Investments that you should avoid in retirement

If you want to live well in retirement, investment is the key, but watch out for these traps.

Investments that you should avoid in retirement

If you want to live well in retirement, investing well is the key, but there are risks involved. While you can’t avoid all risk if you want to thrive in retirement, there are some investments you should definitely steer away from.

Money in the bank
You will still need a bank account for your everyday spending money, but this is not where you should be investing. Cash rates are at all time lows and term deposits are barely delivering anything worthwhile. You may be attracted by the safety, but the fact is that you are much better taking that money out of the bank and buying shares in it instead.

Get rich quick schemes
At the other end of the spectrum from not taking enough risk is taking too much risk. It is easy to get swept up in media hype about certain investments (Bitcoin, etc) and then miscalculating the level of risk that you are comfortable with. It is important to remember the maxim high-risk, high return. If you take on more risk than you are comfortable with to make a quick buck, you could be left in a difficult place financially if that investment fails.

Tax minimisation schemes
Some of these schemes can be extremely complex, some can be illegal and some are just an outright scam. In these situations it is easy to apply a simple rule of thumb – if you don’t understand the investment avoid it. There are currently a number of schemes targeting Australians planning for their retirement. These schemes encourage individuals to channel money inappropriately through their self-managed super fund (SMSF). These schemes have some common features. They:

  • are artificially contrived with complex structures usually connecting with an existing or newly created SMSF
  • involve a significant amount of paper shuffling
  • are designed to give the taxpayer minimal or zero tax, or even a tax refund
  • aim to give a present day tax benefit by adopting the arrangement
  • invariably sound ‘too good to be true’, and as such they generally are.


The penalties are substantial for those involved in deliberate tax avoidance schemes. And the penalties aren't just financial; an individual may well lose their right to be a trustee of their own superannuation fund; or in some cases they could go to jail.

What investments would you recommend people avoid in retirement?

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    Financial disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.


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    8th Oct 2019
    Is this a cut and paste Ben. Would rather you post some positives to look at or have a financial adviser do articles. Paying those thieving advisers js a wastecof monet, why would they need to do such things, if they were any good?
    8th Oct 2019
    "Monet" would be a good long term investment though! :-)
    8th Oct 2019
    I agree, nothing mentioned about fixing excessive DEEMING rates on cash Term Deposits in Banks!
    8th Oct 2019
    Because Tricky, the pension is not an investment!

    Cash is a poor 'investment' regardless of the deeming rate.
    The pom
    8th Oct 2019
    Having held a licence as a Financial Advisor about 50 years ago I had been doing most of my own investing but some time ago I went to a Finance Fair and met a very pleasant man who took all my details and a few days later I received a financial plan from him. A quick scrutiny and it went straight into the bin and I have continued on my own. Now in my late 80's and comfortable and happy with my situation I will continue to be my own advisor
    8th Oct 2019
    After working in a financial environment for 35 of my 45 working years and having a SMSF for the last 20 years, I do my own investing. However I do have a financial advisor, (I have known him for about 40 years).

    I do my homework and twice a year I visit him, present what I am thinking of investing in and he says yes or no. I think that a lifetime of working in finance and having a trustworthy advisor has enabled me to be retired for 10 years and stay off the Aged Pension.

    Generally I think that people need to become more financially literate and take control of their retirement future.
    8th Oct 2019
    You got that correct Captain do a bit of research on finance and you can do your own thing,
    however I have never found a good financial advisor.
    8th Oct 2019
    Robie, my advisor (and I use the term lightly) is a fellow I worked with when I was young. We both started doing our Accounting Degrees at night school. He started up his own business after finishing his Degree, and myself and a few others we knew, always had him do our tax returns (even we could have done them ourselves).

    I like to think that our small contributions to his fledgling business helped him continue and to grow his business to the extent he is now very successful and a significant contributor to his small town's economic growth.

    Some advisors are honest and if you have one like that treasure him/her. It helps that I have known this fellow since my early twenties.
    8th Oct 2019
    The only problem with good financial planners is they charge like wounded bulls (or is it bears?) The rest are useless so you need to develop your own ideas first then run them past a F.A. you feel you can trust (ie one who is not connected to another investment company or a bank or insurance company).
    8th Oct 2019
    Tax avoidance schemes? The wealthy use them the same way you and I use toilet paper.
    Of course the rich and the middle class have different laws. One will ring their rich man's lawyer and the other will pay up.