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Inflation and Investing for Retirement: What You Need to Know

Inflation and Investing for Retirement: What You Need to Know

In order to stay comfortable in retirement, you need to account for inflation as the cost of living will inevitably continue to rise over time.

With the Consumer Price Index (CPI) increasing by 6.1% in the twelve months prior to June 2022, Australians are facing the reality of inflation’s impact on their retirement savings more so than ever in the last 21 years.

In retirement, you will no longer be relying on wages and will instead be drawing on your savings that become stagnant. While the cost of living continues to grow, your lump sum only diminishes.

If you want to counter the rise of inflation and keep your retirement funds where they need to be for comfortable living in your later years, the best strategy is to start investing for retirement today.

Why You Need Fixed Income for Retirement

Investing in stocks comes with a level of risk that should be balanced with safer investments, given that your post-work future is what’s at stake. A fixed-income approach to retirement investment strategies focuses on preserving your capital and providing you with a reliable source of income that carries less risk.

Fixed-income assets are less vulnerable to economic factors, safeguarding your finances during times of economic turmoil. By balancing your investment portfolio, you will be reducing the potential impact caused by volatility in the stock market.

Preparing for Retirement With Mortgage Investments

Investing in mortgages is one of the safest and most effective retirement investment options. Real estate is a fantastic growth asset, historically increasing in value as time goes on. There are multiple ways to invest in mortgages, such as first mortgages, second mortgages and contributory mortgage investment funds.

First-Mortgage Investments

If you are looking for a minimal-risk retirement investment, planning ahead by investing in a first mortgage is an excellent option. With a first-mortgage investment, you receive a steady source of monthly income.

These investments are considered reliable and stable, given that they are secured against real assets. In the event of a default, first-mortgage investors are the first to be paid out, drastically minimising any risk that can come with investing.

Second-Mortgage Investments

With many Australians taking on second mortgages as an alternative to refinancing, second-mortgage investments have become a rewarding source of income and a great investment for those looking to improve their self-managed super fund or create revenue in retirement.

As first-mortgage investments will be paid out first should a default occur, second-mortgage investments are generally more appealing to investors willing to take on a slightly higher risk for higher gains.

Mortgage Funds

If you are a more risk-averse investor, another option for your retirement investment strategy is a contributory mortgage fund, which has a reduced risk of defaults occurring. By spreading your mortgage investments among several properties, alongside other investors, you split the risk involved and the wealth gained, resulting in a reliable source of monthly income.

Prepare for Your Future

Factoring inflation into retirement planning is essential for anyone who wants to make the most out of their later years in life. By investing in a source of fixed income, your money can continue to grow even as the cost of living goes up.

Arthurmac has close to over 20 years of experience helping our clients make the best mortgage investments for them, assisting in securing wealth and enabling a comfortable retirement. Our portfolio has survived significant market challenges, including the Global Financial Crisis and the global pandemic.

For more information about investing in mortgages for your retirement or to speak to a specialist, give the Arthurmac team a call on 1300 417 690 or complete our online contact form to hear back from us.



Disclaimer: Please be advised that it is highly recommended to conduct thorough research and seek guidance from a financial expert prior to making any investment decisions. It is further recommended to regularly review your investment portfolio and make necessary adjustments to ensure it aligns with your financial goals.

Stuart Styles

Managing Director Stuart has 16 years of experience as a Financial Services professional having worked previously in asset finance & management roles within the Motor Industry.