5 steps to financial Zen-ity – Channel NewsAsia

Investing prudently can help you enjoy greater peace of mind. PHOTOS: Shutterstock

Being known as a risk-taker may make you feel like an extreme-sports athlete. We applaud your sense of derring-do, but sometimes it’s better to let your mind and body get some rest so you can take on the next challenge.  

On a similar note, if you’re the type of person who seeks to capitalise on market chaos, we applaud your ability to take on big risks for potentially big gains. Discretion is sometimes the better part of valour though, and playing it safe can be your best bet for peace of mind, especially if you’re building your savings for retirement. 

Risk-taking is laudable, but making well-balanced investments allows you to live a pleasant life with few worries.

Multi-asset income solutions can spread your investments across different types of assets to balance risk with reward. It can help deliver sustainable returns, a regular income and grow your long-term savings.

Here are five helpful principles to consider on your journey towards financial zen-ness and enlightenment as you build your retirement savings.

1. Focus on sustainable income

It’s easy to get lost in the moment at a mega-sale and leave the mall with 10 fidget spinners that seemed “like a good investment” at the time. One of the biggest risks you’ll face when investing is buying products that offer potentially higher yields but don’t guarantee your capital or place it under considerable risk.

Don’t be swayed by word on the street: Do your own research or seek professional advice, and focus on high-quality securities that can offer sustained growth opportunities. Assess factors like a fund’s track record or a security’s ability to pay dividends over the long run. Sustainability isn’t just good for the environment, it’s also great for your retirement account.

2. Adopt a balanced investment diet

Everyone knows that chilli crab is the greatest thing since sliced bread. We’re no health experts, but eating chilli crab every day probably isn’t good for your diet.

Similarly, putting your money into a single asset class isn’t a healthy approach for your investments, especially if you’re trying to grow your retirement savings. You’d be vulnerable to the risks within one asset class, such as volatility in equity markets or political factors inherent in emerging market debt. These risks may lead to underperformance within a particular type of asset.

Investing in different types of assets, however, could help cushion your losses if one asset class isn’t giving you the expected returns. Since different types of assets have differing up-and-down cycles, diversifying improves your chances of riding out economic uncertainty, especially over the long term.

A variety of assets are the ingredients for healthy investments.

3. And stretch …

You should only take risks that you’re comfortable with, but taking a long-term approach to building your savings gives you the flexibility to consider taking on a little more risk than normal. How is this so?

Say you’re building your retirement savings over a period of 25 to 30 years. Having a longer time frame lets you consider investment options with slightly more risk than you’re used to. If it doesn’t work out as you’d hoped, you’ll have more time to recover from potential losses. If it does go according to plan, your retirement savings could receive a welcome boost.

4. Be cool

If you thought being cool was important when you were in school, well, it’s even more important when you’re building your retirement savings. Keeping a cool head can help in the long run as you won’t spend your savings chasing market trends, whether they are cryptocurrencies or shares in that avocado sandwich franchise everyone’s raving about. Doing so can adversely affect your returns, especially if you jump on the bandwagon late.

Conversely, if you sell your stocks when the markets drop, it will be more likely that your temporary losses will become permanent. Depending on the situation, taking a longer-term view could help minimise your losses or even increase your earnings if markets recover.

5. Take an active interest in your investments

Investing actively can help you reach your financial goals sooner than you thought.

Leading a passive lifestyle isn’t good for your health. Likewise, taking a passive approach to some investments may not be good for your financial well-being.

Your needs will change as you get older. Investments that carried more risk when you were in your 20s may not be as appealing when you’re closer to retirement. For that reason, remember to take a look at your investments regularly or better yet, work with a professional to find a solution that works best for you.

Don’t want to fret over your finances? Find out which Schroders Multi-Asset Income funds best fit your needs. Simply ask your bank, financial advisor, or insurance company, or visit schroders.com.sg/MAI for more information.

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