Should your investments change as you age?

YOUR retirement investments are not static.

- MARTIN HESSE

AS you journey toward and through retirement, your investment strategy needs to evolve. L FILE

They need to be reviewed from time to time in accordance with an overall retirement plan, and there will be times in your life when changes will need to be made.

It is prudent to reduce investment risk as you get older, especially once you have retired. However, it is also widely agreed among investment experts that, to generate enough income for what may be a long retirement, you may need to maintain a relatively substantial portion of higher-risk investments all the way through.

Investment risk is the probability of your investment not performing as expected, typically through market volatility. When you have time on your side, volatility, which is a short-term risk, should not be a concern; in fact, it is necessary to ensure compounding, inflation-beating returns over the long term. But it does become a concern when you are approaching retirement, and even more so when you are in retirement and drawing an income from your savings.

Your investment journey can be divided into the pre-retirement (accumulation) phase and the post-retirement (decumulation) phase.

During your working career, of about 40 to 45 years, you need to save for the time in your life when you won't be working, which eventually comes to us all, whether we like it or not. Contributing to a retirement fund is the prime way of doing this because of the tax benefits, although you may supplement this with other investments.