I have had conversations with a few clients recently about their investment time horizon and what this means to their ongoing planning. Most recently a client of mine claimed that they have a short timescale due to them wanting to exit work and rely on their savings in around 5 years time.

This individual is still in their early 50’s and has been successful in work building up a good business which has allowed them to save sensibly and also reduce personal indebtedness in readiness for their exit from work. Their view was that they have a short timescale as this is when they are going to start ‘decumulating’ their savings and therefore everything needs to be geared to this date.

We spent time discussing their situation and their views on the matter and I challenged on a number of points. The below are examples of areas we discussed which helped clarify the timescale for the individual:

Their plans beyond work –

What do they want to be doing once they hand in their proverbial laptop and keys. This particular individual loves to travel and enjoys history but is also happy at home exploring the local community. They certainly plan to be active and busy after work which is great for their mental and physical wellbeing.

What is their income / capital aspirations?

This is a part of the planning journey I always talk about when engaging with new people as whilst it might be a number of years away it sharpens the mind and gives us a target to start with for future cash flow projections and then review ongoing. This individual is going to need a base level of income to cover day to day costs and thereafter flexibility was of key importance as their expenditure will vary depending on their travelling plans in the main.

Spending v legacy –

Always an interesting conversation and in this particular case the individual was more focussed on enjoying the spoils of their wealth but would like to leave some sort of legacy behind and therefore the word flexibility again came into the discussion particularly as their spouse is a few years younger and will want them to continue enjoying life if they predecease them.

What is their realistic health expectancy?

Normally an impossible question to answer as we don’t know the day we will pass. However, this individual has two parents still going strong and has good longevity in the family. With their active lifestyle it is a reasonable assumption to assume they will live at least to the average life expectancy age if not beyond. Their assets therefore will need to continue meeting their needs for a number of years to come.

Risk profile –

Our views on risk change almost daily depending often on life events and the risk needed to meet objectives is always something I ask clients to think about and discuss. In this case to meet the individuals needs some risk is required above and beyond ‘risk free returns’ and therefore having a short timescale would seriously hamper the options available.

By the end of quite a lengthy discussion the individual agreed that whilst an ‘event’ will be happening in the short term they will continue to have exposure to real assets beyond that date and this needs to be taken into account in ongoing discussions.

When many people start saving for the future, they think things like retirement are years away so, understandably, don’t think about it. Often when that event is fast approaching that mindset changes and it is always a fun conversation to have with people to challenge thoughts and ensure the work we do together continues to be bespoke to their needs.

I am looking forward to working with this individual for the long-term following this conversation and hearing all about their post work adventures.

Thanks for reading and #enjoythejourney