If I am ever asked what I think is the biggest issue facing retirees today, I would immediately answer – “the way the Government (both sides) insists on fiddling with the superannuation system”. Our retirement funds have become a bit like a ‘piñata’ that is periodically hit to give forth a bit more tax or to render down a benefit that is perceived’ inequitable’ by the prevailing legislators.

I was scanning the financial news the other day and noticed that one of Australia’s biggest annuity providores had reported a record profit for the 2015/16 financial year. Their sales of annuities had increased by a whopping 22% on the previous year; certainly no easy feat with interest rates con- tinuing to head south. It certainly indicated to me that retirees are not taking any chances with their money, and were trading off possible return for security.

During my time as a financial planner probably the most common question I received was “What do I need to do so I can retire?” Not very surprising I guess, as I was in the retirement planning business after all. It would have been pretty odd if the most common question I received was – “are elephants hard to domesticate? Well I have absolutely no idea about elephants, but thankfully I know a thing or two about retirement strategy!

Over the last few years the financial advice industry has seen the introduction of what is colloquially termed ‘Robo advice’. That is, financial advice created by a computer. The premise of this type of advice is that clients will consult with a version of ‘mechanical intelligence’ to garner a specific financial strategy, suitable to their current situation. I would imagine that the ‘robo’ adviser will also execute its own recommendations and deliver the appropriate fee, all while you wait.

There is a difference between saving and investing

There is a very old and worn out chestnut of a saying, a staple of investment spruikers and a notion that is deeply embedded into the psyche of the Australian investor – ‘you can’t lose money investing in property’ This concept seems so ingrained and sacrosanct that I am surprised, Watson and Crick didn’t include a ‘strand’ named “property investment” into their double helix.

Risk and return are what investing is all about. And the higher the risk, the higher the possible re- turns is a fundamental tenet when evaluating potential investment options. And I can assure you, this one simple phrase is invaluable to investors and should always be part of any analytical toolkit. So let’s take a look at how we apply it to investment decisions.