Martin Hawes has written a new book, a personal account about how he planned for his own retirement. There are lessons for everyone here

Hardly anyone manages their own investments anymore. When I look back over my involvement in investment spanning 45 years, perhaps the biggest change is the growth of investment management. I still know a few people who manage their own money (I have a couple of good friends who do it quite successfully) but the vast majority of investment capital throughout the world is now looked after by professional managers. Whether it is managed funds, Exchange Traded Funds (ETFs), KiwiSaver or Discretionary Investment Managed Services (DIMS) from financial advisers, the majority of people invest through managers. The days are near gone of people spending their lives squinting at a screen and reading company annual reports to make their own investment decisions. 

I no longer manage my own investments. When my circumstances changed a few years ago, I had a major review of my finances. I reconsidered all aspects of my money but probably spent the most time and nervous energy considering my investments. 

For 45 years I had managed my own investments – doing your own investment was what you did back in the 1970s. Looking after my own portfolios was a part of my life for decades, something that I did unquestioningly. 

But then I did this major review of my finances: I looked at all the usual things and ended up winding up the family trust, changing my will, cancelling some insurances, planning my draw down rate in the event that I retired, and, of course, considering my investments. (The decisions I took, along with a few others, make a new, recently released book called ‘Retirement Ready’). 

The investment question took the longest; I spent about a year researching, analysing, thinking and dithering about what to do with my investments. It is not easy to stop doing something which has been such a big part of a life. 

At the time, in 2021, I was getting stunning returns – clearly, I was an investment genius! So, I thought - until I started to compare my investment performance with managed funds, KiwiSaver and some of the financial advisers who managed investments. When I did those comparisons, I found that I was not a genius - but not a dunce either. Actually, I was a getting fairly average returns. 

In effect, my research found that I was spending a lot of time, effort and mental energy to be in the middle of the pack. 

So, the next step was to find out why I was only average. Afterall, I had most of the skills to be a good investor, I read a lot of stuff, had plenty of people to talk to and research to consider. Why then, with significant advantages, was I just ordinary? 

After a lot of very honest self-examination there were two main answers: 

1. Although I am quite a good buyer of investments (I like a bargain) I am a poor seller. I have long had a tendency to buy well but become emotionally attached to my investments and, therefore, hold on to them too long. That has been a costly fault for me. 

2. I did not prioritise my own investments. I have always had multiple roles (financial adviser, writer, speaker etc) and these have usually been my main concern – my own investment management has taken a back seat. The cobbler’s family is the poorest shod – my investment management seldom got the time it deserved. 

These faults meant that I did not perform, and I therefore decided that I was better off paying others to manage my investments. 

Ceasing to manage my own investments means that I have joined a major global trend that has been growing over the last few decades. This is especially noticeable amongst those investing in retirement. Now that we live significantly longer, the old strategy to use term deposits to live on the interest is no longer likely to be workable – retired people need better returns and better investment strategies so that their money will last as long as they do.  

Retired investors need a good, diversified portfolio but many lack the skills or desire to DIY. They often also lack the time. This is particularly so for those who want to travel. Now that I have fewer commitments, I take an annual climbing trip to Europe. The markets do not just sit still because I’m on holiday and I am therefore happy to know that my investments are being managed by someone else. If I needed to keep up with the markets, I would have needed to stay on my computer a bit, even while away. 

In recent years I have made quite a number of changes to my financial set up. However, the best change of all, the one with the greatest impact on my life has been to hand my money to others to manage. It has freed up my time, given me more space of mind, I get better investment performance, and it lets me do what I want whenever I want. 

I should have done this years ago. Yes, I pay a fee for this but the price that I pay is a small part of the return that I get. As investment gets ever more technical with many different options, as people become more time poor I have little wonder that most people now have their investments managed by professionals. 

Financial expert Martin Hawes shares the strategies he used to plan his own retirement in his latest book Retirement Ready (Upstart Press, out now). The book tackles the critical questions that will shape your future with practical insights and advice. In this interest.co.nz exclusive, Hawes shares the actions he took regarding his own investments on retirement.