How to Invest for a 30-Year Retirement with Kanish Chugh

**Kanish Chugh** (0:00)
Because we're living for longer, you do need to have some element of growth in the portfolio, unfortunately. It's not a case nowadays where you would have just this complete defensive assets. No, there has to be some element of equities or some element of growth in the portfolio.

**Ren** (0:14)
Even with younger investors, there's a growing interest in income products. The FIRE movement is still popular, but even without people wanting to retire early, passive income is just growing in interest.

**Bryce** (0:29)
Welcome to another episode of Equity Mates, a show where we explore what's possible in the world of investing. If you've just joined us for the very first time, a massive welcome to our community. My name is Bryce and I'm Ren.

**Ren** (0:39)
And today we are talking about the future of retirement income. Now this might feel like a topic that is years, decades into the future for you, but it's something that we all need to start thinking about earlier. As today's guest makes the case, retirement is changing, our needs in retirement are changing, and the way we think about setting up our portfolios should change as well.

**Bryce** (1:01)
Yes, the guest joining us today is Kanish Chugh. He is the head of ETF sales at PIMCO, one of the world's largest fixed income managers. We're lucky to have him in here because we are unpacking, as you said, Ren, how to invest for a 30-year retirement. The reality is when you and I hit retirement age, we might have 30, maybe even 40 years as longevity and whatnot sort of increases. We still might have many, many decades to rely on our investments as a form of income.

**Ren** (1:32)
Yeah. Now, traditional financial planning has used the 4% rule as kind of its rule of thumb. And that rule suggests that over a 30-year time period, you can safely draw down 4% of your balance of your portfolio and still have money at the end of that 30-year period. The challenge is, though, as you said, a lot of people are retiring for more than 30 years now, you know.

**Bryce** (1:54)
Or want to retire earlier.

**Ren** (1:55)
Yeah, yeah. Someone could retire at 55 or 60 and live to 100 With advances in medical technology, who knows?

**Bryce** (2:02)
Exactly.

**Ren** (2:03)
120 could be on the cards. And so it forces us to rethink how we set up our portfolios to retirement. And, you know, as Kanish will talk about in this episode, rather than thinking about our portfolio as something you draw down in retirement, is it now something where we need to think about, is it's a portfolio that pays us income and enough income to sustain us in retirement without touching the principle?

**Bryce** (2:28)
Yes.

**Ren** (2:29)
That's the dream. Have your investments pay for your life.

**Bryce** (2:32)
I'm dying with zero. I'm spending it all.
Now we want to say thank you to PIMCO for supporting this episode. They do have a range of actively managed ETFs designed to help investors meet different objectives, investment objectives, no matter where you are on your investing journey.

**Ren** (2:48)
To learn more about PIMCO's range of income and fixed income solutions, including their active ETFs, visit pimco.com.au. A massive thank you to PIMCO for helping us keep all of our content free.

**Bryce** (2:59)
With that said, let's get to our conversation with Kanish. Kanish, welcome to Equity Mates.

**Kanish Chugh** (3:06)
It's great to be back. It's been a few years between drinks. It has been, yes, yes.

**Bryce** (3:11)
So we're going to unpack all things income and particularly around how things are changing from building a portfolio and aiming for a retirement income. When you look at the next 10 or 20 years, what do you think will be fundamentally different about retirement compared to, I guess, the experience that previous generations have had?

**Kanish Chugh** (3:32)
I think it's important to rationalize that our life expectancies have evolved through medical advancements. So we're living longer, which means our retirement needs to fund longer as well, that sort of that period.
I think it's really important when we consider this in terms of how do we plan for that retirement. So when you talk to Australians, we've got this sort of now big spread in terms of Australians that are sitting in that sort of, we're about to enter retirement, we're in the midst of it. There's a large cohort that are thinking, well, how do we need to plan for this? When we look at Australian portfolios in the investor standpoint, if you're 25, 30, 35, some of those investors that are building their own portfolio, I would argue, don't have enough defensive assets within them or haven't thought through, how do I build in some of that defensiveness?