What is Long-Term Investing?
If you or your spouse are age 65 today, chances are one of you will live to age 90. That makes you a Long-Term Investor.
Unless you have more investment assets saved than you will ever need, your portfolio strategy may require some equity exposure to allow for potential growth net of the income spent annually. This potential net growth will allow for an inflation hedge in your income plan.
What is Risk?
Most retirement investors fear a short-term stock market sell-off. This fear is magnified by the media who cover each pullback as a major negative event. Sadly, fear generates ratings. Because of this, many investors allow their emotions to guide investment policy and either avoid stocks or sell at the bottom of each cycle. If an investor does not sell, is this risk or just volatility?
A far more dangerous risk in retirement is when your investments do not keep pace with inflation - or grow at all. Buying CD’s that provide safety of principal and no growth potential can be summed up as “going broke safely.” You will lose purchasing power as you age. Stagnant or shrinking investment values are a far greater risk to your retirement income plan than being exposed to some market volatility.
Action Plan
Developing a diversified investment strategy that fits your needs and risk profile may provide an inflation hedge for your retirement income. The drawback – exposure to some short-term market volatility.
However, you are a diversified long-term investor with a plan!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Stock investing includes risks, including fluctuating prices and loss of principal.
CDs are FDIC insured to specific limits and offer a fixed rate of return if held to maturity, whereas investing in securities is subject to market risk including loss of principal.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Investing involves risk including loss of principal.
Investing involves risk including loss of principal.