Weekly Market Report - How prepared are we for retirement?

Here is the latest installment of Dale Gillham's weekly market report:

A common question that is often asked is how prepared are we for retirement? According to statistics, approximately 1 in 5 people are not sure they can afford to retire and one third don’t know how much money they need in retirement, while the remaining believe they can comfortably retire at age 65. The concern for many investors nearing retirement right now, however, is whether they will have sufficient income given that the volatility in the share market in the past nine months has had a significant impact on superannuation funds. Add to this the fact that we are living longer and you can start to see why there is continuing concern that many may not have enough to sustain themselves in retirement.

Given this, when it comes to investing it pays to ensure you spread your risk across various asset classes so as to minimise your exposure to the downside risk in any one asset class. In other words, building up a diversified portfolio of shares, property cash and/or bonds will ensure you have a balanced portfolio that will support you in accumulating wealth to enjoy your years in retirement.

So what can we expect in the market?

The Australian market has continued to rally this week and it is the first time this year that the market has risen over two consecutive weeks. Whilst this is a positive sign, it is not an indication that the down move is over because to confirm this we need to see the market rise for a further five weeks. That said there is a possibility that the market could continue to rise although the probability of this occurring is not that strong.

In the short term, the market should rise over the next week with the next resistance level likely to occur around 5666 points. If the market rises through this level, it should continue to rise to around 6000 points before finding any further resistance. While this news is positive, right now it is wise to be patient and to wait until the market confirms it is rising.

Dale Gillham is chief analyst of share investment company Wealth Within