Building an Investment Portfolio For Your Retirement

Posted by Oliver Hickman on 05/04/18
Building An Investment Portfolio For Your Retirement1

For many of us, retirement can seem a long way off, something we’ll deal with later once we’ve finished enjoying life. Unfortunately, age creeps up on us when we least expect it. Before you know it you could be ready to retire but lack the funds needed to support your lifestyle.

You need to start planning for retirement as soon as possible. If you haven’t already started, then now is the right time! We’ve created this short guide to help you get started with retirement planning & property investment.

Step 1: Figure out how much you need

All retirement plans begin with a number; how much money do you need in the bank, or how many homes do you need in your property portfolio, to fund your retirement lifestyle without having to dip into your base savings.

This number differs depending on your lifestyle and circumstances. Think about your current costs – some of them may decrease (if you own your home outright, you won’t have a mortgage) and some will increase (health insurance, for example. Or maybe you plan to travel a lot more).

You’ll also need to take into account how many people you’ll be supporting, and how many years you’ll need to fund. If you intend to retire early (before 65) you’ll need extra money to cover this time.

Step 2: Get your financial plan in place

Retirement planning is one part of a solid financial plan. Start by getting your finances in order and:

  • Paying down credit cards and consumer debt.
  • Paying extra off the mortgage to get mortgage-free sooner. (Use our Mortgage-Free Faster calculator to find out how property investment can help you do this).
  • Contributing to Kiwisaver, which offers government-funded incentives for retirement investments.
  • Reducing costs or expenses in other ways to bring down the total amount you need to save.
  • Start looking into ways to generate additional wealth, such as investing in shares, index funds, or property.

Step 3: Build your investment portfolio

Unless your financial plan consists of “winning the lottery”, your retirement will be funded through NZ Super, plus money you generate through investments. These investments might be in the form of company shares, managed funds, index funds, term deposits, or rental properties.

The investment vehicles you choose make up your “investment portfolio.”

We recommend looking at different investment options and choosing a range that work for your lifestyle and goals. It’s best to have a diverse portfolio with a range of investment options, in order to spread your risk evenly across a range of asset classes.

Property is an excellent option for kiwi families looking to fund their retirement. It enables large capital gains without the requirement for a massive injection of wealth. You can usually get started in property using the equity you’ve built in your own family home. Property investment can help you accelerate retirement savings (and, in fact, many of our clients have been able to retire early thanks to their property portfolios).

Are you on track to fund your retirement, or do you need to get started yesterday?

Don’t forget to contact us if you’re ready for a free discovery session to help you figure out your investment property strategy.