Investors in the sustain phase face new challenges.
Portfolios will likely need greater exposure to ‘risk assets’ such as stocks and higher yielding bonds to meet return objectives, in our view.
We believe understanding and managing those risks is key to finding the right balance between preservation and growth.
Balancing ‘Growth’ and ‘Preservation’ Pre-Retirement
The ten years leading up to retirement, what we call the ‘Sustain Phase’, can be scary with questions such as:
Will I have saved enough to fund my retirement?
How can I mitigate the risk that my savings will see a significant decline just before I retire?
The year finished strong as investors look ahead to a 2021 recovery.
Previously lagging sectors, such as Energy and Financials, were the best performers, we believe, due to growing expectations for a full re-opening of the economy.
As the rotation towards recovery plays continues, we have increased our exposure to economically sensitive areas such as emerging markets.
The Road to Recovery is Paved with Government Spending and Vaccine Approvals
Finished the year strong:
At the beginning of the fourth quarter, uncertainties surrounding the US elections, timing of vaccine approval, and above-average valuation levels left many investors questioning whether the rally off the March lows could be sustained. News of additional stimulus, improving economic metrics, and multiple vaccine approvals overshadowed those uncertainties. As a result, investors chose to focus on the road ahead rather than the rear-view mirror. Ultimately headlines gave way to recovering fundamentals, leading globa
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