Im 31, started investing 1 year ago. Have about $58k most of which are in indexes that track US, Europe, asian markets (majority US). What should my investment strategy approaching retirement be?

Hi Ridhwan Muzaki,

When considering goal-driven investments, it is important to keep in mind the target and time horizon you are looking to invest towards.

For a target 5 years in the future, Investors need to be mindful to gradually de-risk their portfolio the closer they get to their expected target date. Statistically, equity markets enter into sharp corrections at regular intervals. You would not want to experience a similar drawdown like in March this year, where markets dropped 30%, just before the pay off for a property comes due.

With a 5-6 year horizon, you can start out with a growth-oriented portfolio, but 2-3 years before the target date, it is advisable to switch into a lower risk/asset preservation portfolio.

In contrast, in a savings account in the current environment, the returns are to be expected to remain close to zero for the foreseeable future. If adjusted for inflation, the return over time may even end up negative in such a scenario.

Hope this helps to answer your question! :)

Hi there! Interesting question.

I think this answer will be different from person to person and should be individualised to your financial goals and risk tolerance.

I can give you 2 examples. Personally, when I am older I will start allocating more into dividend stocks to get more passive income and cashflow to fund my expenses rather than so much capital gain.

Another way you can do is also allocate into lower risk investments such as more defensive stocks compared to companies more poised for higher growth. As well as add in more diversification.

However, there is nothing wrong if you are able to manage more volatile positions. Many active investors/traders who understand the market are able to consistently profit and steer their way through no matter which direction the market goes.