Avoiding stocks from a Kiplinger Article

Just wanted to pass on something that I read and it supports my last long windy blog post. To run from stocks after retirement could be a mistake. You can do this as long as you do notably and hold. Just a little work has to be done to monitor your investment. Most of us Baby Boomers were taught to invest for the long term or buy and hold. That rule has been shreaded up and forgotten. Now we babysit our investments and make moves based on market conditions. 

 

Financial Decisions You Will Regret in Retirement

Avoiding the Stock Market

Shying away from stocks because they seem too risky is one of the biggest mistakes investors make when saving for retirement. True, the market has plenty of ups and downs, but since 1926 stocks have returned an average of about 10% a year. Bonds, CDs, bank accounts and mattresses don’t come close.

“Conventional wisdom may indicate the stock market is ‘risky’ and therefore should be avoided if your goal is to keep your money safe,” says Elizabeth Muldowney Samuelson, a financial adviser with Savant Capital Management in Rockford, Ill. “However, this comes at the expense of low returns and, in fact, you have not eliminated your risk by avoiding the stock market, but rather shifted your risk to the possibility of your money not keeping up with inflation.”

We favor low-cost mutual funds and exchange-traded funds because they offer an affordable way to own a piece of hundreds or even thousands of companies without having to buy individual stocks. And don’t even think about retiring your stock portfolio once you reach retirement age, says Sweeney, of Fidelity Investments. Nest eggs need to keep growing to finance a retirement that might last 30 years. You do, however, need to ratchet down risk as you age by gradually reducing your exposure to stocks.

The article above is from Kiplinger and can be found here —> Kiplinger.