Best bussiness financial advice on the net


Investing: Saving Your Retirement

Everyone would love to retire early, but theythose who have been successful setting aside
also desire to be free from the fear ofa healthy nest egg follow conventional wisdom
running out of money. Changing your attitudeit will needlessly reduce their lifestyle or
toward investing and the approach you takeimpact what they leave their children or use
will help you accomplish both. Read on to seeto  support  charitable  causes.
how you can retire years sooner and make you
money  last  decades  longer.Traditional portfolio management views stocks
as being risky and bonds as being safe. As
Last week I talked about our need to changesuch, you should increase the amount you have
the way we view retirement. I explained thatin bonds and decrease the amount you have in
seeing retirement as a transition to astocks as you get closer to retirement. The
less-stressful, more enjoyable jobrule of thumb is that you should have roughly
drastically reduces the amount you have toyour age in bonds, so if you are fifty your
have socked away. Even working just part-timeportfolio should be 50% bonds, 30% stocks and
during retirement can allow you to retire20%  cash.  That's  crazy!
years sooner, or make your money last years
longer.Along with that view is the philosophy that
you should buy an investment and hang on to
Changing our view of retirement is only halfit--buy and hold. Investors that lost 30-50%
of the solution. We also need to change ourbetween 2000 and 2002 know that buy and hold
attitude and approach to investing for andcan be a risky proposition. We all know that
during retirement. This by itself will have athere is the potential for stocks AND bonds
similar impact on when you can retire or howto lose value. This is referred to as market
long your money will last. Combining the tworisk and interest rate risk. Since the
together can completely change the retirementindustry believes that you should buy and
equation.hold, the only way to minimize the overall
risk to your portfolio is by changing the
Our life spans grow longer every year,allocation  between  stocks,  bonds and cash.
placing greater demands on our nest egg.
Moreover, as a nation we are saving less andIt all sounds great--but by believing it you
less. In fact, recently the national savingsmay be forgoing tens (or even hundreds) of
rate was negative--collectively, we spentthousands of dollars. I don't accept their
more  then  we  earned.underlying assumptions and neither should
you. There are other, more effective ways to
Let's face it--few of us save as much as wemanage portfolio risk that may dramatically
should. The demands of raising a family,increase  your  returns.
saving for our kids' education and caring for
aging parents make it difficult to set asideThink about it. Interest rates the last
as much as is needed. By the time our kidsseveral years have been at historic lows.
are independent, our retirement may only beThat didn't change the traditional
10-15  years  away.allocations provided by the industry. They
still said you should have 50% of your nest
Unfortunately, the conventional wisdomegg in bonds if you were 50 years old. The
provided by the financial services industryreturn on bonds wasn't even enough to keep
hasn't made reaching our goals any easier.place with inflation and you were supposed to
Conventional wisdom says that you shouldput  half  your  money  in  them? Ridiculous.
invest more conservatively each year you are
closer to retirement. Their wisdom also saysIt's possible to grow your money faster with
that in retirement, you should only withdrawless risk. It's possible to draw out more
4%  from  your  portfolio  each  year.than 4% without the fear of running out of
money. And it's done by adjusting
The conventional wisdom is wrong. Frankly, ifconventional wisdom to the realities of the
the average person follows this advice itmarkets. Next week I will share specific
will be a wonder if they retire at all! Ifstrategies and methods to do just that.



1 A B C D 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111