We’ve looked at different ways to structure yourself in retirement. To recap, you have three main options:
- Stay in your industry or retail super fund and make the most of the flexibility they offer.
- Work with a financial advisor who manages your investments, typically through a platform with managed funds. This is the most expensive option and usually suits wealthier individuals.
- Become a self-directed investor, which is the most flexible and cost-effective option but requires effort and interest.
Most Marcus Today members are self-directed investors—about 70% of our members are over 60, with many managing their own self-managed super funds (SMSFs).
This approach provides control and flexibility while also serving as an enjoyable hobby for many retirees. However, it’s not for everyone. If you’re only doing it because your accountant told you to set up an SMSF, but you have no real interest in investing, it might not be the right choice.
If you do want to take control, there are three main approaches to self-directed investing.
- Trading (High Risk – Red Zone)
Trading is the most volatile and high-risk form of investing.
- It requires constant attention and discipline.
- Many beginners lose money quickly and walk away.
- Some traders refine strategies and make it work, but successful trading is repetitive and requires a strict method.
We colour this red in the newsletter because it’s dangerous and can keep you awake at night.
Most new investors come into the market believing they’ll make their fortune by trading, but they often blow up their first $10,000 and disappear. Trading is not recommended for most people unless they are truly dedicated and have a solid, tested strategy.
- Growth Investing (Moderate Risk – Yellow Zone)
Growth investing is for people who don’t need income from their investments yet—typically those still working and building their nest egg.
- Growth investors take more risks for higher potential returns.
- They focus on companies that reinvest earnings into growth rather than paying dividends.
- Typical growth stocks have high price-to-earnings (P/E) ratios and low yields.
In contrast to income stocks, growth companies shouldn’t be paying dividends. If they can reinvest money and earn 20% per year, why pay it out to investors who can only reinvest it at 4% in a term deposit?
- The US market is heavily growth-focused, while the Australian market leans more towards income stocks.
- Growth investing requires active management—you need to time stocks well and know when to sell.
- Investors must be comfortable with volatility and willing to do research.
We colour this yellow in the newsletter because it requires effort but offers strong potential rewards.
- Income Investing (Low Risk – Blue Zone)
Income investing is the most common strategy for retirees and one of the simplest ways to invest.
- The focus is on stable, dividend-paying stocks.
- Investors seek high-yield stocks with franking credits for tax benefits.
- The strategy is low maintenance—you don’t need to trade often.
We colour this blue in the newsletter because it is conservative, stable, and focused on income.
Why Australian Investors Love Income Investing
The Australian market is one of the highest-yielding in the world, thanks to franking credits.
- Franking credits allow investors to claim back tax already paid by companies on dividends.
- In some retirement structures, this results in cash refunds from the government.
- Many retirees rely on franking credits as a core part of their income strategy.
The Best Income Stocks in Australia
The big four banks are some of the best income stocks in the world.
- Banks don’t have major growth opportunities, so they return most of their profits as dividends.
- They all have high payout ratios and fully franked dividends.
- If you include franking, major bank yields typically range from 6% to 8%.
At times, the Marcus Today Income Portfolio has held 50% of its allocation in banks—a move most fund managers wouldn’t make due to diversification rules, but one that maximises income.
Other common income stocks include:
- Real Estate Investment Trusts (REITs)
- Utilities and infrastructure stocks
- Energy companies
- Low-growth, high-yield businesses
Why Income Investing Works for Wealthy Investors
Many wealthy investors prefer income investing because:
- They already have enough capital and aren’t looking for high-risk growth.
- Their goal is earning a stable income without taking unnecessary risks.
- If they hold enough high-yield stocks, they earn more than they spend, making their portfolio self-sustaining.
Income investing is so simple that many investors don’t need a financial advisor—there are very few managed funds that focus purely on high-yield stocks, so investors often do it themselves.
Bonus: The Strategy Portfolio (ETF Investing & Market Timing)
While trading, growth, and income investing are the three main approaches, there is one more strategy—timing the market using Exchange-Traded Funds (ETFs).
- This involves investing in entire markets, sectors, or themes rather than individual stocks.
- There’s less volatility because ETFs spread risk across multiple stocks.
- It allows investors to take advantage of global trends without stock-picking.
Marcus Today runs a Strategy Portfolio that follows this approach, focusing on sector rotation and market timing.
We cover this strategy in more detail in another video.
Final Thoughts
If you’re managing your own investments, you have three main approaches:
- Trading – High risk, high reward, but difficult to master.
- Growth Investing – Moderate risk, ideal for investors who don’t need immediate income.
- Income Investing – Low risk, ideal for retirees looking for stable returns.
Most Marcus Today members combine growth and income investing, with occasional trades on the side for fun.
If you want to see how these strategies work in practice, check out the Marcus Today newsletter, where we run:
- An Income Portfolio for dividend-focused investors.
- A Growth Portfolio for capital appreciation.
- A Strategy Portfolio focused on ETFs and market timing.
- A Trading Ideas section for those who enjoy short-term opportunities.
Self-directed investing isn’t for everyone, but for those who enjoy it, it can be one of the most rewarding and engaging ways to manage retirement wealth.
