Retirement Queen Nigeria

Factors to Consider When Planning Your Retirement Portfolio

Factors to Consider When Planning Your Retirement Portfolio

If you still have 10yrs to your retirement, you can still reach your retirement goal, accumulate enough savings and investment for yourself with proper planning, commitment and dedication grow a diversified portfolio that can last for three decades or more

Planning for retirement means evaluating not only your expected spending habits and revenue in retirement but also estimating how many years your retirement fund may possibly last. Retirement age in Nigeria is 60 years; you need to plan for at least 30 years retirement life.

This must be done carefully taking into consideration the growing level of living expenses, housing, medical, and healthcare._ 

A retirement that would last 25 to 30 years looks very different from one that may only last 5 to 10 years._

This becomes so important because you don’t want to run out of money or have no enough money to live through your retirement age. This is the reason we are advocating for personal retirement savings/investing account as a way of increasing your savings rate and cutting back on unnecessary spending to complement your Statutory Retirement Savings Account._

Therefore, a proper estimate would guide you to have an idea of how much more you would need to save as you get closer to your retirement age. Also, the need to review your risk tolerance level cannot be overemphasized because your risk appetite would play a pivotal role with regards to portfolio allocation without jeopardizing the sole aim of savings accumulation._

At this point, we cannot but stress that any retirement portfolio(s) at this stage should focus primarily on high-quality, dividend-paying stocks and investment-grade bonds to produce both conservative growth and income. The need for investment safety and capital preservation and the need for growth to hedge inflation is paramount._

Going by a popular guide that suggests investors should subtract their age from 110 to determine how much to invest in stocks. A 50-year-old, for example, would target allocation of 60% stocks and 40% bonds. However, it should be noted that taking on too much risk can be dangerous. Increasing bond allocations by 10% may be appropriate in this scenario for low-risk investors._

To put your risk tolerance and fund allocation in a proper perspective, you are advised to structure portfolio to reflect your age, risk tolerance, and market volatility. For instance, a Growth Portfolio of 70% to 100% in stocks may be recommended for an investor who has 30 years to retirement age while an Income Portfolio of 70% to 100% in bonds or a Balanced Portfolio of 40% to 60% in stocks may be recommended for an investor who has 10 years to retirement age._

We are professionally advising you to get serious with savings and investment for your retirement age. if you are low on savings at 50 yesrs of age, you are seriously advised to double your efforts on savings and investment while you are still employed and earning a steady income. If you have little saved for retirement, this is a wake-up call for you to get serious about turning things around._

However, one of the most challenging aspects of creating a comprehensive retirement plan is striking a balance between realistic return expectations and a desired standard of living. The best solution is to focus on creating a flexible portfolio that can be updated regularly to reflect changing market conditions and retirement objectives.

Article by Mr. Gilbert Ayoola. A capital market Investor, Analyst Consultant & Advisor Currently the Zonal General Secretary of Ibadan Zone Shareholders’ Association of Nigeria (IBZSA)

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