It is a testing time for those of us drawing a pension, either from an industry or commercial fund or from our own SMSF.
Interest rates are low and probably going even lower.
After a heady rush of blood, the ASX seems to have pulled back somewhat.
Forecasts for the Australian economy suggest low growth, low inflation for some time to come, possibly 5-10 years when one looks at long term trends.
Successive governments too timid to tackle difficult reform to move the economy away from rocks, crops, roads and houses.
US stock market at record highs.
Super on the radar as a source of revenue for all parties, none of which seem to have any ideas or sense of the implications of what they are doing.
So what are the options.
Tighten my belt. spend less, stop drinking wine from bottles and buy casks.
Take all my money from super, sell my house and buy the most expensive place possible and live off the aged pension; not an attractive proposition on first thought but possible with a reverse mortgage. I need to do the sums.
Move overseas. This is easier said than done. It is more difficult as one gets older to leave family, to make new friends, to enter a new social scene etc. With one child in the Netherlands, one at uni in Brisbane and an elderly mother-in-law in Canberra, it would be a difficult decision.
Investment strategies
When I set up my fund a few years ago, strategy was simple and maybe naive. It was to have about 10% in cash and the remainder invested in high yield blue chip stocks. This has worked very well but it is not so simple now. I now have about 50% in cash, 30% in the Australian market and 20% in the US market. I am still looking for a hedge fund with a short-long strategy in which I can invest packages on around $50,000. I am looking at options and CFDs but lack the experience and expertise. I might have to learn quickly!
Small and medium cap stocks will probably do better in the medium future but it is much more difficult to assess these. Fundamental analysis has not been very useful for such stocks recently.
Interesting uncertain times ahead with no straight forward answers.
