Generally speaking, an individual's risk appetite will reduce as they get older.
This makes a lot of sense when you consider that someone in their 20s has a lot more time to recoup their losses compared to someone in their 60s who is nearing retirement and will soon be reliant on their savings to fund their future lifestyle.
In light of the increasing importance of capital preservation as we grow older, I believe investors need to ensure they select shares that are consistent with their risk appetite.
With that in mind, here are three shares that I think could be great additions to a well-balanced retirement portfolio:
BWP Trust (ASX: BWP)
BWP is a real estate investment trust that primarily owns industrial property such as warehouses. Most of the company's warehouses are leased to hardware giant Bunnings, which is owned by Wesfarmers Ltd (ASX: WES). I believe Bunnings is a high quality tenant and very likely to remain in these warehouses for the long term. As a result, I believe BWP's earnings are very defensive and it is well-placed to grow its distribution at a solid and consistent rate over the next decade.
Telstra Corporation Ltd (ASX: TLS)
Another top option for a retirement portfolio could be Telstra. I like the telco giant due to its improving outlook and attractive valuation. In respect to the former, thanks to a combination of cost cutting, rational competition, and a positive growth outlook in the mobile business, I believe Telstra is well-placed to return to growth from perhaps as soon as FY 2022. Which, after years of dividend cuts, should mean Telstra will soon be in a position to start increasing its payouts once again.
Woolworths Limited (ASX: WOW)
This retail conglomerate could be a good option for a retirement portfolio. The company has a track record of growing its dividend payments and look well-positioned to continue this trend for the foreseeable future. In addition to this, the company's strong brands, entrenched customer base, and non-discretionary nature makes for a very defensive business model.
