When retirement is knocking on your door a new lifestyle is just around the corner.  The days of traveling to work every morning can finally be exchanged for time spent with your family and friends. 

As you near retirement, the assets you have gathered and the money you have saved are extremely important.  After all, this is your nest egg and it will need to provide you with money for the rest of your life.

When some investors near retirement, they fail to make proper adjustments to their investments.  The last thing an investor wants as they near retirement is a sudden decline in their nest egg.  When it comes to retirement, your mix of investments is important, as well as the style of investing you practice. 

Below are some ways BDO Securities and BDO Unibank can help.

Asset allocation

If you’re a year or two away from retirement, you should invest differently than you did when you were fifteen years away from retirement.  One important consideration is your asset allocation. 

Asset allocation is the ratio of money you have spread between different assets.  For example, many investors keep most of their money in real estate and stocks.  Both real estate and stocks are considered asset classes.  While it’s ideal for many investors to have most of their investments in real estate and stocks, it may be a bit too aggressive for someone nearing retirement.  Bonds may be a consideration to add to your investment mix. 

There is no one answer for the percentage of a portfolio that should be in stocks vs. bonds.  However, when nearing retirement, many financial professionals would recommend a mix of at least fifty percent bonds and fifty percent stocks.  While this completely depends on your age, the amount of money you have saved, and your risk tolerance, the fifty percent stocks and fifty percent bonds model is just a general guide.

If you have just enough money for retirement and can’t risk any decline in value, you may want more bonds in your portfolio.  If you have plenty of money for retirement, more stocks in your investment allocation may be suitable.

Dividend investing

Many investors nearing retirement use a dividend income investment strategy.   Investing in dividend stocks helps generate income that can be used in retirement.  This income can be spent on expenses when in retirement, or it can be reinvested into the stock market (or bond market) to increase your investments.

By investing in dividend stocks as you near retirement, you can start building an income stream of dividend income.  Once you reach retirement, you will have built a portfolio with dividend-paying stocks to help supplement your finances.

Remember, if you use an asset allocation with a percentage of stocks and a percentage of bonds, you will only invest the percentage allocated towards stocks into dividend stocks.  The other percentage will be held in bonds.

Finding dividend stocks is easy with BDO Securities.  The Weekly Wrap report includes a list of dividend yields of forty plus stocks covered by BDO Securities.  This report can help you find stocks that pay dividends (see below):

Stock trading and long-term investing in retirement

Retirement can be a perfect time for people interested in investing in the Philippine Stock Exchange.  This is because, once retired, you have the time to keep up to date with the market and focus on your investments.  As you approach retirement, you can take steps to learn more about investing so you have experience once you’re retired.

Trading and retirement

If you are new to the Philippine Stock Exchange and would like to learn how to trade, you may want to take a small amount of money and practice as you approach retirement.  If you’re just learning how to trade, you may not want to use a large portion of your money.

However, you can earmark a smaller portion of your investments to allocate toward trading.  This way, once retired, you’ll have experience trading.  You can then trade stocks during the day and increase the amount of money allocated towards trading.  One way to start learning how to trade as you approach retirement is reading BDO Securities’ Technically Speaking report (see below):

If you read this report weekly, it can help you develop a better understanding of trading stocks.  The report lists BDO Securities’ opinion on entry and exit prices of a stock and can help you find stocks to trade.

Portfolio management in retirement

While trading may be a bit too time-consuming for you in retirement, you may prefer to focus on portfolio management.  One of the tasks you can do as you approach retirement is to read the BDO Securities research reports regarding the stocks you buy.  By keeping up to date with your stocks, you can better understand the opinions of the BDO Securities analysts.  This can help you decide if you should buy more of a stock, sell the stock, or hold the stock.  BDO Securities’ reports can also help you find new stocks to buy.

As mentioned before, if you’re using a dividend strategy you may want to read the Weekly Wrap to find dividends stocks.  However, the Weekly Wrap isn’t just good for dividend stocks, the report lists the upside potential of over forty stocks covered by the BDO Securities analysts (see below):

By reading reports like the Weekly Wrap each week it can help you sharpen your investment skills on your way to retirement.  This way, once you are retired, you will have knowledge about the BDO Securities reports, how to use them to find stocks to buy, and how they can help you monitor your existing positions.

Conclusion – Investing with BDO Securities near retirement

As you approach retirement, it’s important to look into your asset allocation.  If you’re too heavily weighted toward risky asset classes like stocks, you may want to think about adding bonds to your portfolio.  Once you have a proper investment mix of stocks and bonds, you can decide the best investment strategy for you once you’re in retirement.

Some retirees prefer a dividend investing strategy since it allows them to generate income.  Investors sometimes use their dividend income to supplement their living expense while others reinvest their dividend income into more stocks and/or bonds. 

The closer you get to retirement, the better it is to learn about the stock market.  Since retirees have more time on their hands, it’s a perfect period of your life to focus on your investments.  Because retirement can be a great time to manage investments, the time period before retirement is perfect to learn about the Philippine Stock Exchange.  If you’re interested in trading stocks in retirement, maybe start reading BDO Securities' Technically Speaking report and trade a small amount of your portfolio to gain some experience and practice.

If you prefer to focus on portfolio management, read the BDO Securities reports regarding the stocks you own.  By familiarizing yourself with BDO Securities' reports, it can help you better understand the stock market.  You can also read the Weekly Wrap each week to find new stocks to buy and keep up with the weekly market.

The good news is retirement is just around the corner.  What you do today regarding your knowledge of investing and the allocation of your investment portfolio can help jump-start your retirement.  If you’re ready to better understand the Philippine Stock Exchange and not yet a BDO Securities customer, you can sign up for an account below

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