Powered by momentummedia
nestegg logo
Powered by momentummedia
Powered by momentummedia
nestegg logo
nestegg logo

 

 

Invest

Why older Aussies should buy ETFs

  • February 07 2020
  • Share

Invest

Why older Aussies should buy ETFs

By Cameron Micallef
February 07 2020

Retirees looking to move up the risk curve in a low-yielding environment are being urged to look at exchange-traded funds as a way to minimise risk.

Why older Aussies should buy ETFs

Why older Aussies should buy ETFs

author image
  • February 07 2020
  • Share

Retirees looking to move up the risk curve in a low-yielding environment are being urged to look at exchange-traded funds as a way to minimise risk.

Why older Aussies should buy ETFs

In a conversation with nestegg, ETF Securities CEO Kristian Walesby explained the situation many retirees are facing and how they can reduce their overall risks through diversification.

“When we look at typical SMSF as a proxy for a person coming up to a retirement or in retirement actually has, you’re going to see it loaded up with five or six top 20 companies,” Mr Walesby said.

The ETF provider explained that if investors only have a narrow pool of shares in similar sectors, they are facing higher levels of risks then required.

“If they only have six or seven companies and two are banks, you can have a situation where those banks are not doing what they used to do and are not able to pay the same yields,” Mr Walesby said.

Advertisement
Advertisement

The ETF provider believes a low-risk ETF product can help provide balanced growth with less risks for older Australians in a couple of trades. 

“You only need two or three of them and they should have a good profile in combination in lower risk through lower-risk classes,” Mr Walesby said.

Mr Walesby also highlighted the need for providers to educate older Australians to ensure they are making informed decisions. 

“One of the biggest things we are trying to talk to retirees about, the dangers they have in their SMSF if they got just say five or 10 stocks, if three or four go down heavily, the dramatic change it has on their futures.”

“Whereas if they flip them out to an ETF, they still have a probability of downfall, but it’s much more reduced,” he continued.

The fund manager suggested these older investors are being forced to enter the market due to historic low rates and need products that cater to them.

“Anyone who is near retirement age who hasn’t got a big enough nest egg, that’s a horrible situation because you’re having to take risk with your savings to try and make sure they get to whatever your target is and know you’re going to get there with no risk.”

“If you don’t invest, your money won’t grow as even inflation will erode that,” Mr Walesby concluded.

Why older Aussies should buy ETFs
Why older Aussies should buy ETFs
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

About the author

author image

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

more on this topic

more on this topic

From the web

Recommended by Spike Native Network

More articles

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.