.

When you retire at 65, you will simply be moving your investments from a box with the label "pension" on it to two new boxes - one called "direct investments" and the other called "ARF", both of which should be invested in equities.

The only possible exception to this would be if you had a plan to use the 25% tax-free lump sum at 65 to clear a mortgage, trade-up or do something else which would not be possible if there were a fall in equity values between now and when you are 65.

 

[conor_mc]

No. At 60 your investment horizon is 20 to 30 years, so equities is the right investment vehicle for you.

Yes and no. There is an argument that reducing equity exposure in the early years of retirement mitigates sequence of return risk, but followed by increasing the exposure after 5-10 years to avoid missing out on subsequent bull markets.

Pre-Retirement Glidepaths: How crazy is it to hold 100% equities until retirement? - SWR Series Part 43 - Early Retirement Now

March 2, 2021 – A while ago, I wrote about the challenge of designing pre-retirement equity/bond glidepaths (“What’s wrong with Target Date Funds?“). In a nutshell, the main weakness of Target Date Funds (TDFs) for folks planning an early retirement is that if you have a short horizon and a...

earlyretirementnow.com

Very US-focused (despite being written by a German!) but explains the concept quite well.

 

[ClubMan]

Yes and no. There is an argument that reducing equity exposure in the early years of retirement mitigates sequence of return risk, but followed by increasing the exposure after 5-10 years to avoid missing out on subsequent bull markets.

The article is far too complicated for me but it sounds suspiciously like attempting to time the market.

 

[conor_mc]

It is pretty intense alright!

But no, it’s not timing the market. It’s not really much different than the standard life-stages approach, the timing is more related to your stage of retirement rather than the market level.

But I think the basic premise makes sense - the biggest risk to your retirement portfolio going the distance is a bear market in the first 5-10 years of retirement, so diversifying into bonds helps at that stage. But after a period of time, if you’re under-exposed then your portfolio won’t recover as well (or maybe not at all).