What should I do with my superannuation scheme, KiwiSaver or other lump sum?

---

Cash flow is the key component to developing an investment strategy that will fund your ongoing retirement lifestyle. You need to draw up a retirement budget and carry out an analysis of how long your capital will last. You can use online calculators at sorted.org.nz and create graphs to visually see the rate the funds will decrease as you use them. This will also help you make decisions in relation to your retirement.

Keep in mind that your investments need to function in two ways:

• By supplementing your NZ Superannuation for daily living costs and;
• Being flexible enough to get lump sum withdrawals for those "one-off" costs like travel or purchasing a new car. Once you have established what you are going to need on an annual basis you can consider your options for investing your funds.

One popular option is the property market. It can be a reliable income stream as the rents come in but will it be sufficient to fund your lifestyle requirements especially if you will need lump sums from time to time in the future? Decide if this type of investment generates enough to fund your retirement lifestyle or will it put you at risk of becoming asset rich and cash poor?

Investing in term deposits or bonds is another option that allows you to design your investments to mature at different times and get lump sums as you need them, but if the timing isn?t matched correctly you may be locked into fixed investment periods that could leave you short of cash when you need it most.

You can also use the sharemarket and purchase shares of various risks and characteristics. This is one a way to get a mixture of income with good opportunities for capital growth but be aware, you really need to know what you are doing and understand all the influences that impact on shares in order to get the most out of the sharemarket.

If you are a cautious type you may like to spread your eggs in various baskets and have a mixture of all the above options. Remember, whatever way you choose to invest, the key component is to ensure that your retirement plan generates sufficient cash flow to meet all of your retirement lifestyle needs and goals.

Take your time to make these important decisions, do your research to help you decide and in the meantime put your funds on deposit until you have determined the right approach.