Investment planning is important at just about every life stage. However, if you’re an accredited investor moving toward retirement, it’s especially crucial to take a closer look at your overall strategy to avoid making costly missteps.
While it's always best to seek personalized guidance, here are a few general points that may help you start planning for the future.
Put Your Money in Focus: Moving From Wealth Accumulation to Preservation
When it comes to your relationship with money, mindset matters more than you might think. For high-income earners looking toward retirement, a successful investment plan most often starts with a mental shift.
You’ve spent your working years laser-focused on accumulating wealth. With a smart investment strategy, you could probably continue building wealth well into retirement. However, in most cases, retired clients need to focus on preserving wealth.
“Preserving wealth” can look different from client to client. For some, it might mean adjusting risk tolerance; for others, it might be further portfolio diversification.
Balance Liquid and Illiquid Assets
As you might already know, private equity and other kinds of alternative investments can be especially lucrative over time. But those potentially high returns come with a downside: your funds are fairly illiquid.
For instance, many private equity firms pool investor funds to purchase a business. From there, they restructure the business to make it far more efficient. In most cases, they then sell the new and improved business.
This process typically takes several years, and you likely wouldn’t be able to access your capital during that time. To avoid potential cash-flow problems, always verify you have sufficient cash on hand or in easily accessible savings or money market accounts.
Focus on Diversification
A highly diversified portfolio has a better chance of weathering market downturns, and as an accredited investor, you have a unique opportunity to diversify. Because your accredited status grants you access to private markets, you may be able to add high-reward investments to your portfolio.
Private markets are often riskier, but they don’t tend to be correlated with public markets. A healthy balance across multiple asset classes may help you effectively preserve and grow wealth.
Make the Most of Tax-Advantaged Investments
Accredited investors frequently have to contend with higher tax burdens than most. Putting some of your portfolio in tax-efficient assets may help reduce the total amount you owe.
Municipal bonds are one asset class that could be worth considering. They offer a “triple tax advantage” in New York because interest on municipal bonds is exempt from state, local, and federal income taxes.
However, municipal bonds are just one part of a balanced portfolio. For other investments that may not be as tax-friendly, consider tax-loss harvesting to reduce the capital gains tax you owe. Very high-income individuals may owe capital gains taxes of up to 20%, so creating a customized tax strategy is essential.
Looking for Investment Planning Guidance in Retirement?
At Murphy & Mullick Capital, we understand that every client has a unique financial vision. And more often than not, a thoughtful investment strategy can help you get closer to making that vision a reality.
If you’re an accredited investor who plans to retire in the near future, or if you’re already retired, we’re here to help you reshape your investment strategy to suit your short- and long-term financial needs.
Think we might be the right firm for you? We invite you to schedule a no-obligation 30-minute strategy session by calling (631) 257-0080, emailing amullick@osaicwealth.com, or reaching out online.
Frequently Asked Questions
What should investment planning look like in retirement?
Retirement investment planning typically shifts from focusing primarily on growing wealth to balancing growth, income, liquidity, and risk. For accredited investors, this often includes evaluating portfolio diversification, tax efficiency, cash-flow needs, and how different investments work together to support long-term retirement goals.
How should accredited investors balance alternative investments and liquidity?
Alternative investments such as private equity can offer unique opportunities, but they often come with long holding periods and limited access to your capital. Maintaining an appropriate mix of liquid and illiquid assets can help provide flexibility for retirement income needs while still allowing room for long-term investment opportunities.
How can accredited investors build a more tax-efficient retirement portfolio?
Tax-efficient investment planning may include strategies such as coordinating withdrawals, considering tax-advantaged investments where appropriate, and managing capital gains over time. At Murphy & Mullick Capital, we help accredited investors develop retirement investment strategies that integrate portfolio management, tax considerations, and long-term financial objectives.
About Michael & Anubhav
Michael J. Murphy and Anubhav Mullick are the co-founders of Murphy & Mullick Capital Management, an independent, SEC-registered investment advisory firm in Smithtown, NY. Michael began his career in 2007 and has worked in the independent channel since 2008, and together the two have spent roughly 20 years building a referral-driven practice known for its specialty in structured notes. Clients work directly with the co-founders, get plain-English answers, and never wait more than a day for a response.