Retirees with money to invest are often advised to use a basket of investments to balance their risk.

According to a recent survey in the United States, 56% of retirees have a share portfolio as a part of their income strategy.

When you invest in shares, you’re essentially buying a small piece of ownership in a publicly traded company. As a shareholder, you’re entitled to a portion of the company’s profits, as well as any voting rights that may come with owning the stock.

The value of your investment can increase or decrease based on various factors such as the company’s financial performance, changes in the market, and investor sentiment.

If the company performs well, demand for its shares may increase, driving up the share price and increasing the value of your investment. Conversely, if the company performs poorly or if there is negative news about the company, demand for its shares may decrease, driving down the share price and decreasing the value of your investment.

When you buy shares, you can do so through a stockbroker or an online trading platform. Once you've purchased shares, you can hold onto them for as long as you like or sell them on an exchange to another investor.

It’s important to note that investing in shares carries risks, as the value of your investment can fluctuate and there is always the possibility that you may lose money. It's important to do your research. 

Balancing your portfolio means choosing investments that provide a reasonable rate of return while also managing risk.

Here are some strategies for doing that:

• Diversification. Diversification is a key strategy for managing risk. By investing in a variety of stocks, bonds, and other assets, retirees can spread their risk across different sectors and minimise the impact of market fluctuations.

• Asset allocation. This involves dividing investments among different asset classes, such as shares, bonds, and real estate. Adjusting the mix of assets based on risk tolerance and market conditions can help achieve a good return while managing risk.

• Consider bonds. Bonds – essentially loans from you to a government organisation or a company – are regarded by some experts as a safer investment than stocks and can provide steady income.

• Avoid overreacting to market volatility. Focus on their long-term investment strategy and avoid making decisions based on short-term market fluctuations.

• Seek professional advice. A financial advisor can help you develop an investment strategy based on risk tolerance and financial goals.