Wealth Management

In a low return environment, is your financial plan still on track for success?

Matt-Todd Matt Tod
22 February 2021
3 min read

23 February 2021

The beginning of the year is often a time of reflection when people look forward and plan for the year and years ahead. This process often leads to people reassessing their financial aspirations and lifestyle goals, contemplating things such as purchasing a Bach or a boat. At times like these, people often ask themselves questions like:

  • Can I afford to retire early or work less?

  • How much money do I need to retire?

  • What will I be able to spend in retirement?

  • Do I need to save more?

  • Will my retirement savings run out?

As a wealth adviser, I like to work alongside my clients to develop a personal financial plan that answers exactly these questions. However, a lot of people assume that conversations with wealth advisers centre around, ‘What sort of returns can I expect?’

While the obvious response to this would be, ‘How much risk can you tolerate?’, what I really want to know is what your financial and lifestyle goals are. Once I know these, I can help put together a financial plan to answer those important personal questions for your future, including providing information on expected returns.

In the current low fixed-interest rate environment, my word for investors as we start 2021, is ‘diversification’. As at January 2021, term deposit rates from the major banks are around 0.90% to 1.15% for a term range of one to five years. If we move further along the risk spectrum, US equities have a more uncertain outcome, however some research suggests 5% may be achievable over the longer term for the years ahead. These return numbers are substantially below what we have seen historically.

Of course, falling term deposit rates generally means lower returns in this sector so we are seeing investors take onboard more risk to obtain better returns. However, this behaviour can lead to share markets getting pushed higher and investors taking on more risk than they may be comfortable with, to achieve more financially.

This makes it a good time to revisit your financial plan (if you have one) to assess your financial and lifestyle goals for 2021, or establish a financial plan, if you don’t currently have one.

Working with a wealth adviser will enable you to review your financial goals and objectives and assess your current risk appetite so you can make the appropriate changes to continue on the road to financial success.

A simple conversation with an adviser can make the wealth of difference to your retirement outcomes (pardon the pun). Start 2021 on the right foot and book that an appointment with the Findex Wealth team today.



Findex NZ Limited, trading as Findex


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© Findex Group Limited 2021. All rights reserved

February 2021

Author: Matt Tod | Associate Partner