Pension and investments: how the 64-year-old seeks a solution to rebalance her portfolio

Jacopo Ceccatelli, head of institutional clients at Finint private bank, replies

The reader's articulate question allows us to delve into the important topic of the role that investments should play, depending on one's circumstances and needs. From this point of view, the situation presented in the question is that of a person who has already planned his or her financial position quite correctly.

In addition to a generally under-controlled general situation in fact, with a house of her own without a mortgage and sufficient recurring income, between pension and investments, for a good standard of living, the reader diversified her investments in a rather articulate manner.

Premising that, as we do not know the chosen instruments in detail, it is not possible for us to make definitive evaluations, at least from the point of view of approach, the choices made seem to be decidedly agreeable.

Correctly, high-risk investment components are limited to 15 per cent, with another 12 per cent in balanced funds and more than 70 per cent in medium-low risk instruments (liquidity bonds).

The type of instruments also seems well diversified, with funds, ETFs and securities, to which some insurance policies are added, presumably life policies. On the latter, given that the validity of the instrument as such seems unquestionable to us, we would point out that it is always extremely important to verify both the commission load and the types of investment within the policies, which must be consistent with the investor's objectives. If it is a matter of class I policies (as it could be), the reader could verify whether there are margins to ask for reductions on the amount withheld by the company in light of the gross returns recorded by these products, which are often decidedly deficient (especially when considered in relation to what can be obtained with deposit accounts or government bonds).

So what should we suggest to the reader to improve the investment mix? Starting with the higher-risk component, we point out the advisability of investing mainly in high-dividend equities. In this regard, on both the Italian and European markets there are many companies with dividends that represent a decidedly high percentage compared to the purchase price (often over 5%). Clearly, when choosing securities, it is advisable to target companies with a very high standing in order to avoid nasty surprises. It is best, therefore, to seek the help of a financial advisor when making your choice.

With regard to funds, as with policies, regardless of the type (equity, bond or balanced), it is always very important to check the costs and commissions applied, and also the past track record, which on the one hand cannot be considered a guarantee for future performance, but on the other can nevertheless provide useful indications on management style and risk profile. Also in this case, however, getting the support of a specialised professional can simplify the choice phase. Finally, coming to the medium-low risk component, the bond component, we would like to point out that today's market levels for Italian government bonds, or comparable ones, allow for net returns of between 2.50% and 3.5%. With regard to this component, with a view to diversification, we highlight the opportunity to allocate a portion (between 15% and 25%) in inflation-linked issues, such as the BTp Italia. Even if inflation expectations are no longer very high, this type of security can still protect investors in the most dangerous scenarios, i.e. those of a high inflation phase that erodes the purchasing power of one's "nest egg".