The stock market
Past Performance is not a guide to future performance.
Your Investment Journey Doesn’t End When You Retire
You've finally done it. After decades of saving and investing, you've reached retirement. There's enormous relief and excitement about what awaits in the next chapter of life. But then a new worry creeps in. For the first time ever, you're living off your investments instead of adding to them each and every month.
For many investors, their first instinct is to “play it safe” with their hard-earned investments. This thinking may have made sense for previous generations. Most investors retired, bought an annuity (turned their pension pot into an income for life), and lived off the guaranteed payments. For many, the investing was done, the end of the road.
But times have really changed. Today's retirees (couples) face retirement periods of 20 to 30+ years, not the shorter timelines of the past. At the same time, investment markets have become more sophisticated, while lower interest rates have made guaranteed products less appealing.
What was once a safe approach is now a risk to your financial future. Our challenge to all investors, especially retirees, is to recognise that their investment timeline is much longer than they think.
The Reality Check: You're Investing for Decades, Not Years
It's easy for retirement to feel like the finish line. You've moved from the savings stage to the spending stage. Finally, no more worrying about the stock markets and investment returns.
However, that's no longer the reality. Today's 65-year-old couple has a one-in-three chance that at least one partner will live to age 95. Seen through this lens, it's clear that your spending stage could be as long as your savings stage.
The conventional strategy of gradually shifting to low-return, low-volatility portfolios in the years leading up to retirement is no longer sensible given this reality.
Rather than being at the investment finishing line, you are merely at the intermission. Your planning, mindset, and investment strategy need to reflect this. Your assets will ideally need to provide a rising income for up to three decades to keep pace with inflation.
This might feel overwhelming. But it's actually good news. You're not a retiree managing a shrinking pot of money. You're still a long-term investor, just in a different life phase.
Why Playing It 'Safe' Is Actually Risky
We understand that market volatility feels different when you can't replace temporary declines with further contributions. Your appetite for risk has changed, and those "stable" investments look awfully appealing.
But playing it safe is actually the riskiest thing you can do.
While you're focused on avoiding short-term fluctuations, inflation is quietly eroding your purchasing power. The things you buy today will cost dramatically more over the decades ahead. Meanwhile, those "safe" investments? They often can't keep up with rising prices.
We see this all the time. Portfolios that feel comfortable today often leave people struggling to pay their bills twenty years later.
The answer is not to throw caution to the wind. However, by understanding your required rate of return and building in a safety net, you can put yourself in a position to invest for the long term with confidence.
As an example, by keeping one to three years of expenses in cash or short-term investments, you’ll never be forced to sell assets at a bad time. You gain peace of mind, but your remaining funds can still pursue the growth you need.
We know from history that market volatility is temporary. Markets recover. But inflation's damage is permanent. Long-term investment returns are permanent, too, helping build wealth for those patient enough to stay invested.
The cash bucket lets you ignore the temporary whilst capturing the permanent.
Embracing Your True Investment Timeline
We can’t stress this enough: you're not a retiree managing declining assets. You're a long-term investor with a multi-decade investment horizon. Your investment strategy and asset allocation should reflect this reality.
We encourage you to review your current approach with this extended timeline in mind. Ask yourself: "Is my portfolio designed for a 30-year journey?" If not, it may be time to align your investment strategy with the reality of modern retirement.
We understand that maintaining growth-oriented portfolios in retirement requires both courage and careful planning. As your adviser, we recognise that implementing this strategy involves navigating complex trade-offs between your changing risk tolerance and your unchanging need for long-term returns.
Your financial independence over the coming decades depends on striking the right balance. We're here to help you navigate this transition with confidence, helping ensure your assets work as effectively in retirement as they did during your accumulation years.
Past Performance is not a guide to future performance.
😀 Rational optimism 😀
The media is not a friend of the disciplined and patient investor. Ignoring the key determinants of lifetime investor returns, the media focuses on short-term returns, market predictions, and negative news.We present the following as an antidote to the onslaught of negative news:
The Length of Software Tasks AI Can Do Is Increasing Quickly
InventWood to Produce Wood That’s Stronger than Steel
Apple to Support Brain-Implant Control of Its Devices
📰 Read 📰
The Secret to Compounding [5 minutes]. When you take care of today, tomorrow takes care of itself.
How Will You Measure Your Life? [10 minutes]. Applying business theories and management principles to your personal life.
Some Things I'll Never Spend Money On [3 minutes]. Prioritisation is one of the best ways to both enjoy and save money.
How to Survive the Wrong Turns in Life and Markets [8 minutes]. Navigating life's challenges and market fluctuations requires resilience and adaptability.
The disease of more [9 minutes]. In a world overflowing with choices and information, are we truly happier, or have we contracted the "disease of more"?
These Are All The Ways I Feel Poorer Than I Am [7 minutes]. Reflections on how anxiety and busyness can detract from a fulfilling life.
🎧 Listen 🎧
The Spending Practice [1 minute]. Every financial decision is an opportunity to become more aligned with who you truly are.
🍿 Watch 🍿
🖼️ A picture is worth a thousand words 🖼️
The World's Ageing Population and Falling Growth Rate
Visualising All of the World's Billion-Dollar Companies
Life Expectancy by Country in 2025
We hope that you enjoyed this month’s newsletter. Please let us know what you enjoyed or write back with any of your own news.
As always, we're here for you.
See you next month!
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This article is based on the opinion of Foster Denovo and should not be seen as providing advice on a suitable investment strategy, you should not take any action based on the content of this article you should seek Financial Advice regarding your own investment strategy.
The value of an investment can go down as well as up and you may get back less than you originally invested. Past performance is not a guide to future performance.
When investing your capital is at risk.
Foster Denovo Limited is authorised and regulated by the Financial Conduct Authority. Registered office: Foster Denovo Limited, Ruxley House, 2 Hamm Moor Lane, Addlestone, Surrey, KT15 2SA. Phone: 01932 870 720 Email: info@ fosterdenovo.com Website: www.fosterdenovo.com