Goal-based investing: managing your lifestyle and financial risk

As we continue to live longer and more active lives, post-retirement expectations are changing. In earlier decades, “health-span”, the period of time in which we are generally healthy and active, was limited and often coincided with retirement age. With shorter life expectancies, too, this meant retirement planning often focused on care, and for steps afterlife. 

We live in a different world today. People continue to live active, fulfilling lives for twenty to thirty years after they retire. In many cases, we see people holding off on retiring and continuing with successful careers into their late 60s and beyond. But longer life spans and longer health spans mean that the expenses we associate with an active living will remain a key factor for longer than before. In order to maintain a healthy and fulfilling lifestyle, this makes it incredibly important to focus on your investment planning, to ensure you have the right income to match your life expectations today, and decades down the line. Let us take a look at some of the factors involved in building out a strategic, long-term post-retirement investment plan:

Align your current investments to fit your future lifestyle

This is by far the most important factor: you need to have a clear understanding of what you are planning to do post-retirement and what that entails financially. If you are interested in traveling the world, pursuing a hobby, or moving to a new community, you need to have a good picture of what the costs entail, from both an immediate and a long-term basis. You will also want to factor in other likely expenses you may end up incurring, such as graduate and post-graduate education costs for your children and long-term healthcare and support for yourself and your partner. 

The key here is to identify the essential aspects of the things you want to do - this will allow you to triage and eliminate extraneous costs: traveling, for instance, does not necessarily mean going on luxury cruises for months on end. Once you have identified the real core of your retirement plans, assess your current savings and investment posture. Realistically, how much can you set aside right now, as a proportion of your income, to meet those future expenses? How does saving and investing align with your current needs? What kind of returns would you need on your investments to generate the income you need in the future without compromising on your current lifestyle? 

Diversify your assets so that it works for you while you sleep

In order to enjoy a fulfilling post-retirement life, investment is key: you will need to make your money and assets work for you to generate income. When building out a long-term investment strategy, however, it is important to make sure you are spreading the risk. An aggressive investment strategy can see real returns, but it needs to be complemented by a bedrock of solid, stable assets  
When you spread risk, which can be achieved by diversifying your portfolio, you increase your resilience to uncertainty and to events like the COVID-19 pandemic that can have a significant medium-term impact on global markets and your portfolio, without compromising on solid, consistent returns. 

Unlock the value of your capital through cross-border investments through safe platforms

Currently, Indian stocks comprise only three percent of the total global market. While India is an engine of growth, savvy investors look to diversify portfolios internationally across major markets like the US, China, and beyond. This offers them a route to invest in a diverse set of companies that can provide good growth potential while reducing their correlation with the home markets and therefore making their portfolio less vulnerable to country-specific shocks.  However, international investing can be daunting for those unfamiliar with the markets. However, specialist international investment platforms can help you access mature markets like the US. Some of these platforms offer tailor-made baskets of US stocks and ETFs, catering to different post-retirement goals and with a variety of thematic focuses. These are often the best way to get into the market - you’ll get one-click access to a diversified portfolio of US stocks and other instruments that align with your specific risk appetite and investment goals. 

Conclusion

As we are living longer, more fulfilling lives, securing our financial future is becoming all the more important. For this, it is important to have your money working for you, and building a diversified portfolio is a time-tested way of doing so. In order to build a well-diversified portfolio, investing internationally is crucial. When you work with international investment platforms, you unlock the full value of your capital by accessing markets in the US and beyond that drive the global growth engine. When we are talking about active living 20-30 years post-retirement, a solid, goals-based investment plan with a focus on international markets is the only real way to ensure success. 

A version of this article was published on Outlook Money.