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Summary: After you retire, the biggest threat to your portfolio is your own free time. A good fund lags, the afternoon is empty, and the switch gets made. Plan for the boredom as seriously as you planned the money, and arrive with a portfolio that gives you nothing to do.
After you retire, the biggest risk to your portfolio is your own free time.
For 30 or 35 years, money was a worry you wanted to end. Then it ends. Now you have the two things you always wanted: time and a large corpus, and a phone that makes acting on them easy. So the tinkering starts.
I see it every week in the questions we get. A good fund lags for a year, sometimes two, and the question arrives: is it time to switch? The fund is usually fine. A bad year or two is what owning a good fund costs. The question is not about the fund. It is about the urge to act. A working person notices the same dip, shrugs and goes back to work. A retired person with the afternoon free acts on it.
The cost stays hidden because it never arrives as a bill. A couple retiring with Rs 2 crore and drawing 4 per cent has Rs 8 lakh to live on. Let the switching and the waiting in cash cost two percentage points, and what leaks away each year is Rs 4 lakh.
So plan for the boredom. Arrive at retirement with a project you could work at for a lifetime, not a 'will look into it sometime'. And arrive with a portfolio that gives you nothing to do:
• four or five funds, not twenty
• withdrawals automated
• allocation already settled
The retired investors I know who stayed out of trouble were not the ones with the largest corpus. They were the ones who had something to do.
Also read: The Points You Do Not Own
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