Also read the following related article:

• Why your investments fail (It's not the economy and it's not your fund manager. Kabous le Roux on the two main reasons why your investments aren't growing...)

Question:
I've made some investments with Liblife about five years ago, but have thus far lost R45 000. I'm 62 years old and if it goes on like this there'll be nothing left five years from now.

Where can I invest where my money will grow and not get less? What can I do about this investment that isn't performing like I want it to?

Answer:
What every person needs is to have investments that grow. The whole point of saving is so that someday you will have funds to fall back on for whatever purpose you are saving. This is especially crucial when the reason you are saving is for retirement. What a person needs to do in that case is start investing early, save enough every month to meet your needs and conduct serious investment research to discover which investments suit you and meet your needs. In other words, an investment strategy is needed.

If you can?t do this yourself, for whatever reason, then I strongly recommend that you consult with a qualified financial planner who is trained with investment knowledge as well as planning for different scenarios.

Let?s assume that you have put a reliable strategy in place. You are now nearing retirement and the market crashes, the economy goes into recession and no matter what you are invested in, either your capital has taken a nosedive or your income is no longer as much as was predicted at the beginning of your plan, or both. You thought you would have enough (maybe only just) to retire, but now you realise that at the current rate of growth or return you will probably not have enough for the worry-free retirement you envisioned. What on earth do you do? Well, technically you have only four options or a combination of them:

• Save more

• Spend less (now and in retirement)

• Retire later

• Get a better return on your investments

The most comfortable option to choose is to get a higher return on your investments. But a higher return comes at a higher risk. You may have taken a higher risk, knowing that long term returns would be better, and your returns have been up until now.

At this point you need to reassess your investments and make sure you completely understand them and are still comfortable taking the associated risk. Please bear in mind that any movement at this point to the safer haven of cash means that you lose the potential of a recovery in the current investment. For most people this decision should be taken only with the patient guidance of your trusted financial planner (or find a new one if you don?t trust yours). Most people just don?t know enough about investments and how they work.

I find that many people panic in the years leading up to their retirement. They may worry that the market will crash just before they retire so that when they "take out" their pension it is a reduced amount and no longer sufficient for their needs.

Article continues on page two...