Lifestyle funds

Some fund managers advocate investing in lifestyle funds. For example:

- for young investors: high proportion of equities
- for older investors: high proportion of bonds

In my view, if the investment is for retirement needs, it is better to invest in equities, even for older people.

If you are now 60, the average lifespan is 20 years. If you draw down your retirement funds in monthly instalments, the average duration of your investments is more than 10 years. So, an equity fund is quite suitable.

When you reach age 70, you can consider to move some of the investments into a bond fund. At that time, you should choose the right time to make a switch. The stockmarket goes in cycles of 3 to 5 years. If you choose the right time during this cycle, you can get an attractive return.

Alternatively, you can cash out and invest in a life annuity.