Have You Checked Your Allocations Lately?
Have you checked the allocations on your retirement investment accounts (IRAs, 401Ks, etc.) lately? You know the allocations of 60% stocks, 40% bonds or 50% stocks, 50% bonds, This economic crisis has severely damaged the tried and true investment theories of the past. The main one being the reliance on the stock market a the key to retirement security.
Sure, the stock market has gone up over time but it has had periods of severe volatility particularly on the losing side. If you were 10 to 15 years away from retirement and heavily into stocks your retirement savings took a very damaging hit and may delay your targeted retirement date. Some people may be willing to accept this risk of volatility in the stock market. The important thing is that we understand those risks - remember higher returns means higher risks.
In retirement savings, the stock market was taken for granted as a reliable investment return generator - NO LONGER. The important thing for retirement savings and protecting our “nest egg” is to avoid those big losses. The better strategy may be to put more money towards retirement savings and invest conservatively. Think about it.
Good luck.
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