Retiring well?

invest, April 18, 2010, the sundaytimes

"Here is an accumulation strategy for retirement provided by First Principal Financial's chief Mohamed Salim"

• The investor is 37 and intends to start investing $7,000 every five years for the next 25 years
• He is aiming for a modest return on investment (ROI) of 6% per as he is a low-risk investor.
• No fancial investment is needed to achieve a 6% return on investment, just a good and consistent investment stratgey by spreading into a portfolio of asset classes such as bonds, unit trusts and life insurance that is continuously monitored and re-balanced, according to Mr Salim.

Is this realistic for a low-risk investor to compound at 6% ROI over 25 years with market cycles full of bulls and bears by just averaging up every five years.

What if the averaging up at every 5 year was unfortunately done near bull market peak?

What if towards the last few years of 25 years period, another Greater Bear in the same magnitude of 2008 Bear hit him?

Frequency Of Bear Markets


Bear markets, defined as a period where the market goes down 20% or more, from peak to trough, happen frequently; in the last 108 years, from 1900 - 2008, 32 times, or about 1 out of every 3 years. The average length of a bear market is 367 days


How can he mitigate such risks?