When cash is not the best

When cash is not the best

This article addresses the particular needs of retirees during volatile markets and gives a reason why cash is not a good option.


An investment in the share market is always accompanied by an element of risk, which your financial adviser would have explained to you when first developing your plan. However, as prepared as you think you are it’s hard not to worry about your retirement funding when the media is in frenzy over erratic share markets.

Yes, market volatility is a major concern. However, it’s good to keep in mind that volatility tends to be a shorter-term problem.

There has been much written about the strategies we should adopt in a volatile market. The good ones to focus on include:

  • Don’t panic
  • Avoid the flight to cash
  • Don’t sell at the bottom of the market.
  • Markets will eventually stabilise, and the share market will recover
  • Above all, discuss any concerns with your financial adviser

There is a more important long-term risk facing many retirees and that is the risk of longevity.

If you have reached the age of 60 there is an excellent chance that you will live well into your 80s. Retirees and those about to retire are faced with the problem; will we live longer than our savings and superannuation will last?  At retirement age it is highly probable that our savings will need to last us for 20 to 30 years.

Australians have the third highest life expectancy in the world for males and the seventh highest for females according to the World Health Organisation. (Note that the difference between us and the highest is just 3.6 years for overall life expectancy.) Despite almost daily reports of crises and shortcomings, the Australian health system has in fact helped Australians maintain an outstanding life expectancy by global standards.

Should a person who retires at age 60 be considered a long-term or short-term investor? Twenty-five years most definitely qualifies you as a long-term investor.

Long-term investors require not only income but also capital growth in their retirement savings.

For this reason, investing solely in “safe” cash can leave you vulnerable to inflation, and lacking a growth factor will mean that your savings may not last long enough.


  1. a) Not for publication (for research purposes)

www.who.int “World Health Statistics 2014”

  1. b) For publication (for readers’ information)