Taking risks is easy when the outcome is of little consequence.

Typically, as we move further down the road in life, we become more asset-rich but time-poor.

That shift changes the consequences of our decisions significantly. 

More to Lose, Less Time to Recover

The older we get, the more we have at stake and the less time we have to recover from any mistakes.

As we approach the point where we stop building wealth and start using it, concerns naturally start to creep in:

• What if markets fall and my income takes a hit?
• Will my money last?
• Have I covered everything I could be doing to improve my outcomes?

These are completely natural concerns.

The consequences of a misstep become more severe and that’s when people often feel pressure to choose between extremes.

Two Tempting Options

Option 1: Go for Growth
Invest heavily in growth assets like shares, aiming for higher returns. Draw income by selling capital when needed.

People that are concerned that they do not have enough often take this approach. I think this is when people are at risk of believing in an investment scam as the returns promised are unrealistically high but appealing. 

Option 2: Play It Safe
Stick to income-producing assets like bonds or cash. Keep capital “safe” and live off the interest.

Both of these options are risky.

What Could Go Wrong?

Option 1 – Sequence Risk
Markets crash as you approach or enter your retirement. You’re forced to sell assets at low prices to fund your income needs. You lock in losses, and recovery becomes harder with every drawdown.

Option 2 – Inflation 
Your income may be fine in the early years. But over time, as the cost-of-living creeps up and your returns stay flat, your buying power quietly vanishes.

It’s Not About Picking a Side

The best answer usually lies somewhere in between but it is different for each individual.

Putting some context around what is actually at risk when considering various options available to you is a good starting point.  

Want to dive deeper into this decision or see what the “somewhere in between” looks like for you in particular? Let’s talk.

#orderpurposeprogress

If you have any questions about the above or would like to see of we are a fit and how I can help support you in managing your financial life please get hold of me:

Email Dominic

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