Case Study 4: The Case of Mr & Mrs ‘Do-It-Yourself’

Since recently retiring, Paul and Hilary were living off the income from Paul’s Approved Retirement Fund (ARF), and supplementing the balance of their income from their savings. If the returns on the Approved Retirement Fund went up they spent more. If returns went down, they spent less.

Over the years, they had also accumulated a small collection of Savings Plans, other investments and a few shares. Most of these, they had purchased off the page from the leading investment houses who tempted them with ‘promises’ of high returns.

Trouble is, knowing when to buy is one thing, but knowing when to sell is another! So, they had gradually built for themselves a portfolio that they didn’t understand – but of course they were too proud to admit it.

Worse still, every Sunday was spent wrestling with the money pages in the Sunday papers. Wasted hours wading through the Business Post and The Times along with other paperwork from their various investment providers.

This wasn’t too bad, while things went up. But when the markets went down, Paul and Hilary would always do extra stress, and luckily for them, a friend referred them to us here at Lifestyle Financial Planners.

We analysed their position, looked at all of their various investments, and their income requirements. More importantly, we got Paul and Hilary to think about their expenditure requirements and how much they would LIKE to spend to give them the life they wanted, now.

Then we ‘crunched their number’. Here’s what we found.

One option was for them to keep doing what they were doing – live off interest and dividends, forever prey to market movements, condemned to dip into their savings whenever things got tight . Forever going without. Forever cutting back.

The other option was to change their attitude and plan to spend their liquid capital in their lifetime. They could leave their home and personal effects to their children when they eventually died, but enjoy spending the rest. Even their children were saying that they wished their Mum and Dad would spend it!

So we helped Paul and Hilary understand just how much return they needed on their investments so their number lasted their lifetime. This meant they could actually take LESS risk with their investments, and in the process consolidate and simplify their portfolio to reduce charges.

More important, Paul and Hilary got their life back. No more frantically reading through the papers. Instead more fun, more eating out, more holidays, more treats for the grandchildren.

For Paul and Hilary, their money suddenly made sense.

They continue to meet with us and we continue to manage their number to give them the life they want.

It pays to know your number!

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