Question

Bobby brown has just turned 48 years of age and come to you seeking retirement advice.

Answer 1

The retirement planning should be started little early may be in early 30’s but the age of 48 is quite late because an average individual retires in between the age of 60 to 65, but still it can depend on the person, if he has been able to accumulate a large sum of money then things can be managed in a systematic way. The basic idea is if you have a long-term investment horizon then you can consider investing in risky assets and then give some time to investment that it can grow. Now given his age, there is may be 12 to 15 years left in the retirement so the focus of the investment should be on preserving the capital while generating a sustainable rate of return. The investment should focus on large cap equity investment and high-quality bonds so the risk of loosing capital is low and the investment can generate a certain rate of return. It also depends on how much of the wealth he has accumulated, if he has accumulated large amount of wealth and the income stream is expected to continue then more risk can be taken and we can also consider allocating small cap stocks in the portfolio which can generate good return. Some investment can also be diverted towards real estate if he is comfortable with. A lot of things depend on how much is his current net worth and what are contingent liabilities and what is his level of risk acceptance.