Retire Early, Retire Well

The other day, we left the office that our former US parent Agora Inc. provided. We’re moving to a new space in the same building. While that gets arranged, I’m working from home. And there’s a sense of loss.

It was a great little office. Double screens for the markets. Views over the city and through to the harbour. A place we’d been comfortable in for a while.

Today, sitting alone at home, I try to understand what it might feel like to retire. To have no workplace to go to. Even if that’s just temporary.

I’ve spoken to people who’ve gone through the process. And they tell me there’s a sense of grief, of loss. And then some unexpected expenses.

Now, we’re a business devoted to researching opportunities in the market. To help people build financial independence and prosperous retirements. This involves a process of building up a robust portfolio by doing the following:

  • Identifying where value may lie
  • Targeting opportunities
  • Buying those opportunities favourably
  • Harvesting the income
  • Holding or recycling opportunities according to the outlook

When you combine your savings with strategy over time, you may discover that you actually end up with more than enough money. And all the time you could wish for.

But newfound time can bring its own set of challenges. So it would be remiss of us to give you financial tools that can buy you time — but not to show you how to actually deal with time when you’ve got it.

We also need to consider what might happen if you need to draw down on your capital for unexpected expenses. If you have an income-focused portfolio, that might feel like killing one of the golden geese!

Here’s a rundown of some of the emotional challenges you might face…

Missing a sense of purpose

Even those who complain every day about work suddenly miss it when it’s gone. It’s the sense of purpose they miss most. The contribution they make. And when you remove that contribution, it’s like cutting out part of your identity.

A new daily routine

Work has its routine and hours. Remove that and you can feel cast adrift. Where do you go now? And what do you do? While it may be enjoyable at first to chill out at home, it can soon seriously lack the stimulus you’re used to.

Reduced social interaction

You used to share a joke with your colleagues. Meet and greet clients. Have meetings and coffee. Feel part of a team. Enjoy company awards, dinners and celebrations. That’s all gone. It can be a tough adjustment.

Unexpected expenses

It happens suddenly when you least expect it: high health costs.

These come from either increased insurance premiums with age, or deciding to pay for an operation like a hip or knee replacement because you get tired of waiting on the public system.

Then, after you’ve paid for this, your own kids come back and live with you because they’re having trouble kick-starting their career. Or they need help with tertiary education costs.

Job growth seems to be slowing in New Zealand. The current government has failed to provide enough fiscal stimuli for job creators. Alongside that is a fluid and global work environment which makes jobs more volatile.

Planning is key

Like much in life, you’re navigating changing seas. The key is to map out your journey. Know where you want to go. Plan enough activity to be busy and secure enough.

As with investing, it’s a good idea to start your pipeline early. Then it can start flowing riches into your life.

Take a friend of mine, for example. He’s in his late 70s and claims he’s not had time for retirement since he got too busy. In actual fact, he never retired. When he could see his last job finishing, he put a pipeline of activities in place.

My busy friend has years of experience in the automotive industry. So he contracts himself out as a consultant. This retains some purpose — working in a more flexible way in an area he knows and loves. And the extra income means he shouldn’t have to touch his capital.

He’s become involved in the community. He’s socially active through the RSA, the Toastmasters speaking club, and another club involving tripe (don’t ask) that seems to involve plenty of beer.

He has an 82-year-old girlfriend. Not to mention stock-market investments and a property to keep an eye on.

There’s plenty to keep him interested and active — which encourages his good health. And, as far as I’m aware, he has no children knocking on the door for money or accommodation. Lucky him!

Adjusting your investment approach

As you grow older, another change you may have to consider making is in the focus of your investing.

While speculative, high-growth companies may grow your wealth, they may also pose a greater risk. You no longer have a lengthy time horizon to experiment with.

This means you should consider moving from a capital-growth focus to actually getting that capital to produce more immediate income for you to enjoy.

The sweet spot? Investing in opportunities that deliver strong dividend yield with capital growth upside. Enjoy the income, then leave a pool of wealth for your kids.

In our Lifetime Wealth Investor research newsletter, we’re developing a portfolio that focuses on both these opportunities.

We rate our picks in terms of risk:

  • Speculative — with the potential for higher growth.
  • Medium risk — where there’s more of a focus on income yield and capital preservation.

Our purpose is to scour the global markets for value and opportunity.

The average running yield (dividends) is sitting at 5.9%. And our average capital growth since 8 July 2019 is sitting at 8.2%. Not bad for two months’ work!

Remember: share prices may rise as well as fall. And the income from them is not guaranteed.

But this started with a plan — to provide the best growth and income picks we could find worldwide. And to train people how to access them.

Of course, things keep changing. Change keeps life interesting. A plan for that can sure help.

You can learn more about our Lifetime Wealth Investor plan by clicking here.

Regards,

Simon Angelo

Editor, WealthMorning.com


Simon is the editor of Wealth Morning and has been investing in the markets since he was 17. He recently spent a couple of years working in the hedge fund industry in Europe. Before this he owned an award-winning professional services business and online learning company in Auckland for 20 years. He has completed the Certificate in Discretionary Investment Management from the Personal Finance Society (UK), has written a bestselling book and manages global share portfolios.


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