So why can’t I afford to live forever?
I explained in an earlier blog that we need to plan to live forever, because we don’t know when we are going to die.
So what can go wrong?
Quite simply, no investment is 100% secure, there is always an element of risk. It is a well known fact that the higher the return, the higher the risk, but even investing in a bank isn’t guaranteed to be safe (check what happened in the USA recently). You won’t remember the great depression which was triggered by the Wall Street crash of 1929 (I wasn’t around either). But the whole world economy came tumbling down and we weren’t far off the same thing a few years back.
Those are the big picture risks, but then there are the risks which are specific to each investment. For example, you might buy shares in a Blue Chip company on the stock exchange, but will that company last forever? Not likely. They’ll come down sometime or other and your investment could go with them. Or you might think you have the safest property investment. Remember what happened to the Carlton Centre in downtown Johannesburg?
If you have a basket of investments some of them will go sour. That’s why investment advisors talk about a “balanced portfolio” or “spread risks”. Bottom line is if you need income from a million pound sterling, then you’d better have two million to be on the safe side (and by the way, that is the magic number!)
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