Investing Through the Years
How to Adapt Your Portfolio Over Time
By Dylan Rodrigues
Investing is not a one-size-fits-all journey. As you move through different life stages, your financial needs, capacity to take risks, and investment objectives evolve. Regularly re-assessing your strategy and adjusting your investment portfolio (only if necessary) helps ensure that it remains aligned with your goals — from your first pay check to your golden years. This guide outlines how investors should adapt their portfolios as they move through life’s key stages.
-
Early Career: Build the Foundation
When you’re just starting your career, time is your greatest advantage. With decades ahead before retirement, you can afford to take on higher levels of risk for potentially greater returns. At this stage, your portfolio should be growth-oriented, focusing on asset classes like equities (both local and offshore) which offer high risk-return trade-offs. While these assets may experience short-term volatility, they typically offer strong long-term growth potential. Consistency is key – invest regularly, monthly if possible. Even modest monthly contributions can grow significantly thanks to compound growth. Setting up automated contributions to a tax-free investment account or a retirement annuity can instil discipline from the start.
-
Mid-Career: Balance Growth and Stability
As your career progresses, your income stabilises, and major life events (buying property, having children, or funding education) start influencing your financial priorities. Your investment strategy should begin balancing growth with stability. Diversification becomes even more important. While equities should still form a substantial part of your portfolio, consider gradually increasing your allocation to lower-risk assets such as bonds, money market funds, or balanced funds. Continue contributing towards your retirement annuity to benefit from the tax deductions allowed by SARS (up to 27.5% of taxable income, capped at R350,000 annually).
-
Pre-Retirement: Focus on Capital Preservation
In the years leading up to retirement, protecting your accumulated capital becomes a priority. Sudden market downturns during this phase can significantly impact your retirement savings. Shift your portfolio to include a higher proportion of conservative assets like bonds, income funds, and cash. This doesn’t mean eliminating equities entirely — some growth exposure is still important to combat inflation over a potentially long retirement. At this stage, it’s also a good time to consult a Certified Financial Planner to review your retirement plan, evaluate your projected income needs, and ensure your portfolio is appropriately positioned.
-
Post-Retirement: Generate Sustainable Income
Once you retire, the focus shifts to drawing a sustainable income from your investments while still maintaining enough growth to outpace inflation. A combination of living annuities, life annuities, and income-generating investments can help you manage withdrawals prudently. Carefully monitor your drawdown rates to ensure that you don’t deplete your capital too quickly. Tax planning also remains important as income from different sources (annuities, interest, dividends, capital gains) may have varying tax implications.
Final Thoughts
Adjusting your investment portfolio is not a once-off event — it’s a continuous process that requires periodic review and careful planning. By aligning your strategy with your life stage and financial goals, you can maximise your portfolio’s effectiveness throughout your journey from early career to retirement. Seeking guidance from a Certified Financial Planner can help you navigate these transitions with confidence.
Read more about Ascor® Financial Planning Services
Related Topics
How to Build an Investment Strategy - Ascor® Independent Wealth Managers
The Magic of Compound Interest - Ascor® Independent Wealth Managers
https://ascor.co.za/time-is-money-why-starting-early-matters-in-retirement-planning/
https://ascor.co.za/when-to-start-planning-for-retirement_yesterday/
https://ascor.co.za/how-costs-can-erode-wealth-creation-in-retirement/
https://ascor.co.za/women-and-finance-how-well-do-you-know-yourself-financially/
Please follow and like us:
