As a financial advisor, I am all the more sensitive to the fact that I cannot count on anyone else but myself when it comes to retirement.
You’d be forgiven if you thought successful financial advisors live like bankers. We put our money into high yield investment products, make lots of commissions, make it to the Million-Dollar Round Table club, live the high life, buy properties, and live off rental income. Or, something along similar lines.
Maybe our appetites for risks are bigger than the average person. But this just means we make our money work very, very hard.
For me, I am extremely concerned with retirement. Compared to say, making big bucks off the stock market, retirement planning sounds super unsexy. But, trust me, they are really just two sides of the same coin.
I’m gay and because I won’t be having any kids to support me when I’m old (not that having kids is a guarantee against poverty in old age), retirement planning is my thing.
My priority – when it comes to my money – is building that safety net where I’ll be able to provide for myself if I retire.
60 – 70% of my income is spent on investments and savings products
What I do for myself – financial planning wise – is exactly what I do for my clients. I always recommend that my clients have a mix of investments and savings products from different companies in their portfolios, I do the same too.
However, unlike many of my clients, a large proportion of my income goes towards growing my portfolio. I spend upwards of 60% of my income on my safety net. I work hard for my money and I want to make sure that my money, ultimately, works hard for me.
Some rules of thumb that I follow:
1. I have a system in place and I Giro a fixed sum of money into my portfolio every month.
2. I strongly believe in the principle of Dollar-Cost Average. Whether the market is up or down, I stick to my investment plan. Given enough time, your investments will work out to be more valuable.
3. I do my research and if a stock is worth it, I’m the type who will pay a bit more to earn a bit less.
Of course I splurge!
I know it’s a cliche to say this but financial advisors are humans and we are not immune to temptations. My weaknesses are watches, glasses, and shoes. And you know what? I’m the sort who will spend whatever is in my bank account. This is why I find it hard to track my spending and why I Giro the money for my investments.
There are definitely things that I consider must-buys. I spend about $280 a month on my gym membership but I see that as an investment in my health because I cannot afford to fall sick. Every year, I make it a point to go for a 10-day meditation retreat to recharge. Being a financial advisor is more than just selling your clients products, it’s also about being their partner in life-planning. I find that often, I absorb some of my clients’ fears and frustrations and that takes a toll emotionally. So, even though 10 days away represent an opportunity cost business-wise, I believe it is good for my career in the long run.
Advice for those concerned with retirement
1. Have an opportunity fund
Although a large portion of my money goes towards retirement planning, I have a small opportunity fund that I set aside so I can take advantage of any unforeseen opportunities in the market.
2. Don’t be driven by fear or greed
Retirement planning is all about discipline and that’s why I Giro a sum of money into my portfolio no matter how the market is doing. Doing this also means you’re less likely to go, “I’ll keep my money in the market and see if it comes back up so I can make back what I’ve lost.” You must remember that you are investing, not gambling.
3. Factor in some degree of flexibility
When I plan for my clients, I always factor in some flexibility. For instance, in the event of job loss, the investment products I got for them have no lock-in period or allow for a pause or reduction in payments. Health insurance remains a vital component in any portfolio because you don’t want to worry about draining your money, you want to focus on getting well again.
The concept of retirement planning does get a lot more intimidating as we grow older but by being smart and disciplined with your money, you can still build yourself a decent nest egg.
