The primary long-term goal for any personal investment plan is planning for retirement - investing excess income now to provide for a secure and comfortable lifestyle when we no longer can work, or, even better, when we no longer wish to work!
Today, with higher career volatility, corporate trends towards outsourcing and Retirement Trusts changing from defined benefit to defined contribution, the risk and responsibility for providing for retirement has shifted increasingly to you – the individual.
Remember, you will probably live longer than you expect - the improvement in medical technology and health habits will result (in time) in life spans of 90 and even 100 years becoming the rule rather than the exception. Someone retiring at 65 may well live a further 30 years or more.
Remember too that the cost of medical treatment, in particular, and general living expenses are increasing all the time and will continue to increase long after your retirement.
The younger you start to save and invest the easier it will be to meet your goals. The power of compounding returns over a few extra years can significantly increase your long-term returns.
Choosing the appropriate investment options will also make a significant difference to meeting your needs and goals.
Planning for Retirement
Saving for a rainy day is not one of New Zealand’s most popular pastimes.
Levels of personal savings are very low, even among the relatively wealthy.