Your retirement portfolio’s biggest enemy may be you
By Wouter Fourie, CFP®
CEO, Ascor Independent Wealth Managers
Co-author of The Ultimate Guide to Retirement in South Africa (3rd Edition)
FPI Professional Practice of the Year 2025/2026
Why investor behaviour can destroy a perfectly good retirement plan. Retirement portfolios need regular review and rebalancing, but disciplined patience can help investors avoid unnecessary changes. You can spend 40 years carefully building your retirement capital and then do serious damage to it with a handful of decisions made during 40 frightening days.
After decades of advising investors, I have become increasingly convinced that one of the biggest risks in retirement does not sit inside the portfolio. It sits in the chair opposite the financial planner. It is us.
We panic. We become greedy. We lose patience. We chase yesterday’s winners. We convince ourselves that this crisis is different. Modern technology has simply made it easier to act on those emotions. A portfolio that once took paperwork and a few days to change can now be altered almost instantly.
What dead investors can teach the living
There is a story that has circulated in investment circles for years. According to the tale, an investment company supposedly discovered that some of its best-performing clients were people who had forgotten about their accounts or had died.
It is a wonderful story, but the famous ‘dead investors’ study is better treated as investment folklore than documented research. The underlying lesson, however, is supported by serious evidence.
Professors Brad Barber and Terrance Odean studied 66 465 US households with brokerage accounts between 1991 and 1996. The households that traded the most earned 11.4% a year, compared with 17.9% for the market. Their conclusion was blunt enough to become the title of the paper: Trading Is Hazardous to Your Wealth.
The lesson is not that investors should never make changes. It is that activity and intelligence are not the same thing. Sometimes investors simply do too much.
Retirement raises the stakes
During your working years, a poor investment decision hurts, but you still have a salary, future contributions and time on your side. Retirement changes the equation because you are drawing money from the portfolio at the same time.
Imagine retiring with R10 million. Markets fall sharply and the portfolio drops to R8 million. You become frightened and sell the growth assets. The first problem is obvious: the paper loss has now become a realised loss. But your retirement expenses do not stop. You still need an income.
Now the second decision arrives: when do you get back in? When markets recover 5%? When the war ends? When interest rates fall? When the rand strengthens? When economists stop warning about recession? By the time the world feels comfortable again, markets may already have moved.
Fear rarely introduces itself as fear
Very few clients phone their financial planner and say, ‘I am panicking and would like to make an irrational decision.’ Fear is usually much better dressed than that.
It sounds like: ‘Surely we should protect the capital until things settle down?’ Or: ‘The rand is weakening. Shouldn’t we take more money offshore?’ Or: ‘This fund has underperformed for two years. Why are we not moving to the fund at the top of the performance table?’
These are reasonable questions. That is exactly why behavioural mistakes can be so difficult to spot. The emotional decision has dressed itself in a suit and tie.
Ask one better question
Before making a major change to a retirement portfolio, ask: Has something changed in my retirement plan, or has something merely changed in the headlines?
If your income requirement has changed, review the plan. If your health, family circumstances or tax position has changed, review it. If your drawdown is no longer sustainable, act.
But if the only thing that has changed is that markets have frightened you, be very careful about turning temporary fear into a permanent financial decision.
Morningstar’s behavioural research found that, during volatile markets, clients were far more likely to discuss market movements and investment performance than their long-term goals. That is precisely when the goal should return to the centre of the conversation.
Sometimes doing nothing is doing something
I am not suggesting retirees should invest their money and forget about it. Retirement portfolios need monitoring, rebalancing and regular review. Income needs change. Tax rules change. Families change. Investments change.
But there is an enormous difference between neglect and disciplined patience. A good retirement strategy should tell you when action is necessary. An excellent one should also protect you from acting when it is not.
Sometimes the most valuable investment decision you make in retirement is the decision you refuse to make.
At Ascor Independent Wealth Managers, recognised as South Africa’s FPI Professional Practice of the Year, we help clients build retirement plans that are designed for real-world uncertainty, not just calm-market assumptions. For more insight, visit www.ascor.co.za.
Or email info@ascor.co.za. To learn more about the best-selling The Ultimate Guide to Retirement in South Africa, visit http://www.retirementplanning.co.za
