U and your money
Investing wisely for aging relatives
As our loved ones approach their golden years, their financial security should take on increasing significance for us. Sometimes people hesitate to discuss financial concerns with their aging relatives for fear of appearing overly interested in their inheritance and often wait until a crisis develops to treat with them. By then of course it is often too late. However, aging relatives who sense empathy and understanding are more likely to welcome such interest from their younger counterparts.
Some older relatives are financially well off and can continue to provide for their own needs. Others however have to make do with limited income and may struggle to make ends meet as the cost of living increases over time. This problem is exacerbated when the rising costs of health care and inflation are considered.
To assist aging relatives with their financial planning efforts, they should be encouraged to consider legal options to ensure that their assets (investments, retirement savings, insurance policies, and real estate or business interests) are treated in the manner they wish upon death, including having a will prepared.
A power of attorney which gives legal authority to another person to act on one's behalf is also an important practical financial planning consideration for aging relatives.
With these operational matters covered, the elderly should continue to explore investing opportunities and should not be dissuaded from diversifying their portfolio. Diversification involves not only investing in equities but seeking to benefit also fixed income instruments: Treasury Bills (T-Bills) and high-quality bonds via bond or income funds.
Some elderly persons place far too much reliance on NIS contributions and old age pension to meet their health requirements. While NIS is a critical factor in an investment portfolio, it should not be the pinnacle or only type of contribution that even you or your parents make towards your non working years. This source typically falls short of retirement requirements and where possible should always be supplemented.
With the focus on maximising growth, consideration should be given to the UTC's Growth and Income Fund where the investor has the potential to earn capital growth and dividend income.
At any age what is required is a judicious mixture of mutual funds, equity and fixed income investments as well as pension schemes that will enable anyone to build a strong pension portfolio to provide future earnings in non working years.
Develop investing habit
One way of preparing for the certainty of old age and combating inflation is to develop a regular, consistent and disciplined saving and investing habit. This could mean the difference between facing the golden years with peace of mind or aging with financial distress.
Having payroll deductions made into any of UTC's funds, namely UTC Universal Retirement Fund or UTC TT $ Income Fund or Growth and Income Fund, can ignite the savings habit and create an investment mindset. In this way, you assure yourself and your family of having secure, stable and diversified investment during the twilight years.
The key to dealing effectively with the prospect of retirement and old age is starting and maintaining an investment portfolio that provides financial options in the golden years. As the poet Robert Browning wrote of old age, "The best is yet to be."