The Two Rules of Investing
Warren Buffett once famously put it: “Rule number one is never lose money. Rule number two is never forget rule number one.”
It’s a line that gets thrown around a lot, but let’s be real it’s not often broken down to what it really means, especially if you’re starting to think about winding up your working life and heading into retirement. For those of us on the home stretch to retirement these two rules aren’t just catchy, they’re the heart of what matters when your super becomes your main safety net.
“Don’t Lose Money” Hits Different After 50
When you’re in your 30’s or 40’s a market tumble is just part of the ride, there’s time to bounce back. But once you hit your 50s and 60s, there’s less room for error. Chances are you’re earning the most you ever have, your nest egg is growing and your countdown to retirement is looking a lot more real. Suffering a big setback now could mean putting off those travel plans or tightening the belt down the track.
This is why as you get closer to retirement, keeping what you’ve worked so hard for front of mind is key. It’s not about shying away from risk altogether but about making smarter, more measured moves.
- Find the right balance: With retirement looming, it makes sense to dial down the high-risk, roller coaster investments. Instead, start leaning towards more stable, income focused or defensive assets. But remember, your super still needs to last you several decades, this is a marathon not a sprint.
- Test your safety net: Ask yourself, “If the market copped a 20% hit next year, would I need to push back my retirement?” If the answer is yes, it’s time to rethink and realign your strategy.
- Keep emotions in check: It’s natural for nerves and excitement to kick in when retirement is close. Resist the urge to chase headlines or make knee-jerk decisions, stick to the plan and play the long game.
- Look after your family and your future: Don’t forget that protecting your wealth means thinking about insurance and estate planning too. It’s about safeguarding what you’ve built for those you care about.
Buffett’s advice is a good wake up call, steering clear of big mistakes is usually more important than chasing those big wins. As you head towards retirement, the focus shifts to building a stable, sustainable future and holding your nerve.
At the end of the day, it’s not just about making it to retirement it’s about doing it with confidence and knowing you’ve got your bases covered.
Momir Vuksa
SMSF Specialist Advisor™/ SSA®
Representative (No 1306168)
