Investing in your 60s

The hope is that by the time you reach your 60s, much of the hard graft of building up a decent investment portfolio will have been completed.

However, people are living far longer these days, so one of the biggest priorities will be ensuring you have enough money for the decades to come.

Here, we take a look at where to focus your attention, the key issues to bear in mind, and the investment funds that can help in achieving your goals.

Your situation

The best case scenario is you’ve entered your 60s with a substantial nest egg, having spent years tucking money away and enjoying investment success. Of course, this isn’t guaranteed. The stock market is a volatile place, and the chances are that your investments will have been on a rather tumultuous journey.

How your money has been affected will be a consideration when you’re deciding your priorities for the rest of your life. For example: What standard of living do you want? Are you happy with where you’re living, or do you have dreams of moving abroad? How much are your plans likely to cost?

First considerations

The usual investment rules apply – even at this stage. It’s always wise to clear outstanding debts before you invest, as the interest rates being charged are usually higher than potential returns.

It’s also important to keep money in an easy access account to use in an emergency. A traditional bank savings account or cash individual savings account will be ideal.

Keeping a close eye on your monthly budget is also important. How much spare cash do you have once all your bills have been paid? Do you need extra sources of income?

The plan

When you reach your 60s, you may want to start taking money out of your investment portfolio, rather than putting money into it. You therefore have to decide how much income you want to take. Once this has been established, you can start looking at which asset classes will be the most appropriate for your circumstance.

You will also need to bear longevity in mind. Many people are living longer these days, which means you may have to keep a decent amount in equities. This is to enable your overall pot of cash to keep growing, even as you take an income from it, so that it can last you for many years to come.

Investment suggestions

The good news is there are a number of funds that could meet your needs at this stage of your investment journey.

Here we highlight eight that could be worth considering. Our list includes equity income portfolios, bond funds, and absolute return products.

Trojan Global Income 

This is a concentrated, quality income fund that has an emphasis on capital preservation, as well as growing its dividend over time. It’s managed by the experienced James Harries, who focuses on finding high quality, resilient businesses that he can hold for the long term.

As well as having done an excellent job historically of preserving capital in difficult markets, the fund has also been much less volatile than many of its peers.

M&G Global Macro Bond

Investors wanting fixed income exposure could consider this go-anywhere portfolio that’s run by the very experienced Jim Leaviss. The freedom he enjoys at the helm enables him to invest in bonds issued by governments and companies across the globe. Portfolio construction sees Jim using his experience to make judgement calls on the prevailing macroeconomic backdrop – then stock picking skills to populate the fund.

TwentyFour Dynamic Bond

This is another fixed income fund with a flexible approach that enables it to take full advantage of changes in market conditions. The manager, Gary Kirk, can invest across the fixed interest spectrum – and he has the backing of a professional team within TwentyFour.

We like the fact it pays an attractive yield, while being managed with an emphasis on credit risk that ensures protection of investors’ capital, where possible.

Artemis Target Return Bond

Our next suggestion is a targeted absolute return fund that is focused on controlling risk. Its goal is an annual return of at least the Bank of England’s Base rate plus 2.5%, after fees.

We believe this fund is an option for someone that doesn’t like volatility but recognises the need for a return that’s higher than cash. Its manager, Steve Snowden, invests in government and corporate bonds from around the world, as well as asset-backed and mortgage-backed securities.

LF Ruffer Diversified Return

This is another targeted absolute return vehicle with capital preservation at its core. The fund’s aim is to not lose money over any 12-month rolling periods. It’s a portfolio that focuses on providing investors with genuine protection in times of extreme market stress. Hopefully, this should enable them to sleep soundly at night. As it is global in approach and completely unconstrained, managers can invest across various asset classes, including equities, fixed income, currencies, and derivatives.

The City of London Investment Trust

Investment trusts have plenty of attractive qualities, including access a wide range of investments and the ability to smooth out returns by retaining up to 15% of net income each year. Not only is The City of London Investment Trust one of the longest-running – it started life back in 1891 – it’s also one of the most successful income and growth providers. It has increased its dividend payment every year for the past 56 years. This track record makes it a worth contender for investors wanting UK equity income exposure.

An alternative route

You could also consider multi-asset income funds and let the professionals decide on the ideal asset allocation split. While you have less focused control by going down this route, you will have the comfort of fund managers making the all-important decisions

Aegon Diversified Monthly Income is a truly diversified, multi-asset fund that boasts a mixture of bond, equity, property and alternative assets.  This helps spread the risk for investors, as well as giving the managers a wide variety of sources from which to derive their income. The fund targets an attractive yield of around 5% per annum, with the potential for capital growth over the medium term. This is classed as any five year period.

Our final suggestion is Waverton Multi-Asset Income, which offers investors exposure to a portfolio of equities, fixed income, and alternatives. As is the case with many of our suggestions for this age group, the team places risk at the centre of its process by focusing on protecting capital in weak markets. The fund seeks to achieve capital growth in-line with or ahead of inflation – it targets CPI (Consumer Price Index) +2.5% over the long-term – as well as providing a consistent and sustainable dividend.