Retirement /Diverseified Managed Funds

[Sgt Pepper]

I am interested in canvassing the opinions of the experienced people who post here. I am 64 and will have accumulated around $300 k in my workplace superannuation by the time i Leave in 2 years. I have spent my whole career in the health service. I have been looking at investing in a diversified managed fund, but to be honest the average returns over 5 or more years are "modest" . I am rather surprised by this, or should I have been?? . Any insights or advice would be gracefully received

[Maverick]

Mary Holm does excellent work on this kind of thing. As far as I'm concerned she has a superb handle on especially this area.

Your biggest problem is inflation as you will have considered. Your $300k is a nice nest egg now but in 20 years time ( yes , you should still be alive statistically) you will need most of it to pay for a plumbers call out by then- obviously exaggerated but it demonstrates the problem.

So that means you've either got to die sooner or somehow make sure you keep that nest egg inflation proof. My 2 cents worth is property is good donkey for that. I certainly dont mean a private rentals ( yuuuk) , I mean listed property the type that actually makes money and that you dont have to spend your summer painting.

Look up Mary, she`s fantastic Sgt P.

[Walter]

The recent market has not been great, but I'm guessing that in a balanced fund you could have earned about 5% per annum before tax. Despite the recent burst, inflation has probably averaged about 3% per annum over that time. If you were in conservative funds or fixed interest you have probably gone backwards. Old people hark back to getting 15% per annum when Muldoon was in charge, but after inflation and tax they were going backwards at about 5% per annum. People that retire usually live about 25 years, so don't fall for the trap of putting it all in conservative funds. Be wary of high prospective returns, everything comes with risk, even if you can't see what it is.

[percy]

I am interested in canvassing the opinions of the experienced people who post here. I am 64 and will have accumulated around $300 k in my workplace superannuation by the time i Leave in 2 years. I have spent my whole career in the health service. I have been looking at investing in a diversified managed fund, but to be honest the average returns over 5 or more years are "modest" . I am rather surprised by this, or should I have been?? . Any insights or advice would be gracefully received

I continued working until I was 69.
Those extra years made a huge difference to our wealth.
Our well orgainised share portfolio has seen good income and steady growth.
We have as our core stocks GNE,HGH,SFF [unlisted] ,SEK,SPK,and STU.
I think any portfolio that pays imputated dividends,holds a bank,generator power company,phone company, an exporter, and a property company should keep you ahead inflation ,and provide a good income.

[SPC]

You'll also need to consider issues such as ease of access to the invested funds in your choice of investment (liquidity), the extent to which you will require regular dividends or interest etc (versus retention of the core capital funds), and ability to draw down the capital over time.
There may be good options in some of the KiwiSaver schemes as once you turn 65 you can retain your investment in these funds but are not constrained by the rules applying to members, ie you're not locked out of your money as you're already 65+.
They may offer regular investment and drawdown options.
Diversity in every way possible covers you from financial disaster. Absolutely no asset class whatsoever is without risk. None.

[iceman]

Depending on how reliant you will be on income from those shares, but if needed then a proportion as Percy suggests. The rest, or all if you don’t need regular income, I’d simply follow Buffet’s advice and buy ðinto something like VOO or VOOV. I’m a few years behind you but preparing for a retirement from my life long career in fishing in about 2-3 years. I’m moving funds monthly into the aforementioned stocks, through Hatch. Of course anything over $50k attracts the ridiculous FIF tax in NZ so my wife & I are doing $50k each.
My 2 cents.

Agree with the poster above that Mary Holm is great at this stuff. I’ve contacted her privately through email and received a great response.

Interesting times and I wish you the best of luck :-)

[Sgt Pepper]

Thanks everyone for your useful and as always quality advice. One possibility I may explore would be ,if permitted, leave my accumulated funds in the National Provident Fund. The NPF has a number of advantages over kiwisaver /managed funds. It has an unconditional government guarantee on your capital and also guarantees a minimum return of 4% p.a. The scheme offers 3 options at retirement, take your entire cash out, convert all to a life long annuity, or take 25% as cash and convert 75% as an annuity paid monthly. The downside has been moderate returns over the years as it has to be a conservative investor due to the government guarantee.
However i will explore the option of leaving the accumulated funds there and just withdraw the earnings when it is declared in June every year. They may not permit this however as it has been closed to new members since 1991. and will eventually be wound up.

[Getty]

The NPF has & will be resilient for you, and it's guarantee is invaluable.
You will be on the pension anyway, so stay with it, don't expose yourself to wolves and market risks if you don't have to.
Enjoy your retirement, your mental acumen and ability to make sound judgments may desert you, so at least your money will be safe.

[GTM 3442]

Whatever you decide to do, make sure that you can, if necessary, access capital without too much trouble. Think of it as administrative convenience.

If you need (say) fifty grand in a hurry for something, it's much easier to sell/redeem 5000 units in the XYZ Fund than it is to work out how many of which share(s) you want to sell.

Administrative convenience does come at a price, but it is d*mn useful sometimes. Over time I intend to reduce the current number of holdings in the portfolio for this very reason.

[Walter]

Thanks everyone for your useful and as always quality advice. One possibility I may explore would be ,if permitted, leave my accumulated funds in the National Provident Fund. The NPF has a number of advantages over kiwisaver /managed funds. It has an unconditional government guarantee on your capital and also guarantees a minimum return of 4% p.a. The scheme offers 3 options at retirement, take your entire cash out, convert all to a life long annuity, or take 25% as cash and convert 75% as an annuity paid monthly. The downside has been moderate returns over the years as it has to be a conservative investor due to the government guarantee.
However i will explore the option of leaving the accumulated funds there and just withdraw the earnings when it is declared in June every year. They may not permit this however as it has been closed to new members since 1991. and will eventually be wound up.

What a sweet deal - is it right the worst you can do in a year is 4%, but you can earn more?