First Principles of Retirement Investing
Trying to determine the best mix between stocks and bonds within your retirement portfolio? There are some things you need to know.
→ Conservative investments, such as U.S. Government bonds and CDs, have provided safe returns over short investment horizons. However, their long-term returns have provided little, if any, real (after inflation) growth. On the other hand, stocks can be very risky investments over the near-term, but have historically provided the greatest potential for real growth over long time frames.
The practical conclusion is that the cost of conservatism is the requirement to save more in order to retire, while the cost of being overly aggressive is the volatility of returns – not knowing what the portfolio will be worth when you need it. Thus, retirement investing comes down to balancing realities (what returns are available today) vs. possibilities (what returns may be in the future). Given the dynamic nature of life and financial markets, this balance changes over time.
Optimism has triumphed over pessimism in the world of economics and investing; there is good reason to think this will continue to be so. However, anything can happen in the stock market. Plan and invest accordingly. ⬥
Investment advisory services provided by Forward Wealth Management, LLC. Past performance may not be indicative of future results. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.