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  • 03/10/2017

Stewart Aldcroft: Don’t Outlive Your Savings!


Stewart Aldcroft: Don’t Outlive Your Savings!

By Stewart Aldcroft
This is a question that many people need to ask themselves these days. Life expectancy has increased dramatically over the past three decades and retirees can live another 20 to 30 years post-work. It can be a difficult balancing act to avoid having your money run out because you didn’t plan realistically about how long you may potentially live. (Of course, there are ways in which to avoid living longer than your money: Don’t live so long! Spend less! Save more! But none of these reasons are very palatable.)

Typically, at 65, it was expected that people, on average, might live for another seven to nine years. But today, average life expectancy is around 80, and in parts of Asia, such as Japan (82 for males, 87.2 for females) and Hong Kong (82 for males, 85.6 for females), it is even longer. Thus, retiring at 60 or 65 means a person might need to live off of savings for nearly 20 or more years. Add to that the potential of inflation – albeit these days it is very low – and the need to both accumulate more and to invest better and for longer is of paramount importance.

The “Rule of 100”

The Rule of 100 was the quintessential formula used to provide easy guidance to those planning for retirement. It provided an easy way to calculate the proportion of investments that should be in equities, i.e., stock markets, bonds, fixed income and money markets (cash). The Rule of 100 works by subtracting a person’s actual age from 100 and using the remaining figure as a baseline percentage of how much of a portfolio should be invested into equities.

For example, a 30 year old would be advised to invest 70% in equities, whereas a 60 year old would be directed to invest 40%. During the 1980s and 1990s, this worked reasonably well, as interest rates were high, equity markets were volatile, and inflation was high, but falling.

However, in the last 10 years, and especially since the global financial crisis of 2008, the Rule of 100 has proven not to be such a reliable indicator of how investors should allocate money. Indeed, many have tried to extend the measurement by 20 or 30 years, thus we were getting the “Rule of 120 or 130”. This, however, has proven to be too simplistic also.

New advice for a new day

Given the need to improve and extend the returns achieved from savings and investments, people need to consider very carefully how to both increase the levels of risk taken, and also ensure portfolios are actively managed. This means there is a need to take a greater interest in what and how you invest.

Equities are often regarded as being the core of any long-term investment portfolio. They can be widely invested across multiple markets, and offer a variety of risk levels, depending on both experience and requirements. Usually, the largest proportion of your equity portfolio would be in the major stock markets in the US and Europe. But being a resident of Asia possibly means having the largest proportion of your assets outside of your home market, thus not necessarily in the same currency you will be using when retiring. This can sometimes be regarded as increasing the risk element, but for people in Hong Kong, where the local currency is “pegged” against the US dollar, investing in US dollar denominated investments poses little currency risk.

Another area of investment advice includes the use of modern techniques, including investment vehicles and products, such as hedge and other alternative investment funds, private equity products and exchange traded funds that were less available in the past. Each of these can be available to both individual investors and professional investment managers. Clearly, in the absence of professional experience, it is often best for the professional investment manager to be charged with the responsibility for selecting and managing assets that use these products. Each of them have both advantages and disadvantages, they can improve returns in portfolios, but also, if incorrectly selected and used, can impact returns negatively.

The essential advice to be given to those approaching retirement is to prepare to invest for longer than you might expect. Don’t automatically assume that by being in “safe assets”, such as government bonds or cash deposits, your money will provide an income for life. Yields on both of these are so low these days, they need to be viewed very cautiously. But also, don’t be 100% invested in “risk assets” either. Balanced portfolios, with ever changing proportions according to market conditions, are probably the best way to go. BM

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身體力行學投資

Stewart Aldcroft 撰文

我會否在年老的時候花光了積蓄?

這是一個很多人都會問的問題。在最近的30年,人均壽命大幅上升,已退休的人士大都能夠再活20-30年。如果您沒有認真計劃您將會活多久,那麼要在保持生活質素和花光積蓄之間取得平衡便顯得十分困難。(當然,有人會建議說:不要活那麼久!節儉一點!省多一點錢!但這些都不是人們願意聽到的。)

從前,當一個人65歲的時候,我們會預計他會再活多七、八年。但今天醫療科技發展迅速,人均壽命已提升至約80歲,而在亞洲部分地區,如日本(男性82歲,女性87.2歲)和香港(男性82歲,女性85.6歲)則更高。因此,如果一個人在60或65歲退休,他必須在之後的20多年依靠積蓄過活。加上通脹方面的因素(雖然目前通脹率很低),更多的積蓄、更長和更精明的投資就變得尤其重要。

100法則

100法則是退休規劃的一條常用公式,可以輕易計算出放在權益型產品的合適投資比例,包括股票、債券、固定收益產品和貨幣市場類現金100法則的計算方式是將100減去該退休人士(或計劃退休人士)的年齡,並以餘下的數目作為基綫比率,計算出投資組合中的權益型產品比例。例如,一個30歲的人士的權益型產品比例應佔投資組合的70%,而一名60歲的人士的比例應為40%。在上世紀80及90年代,利率高企,權益市場波幅大,通脹率也剛從高位回落,100法則獲廣泛應用。

然而,在最近的十年,特別是2008年金融海嘯後,100法則再也不能準確計算合適投資比例。很多人嘗試在公式上加上20或30年,從而得出「120法則」或「130法則」。可是,現實情況卻反映這些新法則的結構過於簡單。

新時代的新建議

既然要改善及延長儲蓄及投資方面的收益和期間,人們就要小心考慮如何在風險增加的同時,保證投資組合得到妥善管理。這表示投資者必須花更多時間研究投資的產品及方式。權益產品常被視為長期投資組合的核心。它們的投資範疇覆蓋不同市場,風險程度也會因應投資經驗和要求而有所不同。您的權益產品很多時候會投資於美國和歐洲的主要股票市場,但對於亞洲投資者來說,這代表他們大部分的資產將會被放置於國外,並以外國的貨幣計算。如果投資者在退休的時候選擇套現,便必須面臨外匯風險。

對香港投資者來說,由於港元與美元掛鈎,把資金投放在以美元為結算單位的產品時便可以減少此類風險。

此外,善用最新的投資工具也很重要,這些包括對沖和其他投資基金、私人權益產品及交易所買賣基金。這些都是過去所沒有的,並可供個人投資者及專業投資經理應用。當然,如果您沒有這方面的經驗,最好還是由專業投資經理使用這些工具來選擇及管理資產。每一種工具都有其優點和缺點,並能夠提高投資組合的收益。可是如果使用錯誤,則會導致投資者蒙受損失。

對那些接近退休的人來說,最佳的建議就是把投資期間延長,比您從前所預期的更長。不要假設只要把錢放在政府債券或定期存款,便能夠獲得足而應付退休的資金。目前,政府債券和定期存款的利息十分低,您必須審慎考慮是否應把過多資金放進去。另一方面,您也不應該把所有資金放在高風險資產。最好的方案還是持有一個平衡型組合,並跟隨市場情況而作出適當調節。 BM

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