Lifestyle investing flawed
A Griffith University academic has claimed that the so-called “lifecycle investing” strategy utilised by many superannuation funds is badly flawed.
Professor of Finance Michael Drew said that lifestyle investing had the potential to leave investors worse off in retirement than would be the case if they had pursued alternative strategies.
“The model works on the principle of adopting high risk strategies younger in life, then working towards the reverse closer towards retirement,” Drew said.
“The investments are put on autopilot, changing gears driven by age, with the promising of gliding in softly to land at retirement.”
However, he said the model did not take account of external factors such as the current market downturn.
Drew said that he and another Queensland academic, Dr Anup Basu had challenged the lifestyle investing approach based on more than 100 years’ of financial return data and found it to be potentially risky in terms of failing to meet the retirement saving goals of many investors.
“Selling when the market is low as it has been this year just because you’ve turned 45 doesn’t make sense,” he said.
AUTHOR
Mike Taylor
Recommended for you
ASIC has banned a Melbourne-based financial adviser who gave inappropriate advice to his clients including false and misleading Statements of Advice.
The number of active advisers on the HUB24 platform has risen to more than 5,200, helping it see quarterly inflows of $5.2 billion.
ASIC has banned a Melbourne-based financial adviser for eight years over false and misleading statements regarding clients’ superannuation investments.
CFS has formed a strategic partnership with the University of Sydney to support the responsible development of AI solutions in the wealth management sector.
