The Situation
A business owner and retail investor in his 50s has successfully run his company while investing in various assets, including shares, properties, unit trusts, and fixed deposits. Despite this, he is uncertain whether his current portfolio can sustain his retirement lifestyle. He is also concerned about legacy planning—ensuring that his children can inherit his wealth smoothly while minimizing legal costs.
The Challenge
Although he has diversified his investments, several challenges have reduced the effectiveness of his portfolio:
Property Investments: Like many investors, he believed property could outpace inflation and generate passive rental income. While rental income continues, oversupply in the property market and weaker demand have significantly reduced property values. Meanwhile, he is still servicing mortgage loans.
Unit Trust Portfolio: His funds suffered from poor management and market downturns. Instead of actively reviewing and rebalancing, he chose to “wait for a rebound,” which exposed him to further opportunity costs.
Diversification Gaps: While he owns multiple asset classes, many were not actively managed. This created hidden risks and costly mistakes that undermined his long-term financial goals.
What We Did
Before recommending any solutions, we first reviewed his overall financial position—covering living costs, commitments, and family dependents. This holistic review helped him clearly see where costly mistakes were made and what steps were needed to optimise his retirement plan.
By the end of our first session, he understood how to restructure his investments to reduce risk while still achieving reasonable returns. Unlike a DIY (do-it-yourself) approach that many retail investors take, he learned that working with a licensed Independent Financial Advisor (IFA) can provide a safer, more structured path to achieving retirement certainty.
Lessons for Other Investors
How can you avoid ending up in the same situation?
Here are three key takeaways:
1. Review your investments regularly.
Don’t hold on to underperforming assets for too long. Be proactive in replacing poor-quality investments with better alternatives.
2. Don’t rely too heavily on fixed deposits.
With today’s low interest rates, fixed deposits barely keep pace with inflation. Keep only your emergency fund in FD and invest the rest into instruments that can generate higher long-term returns.
3. Diversify your retirement income.
Relying too heavily on one asset class, like property, can be risky. Rental income may not always be sustainable, and market downturns can affect capital values. Spread your wealth across shares, bonds, unit trusts, retirement income products, and other assets to protect your income streams.
Final Thought
Ideally, retirement planning should begin years before you stop working. The earlier you plan, the more time you have to refine your investment skills, adjust your strategies, and build a resilient income stream for retirement. With proper guidance, you can enjoy retirement with confidence and leave behind a smoother legacy for your family.
