In­vest for the gen­er­a­tions of the fu­ture

The Daily Telegraph (Sydney) - - News - AN­THONY KEANE

MORE Aus­tralians are set to look be­yond their own life­times when it comes to in­vest­ing.

For­get 10 years for shares or real es­tate as­sets, or even 40-50 years for su­per­an­nu­a­tion; a 100-year out­look may be­come a new stan­dard in long-term in­vest­ing. But is it some­thing that suits you?

Wil­liam Buck’s di­rec­tor of wealth ad­vi­sory, Adrian Frins­dorf, said 100-year in­vest­ment strate­gies were used by large in­sti­tu­tions such as churches, uni­ver­si­ties and schools, but were also be­ing adopted by in­di­vid­u­als.

“With high net worth in­vestors … 100 years can be a rel­e­vant time frame,” he said.

“Th­ese in­vestors gen­er­ally have their own fi­nan­cial po­si­tion well sorted, but are more in­ter­ested in gen­er­at­ing and pro­tect­ing the wealth for fu­ture gen­er­a­tions, in­clud­ing grand­chil­dren not even born.”

Mr Frins­dorf said some in­vestors’ de­ci­sions were made to de­liver ben­e­fits be­yond their life­times. “One pop­u­lar strat­egy is to es­tab­lish fam­ily trusts that can help fund fu­ture sec­ondary or ter­tiary ed­u­ca­tion,’’ he said.

Mr Frins­dorf said wealthy in­vestors were most likely to adopt 100-year plans but they could be un­der­taken by any­one and typ­i­cally fo­cus on growthori­ented as­sets. “What hap­pens within the global econ­omy over a year may not have an im­pact over such a long term.”

Growth as­sets such as shares and prop­erty have his­tor­i­cally per­formed the strong­est over many decades. How­ever, if a 100-year in­vest­ment time frame seems too big a stretch for you, it’s still worth think­ing longer term than you pre­vi­ously might have.

Med­i­cal ad­vances are push­ing life­spans fur­ther, and to­day’s re­tirees are more ac­tive than ear­lier gen­er­a­tions – mean­ing they spend more money.

Plan­ning for Pros­per­ity se­nior fi­nan­cial ad­viser Bob Bu­dreika said it was now com­mon for at least one mem­ber of a cou­ple to live into their 90s.

“Be aware that your life ex­pectancy could be con­sid­er­ably more than what you an­tic­i­pate it might be,” he said. Mr Bu­dreika said in­vest­ments should not be planned in terms of years, but in terms of what you wanted them to achieve.

“What’s the point of say­ing 100 years or 10 years, un­less you have a clear ob­jec­tive?” he said.

“Un­less you have a pur­pose for your in­vest­ing, it be­comes a fuzzy ob­jec­tive.”

Some in­vestors might want to leave an es­tate for fu­ture gen­er­a­tions, but not all of their in­vest­ments need to have ex­tra-long time frames, Mr Bu­dreika said. “If peo­ple can com­part­men­talise their sav­ings, I think they can achieve a bet­ter out­come.”

Many re­tirees to­day split their wealth into three cat­e­gories:

● A few years of in­come needs in safe cash sav­ings.

● Three to 10 years of in­come needs in di­ver­si­fied bal­ance in­vest­ments.

● And the rest in growth as­sets for the long term, and per­haps the very long term.

BE­YOND TO­MOR­ROW: Some in­vestors are look­ing for long-term in­vest­ments – 100 years and be­yond – with the needs of fu­ture gen­er­a­tions of grand­chil­dren in mind. Pic­ture: iStock

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