David Bell, 42, a British sales specialist at Microsoft, began his investment journey in 2013 after meeting a financial adviser in the UAE. He takes a slightly higher level of risk to ensure greater returns because he started late. "In 2018, after five years of my investments underperforming, I had an epiphany and decided that I needed to educate myself and learn how to make my own investments," Mr Bell tells <em>The National</em>. He primarily invests in low-cost exchange-traded funds but has also delved into property and UK government bonds. “On a rating of one to 10, where 10 is high-risk, I would say my appetite sits at a solid eight. I am a long-term investor with a minimum horizon of 10 years,” says Mr Bell. “This means that I am slightly more exposed to market volatility. However, over a 10 to 15-year investment horizon, the risk is much reduced.” Generation X – people born between 1965 and 1980 – will be the primary beneficiaries of a $48 trillion wealth transfer from baby boomers in the next 25 years, according to <em>The neglected generation</em> <a href="https://info.cerulli.com/rs/960-BBE-213/images/Cerulli-HNW-Generation-X-2019.pdf">report</a> by research and consulting company Cerulli Associates. However, their share of US household wealth is barely half that of baby boomers, according to a <a href="https://www.emarketer.com/content/gen-x-amid-the-pandemic?_ga=2.106669827.1803859278.1622452446-1285534507.1596006020">report</a> titled <em>Gen X Amid the Pandemic </em>by research company Insider Intelligence. “We often find the generational middle child struggling quite a bit financially,” says Aman Moti, wealth adviser at financial services company Holborn Assets. “It is not because Gen X has spent too much. In fact, many members of this generation are caught between supporting millennial kids and caring for ageing boomer and Silent Generation parents.” Mr Bell was inspired to learn more about investing after reading the <em>Millionaire Teacher</em> and <em>Millionaire Expat</em> by Andrew Hallam. He also reads a wide range of self-investing and Financial Independence, Retire Early movement blogs such as My Money Moustache, Monevator and Bogleheads. “If all goes well and I can keep saving at my current rate, I plan to reach financial independence in about 13 to 15 years,” he says. However, he does not invest in cryptocurrencies, non-fungible tokens, individual shares or other highly volatile instruments. “With these, there is a small chance of getting rich and a huge chance of losing your money. It is easy to read about cryptocurrency ‘winners’ in the news or on social media but you will rarely see or hear the losers’ stories,” says Mr Bell. We spoke to personal finance experts about tips to help Gen X members weather financial storms and keep their wealth intact. Gen Xers are advised not to become overly conservative with their investment strategies as retirement looms. “The second half of your career should be used creatively to prepare for a long retirement. And then, investment should go on – even once you have retired,” says Ross Whatnall, founder and senior executive officer at wealth management platform GSB Capital. “No matter how old you are, it is important to remain invested in growth portfolios [that are] able to make your money last your whole life.” Members of Gen X must embrace the opportunity to invest in mutual funds and ETFs with moderate risk, says Mr Moti. This generational cohort can reduce risk exposure as soon as its members hit their late 50s or early 60s. “Diversify your portfolio across several risk levels, giving your nest egg the best possible chance to expand,” he says. Finance experts advise Gen X members with short-term financial goals – such as car or home purchases – to remain conservative in their investment approach. With a short-term investment horizon, you do not have enough time to ride out the inevitable corrections in the market. Choosing a high-risk investment product will mean that you will face larger volatility and potentially have lower or even negative returns, says Ramzi Khleif, general manager for the Mena region at digital wealth manager StashAway. However, for long-term financial goals such as a retirement fund with an investment horizon of 10 to 15 years, Gen Xers can afford to take more risk, he says. “It is also important to build an investment portfolio with a level of risk that you are personally comfortable with. If your portfolio has a risk level that keeps you awake at night, it is probably not right for you,” he says. Members of this generation must begin to plan on where and how they plan to live during retirement. Since currencies and cost of living play a big part in quality of life, they are crucial considerations when planning and investing for retirement, says Mr Whatnall. For example, if Europe is where you plan to retire, start thinking about “home bias” with exposure to the euro and European-based markets, he says. “While nothing is set in stone, by immersing yourself in the countries, costs and currencies that you plan to retire in, you will develop much more realistic retirement targets. You will also be much more prepared to meet them.” Set short, medium and long-term financial goals and map out where you would like to be financially in a specific period, says Mr Moti. Common goals include home purchases, higher education costs for children, relocating to a different country or early retirement. Gen X members need to know how much money they will need to achieve each of these goals and what they need to do to fulfil them. “Be very specific with your goals and create an action plan for each month, which details how much money will come in and how much of that will be put aside so that you are able to reach your goals,” he says. “It is important to use your personal goals and needs to compartmentalise your investments. This will not only clarify your goals but also allow you to design a suite of personalised portfolios with different risk levels and various time horizons supporting your different life goals,” says Mr Whatnall. Gen Xers are recommended to diversify their investment portfolios to manage risk and reduce the volatility of assets. “Your investment portfolio should include various asset classes, and within those asset classes, it should include exposure to different factors including geographies, sectors, maturity dates and structures,” says Mr Khleif. Asset classes may include equities with exposure to a variety of sectors such as technology and consumer staples, different types of bonds with varying maturities such as government or investment-grade corporate securities, property and commodities, he says. Gen X now has the highest average debt of any age group, according to <a href="https://www.lendingtree.com/personal/changes-to-each-generations-debt/">research</a> by online lending marketplace LendingTree. Members of this generation increased their average debt by about 10 per cent, or $11,898, between 2016 and 2019 to $136,869. Mortgage debt accounted for the highest proportion (62 per cent), followed by student debt (10.7 per cent), car loans (13 per cent), credit cards (8.6 per cent) and personal loans (5.7 per cent). “Reduce your spending and pay down high-interest debt sooner rather than later,” says Mr Moti. “Paying down high-interest debt as soon as possible will save you thousands of dollars in the long run, which can then be put towards retirement savings.” The average amount of retirement savings for Gen X households stands at $69,000, according to <a href="https://www.transamericacenter.org/docs/default-source/retirement-survey-of-workers/tcrs2016_i_3_generations.pdf">research </a>by the TransAmerica Centre for Retirement Studies. “That amount will not go very far in retirement,” says Mr Moti. For example, you will need $2 million saved up if you expect to live on $80,000 annually in retirement, he says. To figure out how much you should have in retirement savings, speak to a qualified financial adviser who can help you understand the amount you will need based on your lifestyle goals, says Mr Moti. Even if Gen X members do a good job today in saving and planning for the future, nothing is guaranteed unless you protect your health, job and life, says Mr Whatnall. “Health insurance, unemployment cover and life insurance are the bedrock on which every financial plan is built. Do not skimp on the basics. Guarding and growing are two sides of the same coin,” he says.
