Can You Really Afford To Retire Someday?
The Dynamic Wealth Report
March 25, 2010
by Robert Morris, Editor
Just 12 short months ago, many investors were afraid to open statements
from their retirement accounts. Billions of dollars of hard earned
savings had been wiped out in the market crash.
We’re all breathing a little easier now.
However, the effects of the market crash are still lingering for many
individual investors. You might be one of them. No doubt you’re feeling
it in a place where you’re most vulnerable… your retirement account.
Are you one of the thousands of individual investors who suffered
catastrophic losses in a retirement plan? (If so, my heart goes out to
you.)
Those of you near “retirement age” are now facing a harsh reality.
You’re probably going to need to work much longer than you had planned.
Just look at a recent survey by the Center for Retirement Research at
Boston College. It shows 40% of people aged 45 to 59 now expect to
retire later. Sadly, most of them expect to delay retirement by
four or
more years!
It’s not your fault. The problem is the 401(k) retirement plan.
-------------Sponsor-------------
Where Can You Turn $300 Into $1.3 Million Right Now?
Our own small-company specialist, Robert Morris, has found a
way to 'sniff out' tiny penny stocks on the verge of a major breakout. And
the timing for this has never been better.
You see, the system takes advantage of an obscure SEC regulation that
sends penny stock prices through the roof.
We've seen some stocks gain 852%... 5,450%... even 17,496% in no time
flat.
Click here
for the details...
-----------------------------------
As you know, the 401(k) plan requires you to plan, save, and
invest for your own retirement. If you don’t do it right, you may not
have enough income to retire on.
One of the biggest problems is asset allocation. Many investors sink all
their money into the one or two mutual funds with the best historical
track record.
It’s a flawed approach. It fails to take risk into account.
If you don’t believe me, just look at what happened during the market
meltdown. Investors with heavy allocations in stocks saw their account
values cut in half… or worse. By only investing in funds with the
highest returns, you set yourself up for a catastrophic loss.
Asset allocation is your best defense against a catastrophic loss.
When you use asset allocation you balance risk with reward. You build a
portfolio with a good mix of stocks, bonds, and cash.
There’s no single perfect allocation for everyone.
Your “proper mix” is determined by your own goals, risk tolerance, and
time horizon. By assessing these for yourself, you can come up with the
allocation providing an optimal balance of risk and reward.
Let me give you an example.
When the stock market is crashing, bonds tend to do well. Investors flee
the stock market when they’re afraid. And when investors are afraid,
they usually put their money in bonds. This dynamic causes stocks to
fall and bonds to rise.
The opposite occurs when investors regain their confidence. They sell
out of bonds and move into stocks. This dynamic causes bonds to fall and
stocks to rise.
By using asset allocation, your portfolio should weather these types of
market swings much better. Most investors who try to time the market –
moving all in to stocks or all in to bonds at just the right moment –
tend to lose their shirts in the process.
So, how do you determine what asset allocation is right for you? And,
how do you maintain your allocation going forward?
One way to do this is to work with a qualified financial professional. Another way is to use the myriad of financial planning tools available
for free on the internet.
However, financial professionals charge fees for their advice. And, you
might not have the time or expertise to do this kind of work yourself.
Fortunately, there is a simpler way.
Most mutual fund companies now offer target date funds. These funds
provide a ready-made asset allocation for investors planning to retire
in a specific year. And, the fund automatically adjusts the asset
allocation as you approach retirement.
Here’s how they work.
When you’re farther away from retirement, the fund invests a higher
percentage into stocks. This should provide more growth for your
investment dollars. Near retirement, the fund will shift more money into
bonds and cash. This provides the stability and income you need in
retirement.
In other words, target date funds put your retirement portfolio on
autopilot.
If you don’t have the time or expertise to manage your retirement
portfolio, take a closer look at target date funds. Yours could be the
difference between retiring on time and not retiring at all!
Financial stocks are rallying today after Fed Chairman Bernanke said
once again the Fed intends to keep interest rates low. The day’s top
performing ETF as I write is the Direxion Daily Financial Bull 3X Shares
(FAS). It’s up more than 5% on the news.
Print
Page
Bookmark Us
Home | Whitelist Us |
Terms of Use |
Privacy Policy |
Contact Us | Security |
Site Map