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SCMP Reporter

YOU are retired, enjoying life at a leisurely pace and have $2 million tucked away.

  But you want to make an investment, one that will make your money grow but at the same time ensure that it will not be lost.

   The last thing an ageing investor would want is to see everything they have worked for over a good part of their life vanish.

  For retirees, brokers have recommended an investment portfolio that has low risks.

   While it is one that is not as diversified as a younger person's investment pattern, it is a lot simpler because less risky items are recommended.

  Towry Law International's Diccon Martin said the $2 million should be divided into three segments.

   He said a retiree should retain more cash than the young person because the retiree was no longer earning a regular income.

  He recommended a good 20 per cent of the amount to be channelled into a money market account or a fixed interest account.

   But before picking one or the other he said ''investors should shop around for what will be the best''.

  Mr Martin recommended that the older investor should then invest 50 per cent of the amount in bonds because bonds could guarantee a much higher yield than equities.

  For instance, he cited the Baring high-yield bond fund to be launched on July 12 as a recommended possibility which is expected to generate a yield of nine per cent.

  Mr Martin then recommended a 30 per cent segment of the money be invested in offshore bonds.

   He said such bonds were issued by major insurance companies and these companies held tax benefits for people retiring to other parts of the world.

  He said the life insurance companies could also provide the retiree with a regular income of one half per cent of the total value per month and ''income in dollar terms''.

  Meanwhile Anthony Farr of Overseas Financial Services said he could appreciate that older people would probably give priority to ensuring they had incomes for the rest of their lives after their retirement.

  This could be done by investing in any vehicle which gave an annuity rate higher than the prevailing interest rate.

  ''When the interest rates are high, buy the annuity rate. The timing for buying the annuity rate is crucial,'' Mr Farr emphasised, because the yield earned thereafter would be based on the annuity rate and would be fixed for the rest of the retiree's life.

  Mr Farr said the actual investment content in the portfolio of a retiree would be more likely to be targeted at low risks.

  This would ensure that the chance of losing capital was low, he said.

    ''It is a much more conservative approach,'' Mr Farr concluded.



Low-risk, income-generating strategies suit the elderly