Good to Great: How to Scale With an Outsourced CFO

Just picture it: You're lying back in that hammock, thinking I have no idea what time of day it is. And you don’t care either. You're not in that work mode anymore or flying out the door to be on that nine to five treadmill. You're happily retired and your only real concern involves sorting out how many games of golf you can fit in during the week.

There’s nothing too stressful about that.  

It's a scenario we all have pictured in our heads. Happy retirement after years of sweat and toil. You have to be careful how you organise it all. There can be plenty of issues along the way, just waiting to snare the unprepared.  Here are some that are to be avoided at all costs, like ignoring growing aged care costs.

 

Not having a budget in place.

A budget as we all know is a way of keeping all your spending habits under control. It highlights when and where you spend your money, areas where you can save and ways to trim your finances. The bottom line is budgets are all about taking control of your money and managing your cash flow.

To get a grasp of how to create a future budget while you're working, try living with a fixed budget for a while. Reduce your spending and take hold of those credit cards and lock them away in a safe somewhere. Look at your current income and live on say 60% of it. It will give you a realistic idea of what changes you might have to make in your lifestyle leading up to your future retirement.

 

No diversification within your investment portfolio. 

In times of increased volatility in the marketplace, holding a small number of investments exposes you to greater investment risk. Put your diversification hat on and spread your investments across fixed interest, cash, shares and property. By doing so, it will produce more consistent investment returns over the longer term.

You should also diversify your investment time frames for maturity. By setting short as well as long-term goals, it will enable you to have enough money throughout your retirement. 

 

Panicking when there's volatility in the market.

Investing isn't always a smooth ride. The market as shown over the years reacts to different trends and major events sometimes in a volatile manner. It's in these moments that you should keep a cool head and stay with your investment diversification strategy.  For example, if a quality investment falls in value, it's usually the worst time to sell. By selling, it will only realise your losses. But if you hold on and ride out the storm, there's the opportunity when the market is down, to buy even more, leaving you much better off when the market recovers.  

 

Not doing enough research.

Before you set out on your merry way to invest in any asset, you have to understand the benefits and risks of your investment to make sure it matches your needs and objectives. Understand your risk profile. Know the level of investment risk you feel comfortable with by taking into account the time frame for investing, diversification and the expected level of return.

When you research your investment, investigate it thoroughly.  Find out who is behind it. Then take a breath, step back and appraise the situation. In doing so, it will give you the time you need to look at all the dynamics in play and properly evaluate whether the investment is right for your strategy.   

To feather your nest egg, get in contact with an Altus Adviser.