Retirement Planning Investing -
Balancing Risk & Reward
The type of
investment portfolio most likely to "work" for a prospective retiree in their
60s with a few hundred thousand dollars worth of savings is likely to be
quite different from the investment portfolio most likely to "work" for someone
in their 30s or 40s, employed full-time, and planning retirement only in the
long-term.
In contrast, a completely different case might exist for a very young
multi-millionaire who has sufficient capital to retire off of only reduced
returns, and who therefore can afford to completely avoid virtually any
conventional investment risk.
Sometimes the age-old warning advising us not to
"carry too many eggs in one basket" over-extends itself to gratuitous
simplicity. There are, indeed, a number of good reasons why certain retirees
should invest only in bonds and not at all in stocks.
Does this mean they've
lumped all of their "eggs" into only one "basket?" Of course not! Provided
that such an individual purchases a diverse portfolio of bonds, they've actually
succeeded in placing numerous "bond eggs" in their basket. If they add
stocks, they may only be adding more baskets or, worse, attempting to balance a
few less stable eggs on their forehead while carrying around their bonds in
a sturdy basket.
Of course, retirement planners will
sometimes advise otherwise...
But why?
Typically, because they earn commissions and/or very simply... because they get paid to
sell various investment vehicles or to secure your money in a "managed" account
that "benefits" from constant activity.
Get an edge on your own
investment strategies by learning and understanding the basic
concepts PRIOR to discussion with advisors or planners.
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