Gary Hidden: ‘As a 63-year-old retiree with all retirement savings in fixed income investments, I continue to have serious doubts about the wisdom of my ultra conservative approach since you as well as all the other investment gurus advise a more balanced approach with up to 70% of investments in equities. At 63, is it really too late to start as you say on the last page of your book or should I switch some assets from fixed income to equities at this late date?‘
☞ I wouldn’t rush to switch now. Nor would I have too much of my money in low-yielding long-term fixed income investments, because I fear interest rates may rise. But if/when the market is really scary low – and to me, 10,000 on the Dow is not scary low – you should consider putting some money into index funds. Or how about this? Embark, now, on a program of putting, say, 1% a month, or maybe just 2% a quarter, into a couple of the funds recommended at the back of my book. After three or four years, by which time you’ll have 30% or 40% of your assets in the market, stop. If the market has gone up significantly, you’ll be glad you at least did this much. If it has gone down a lot, you’ll be glad you didn’t do it all at once. And eventually it will come back to where you started and you’ll have a lightly-taxed profit.
There’s nothing like sleeping well. So keep a good chunk of your money safe, especially now when stocks pay such low dividends and tend to sell, still, at high valuations. (This is one of the reasons that – for tax-sheltered retirement money only – I put a chunk of my own funds into TIPS.)
Then again, if you’re not a smoker and you lead a relatively happy, healthy life, your life expectancy is another 20 or 22 years. And each year, it gets a little longer. If you do make it to 85 and haven’t taken up any wild or wicked ways, your life expectancy will then be 7 or 8 more years, to 93. And at 93, it will be longer still. My God, Gary, you could be . . . The First Immortal! So don’t be too short-sighted in your investment horizon, either.
If you lost 1% of your money every month, how much would you have left after 100 months?
(Math Quiz Answer: about 37% of what you started with.)
EVERY CARROT’S FAVORITE
Robert M. Youngman, II: ‘If you like carrot juice, try this: 12 ounces chilled carrot juice and two ounces chilled vodka. In college, we called it a Bugs Bunny.’
Coming Soon: The Wisdom of Dick Davis!
Quote of the Day
It turns out that advancing equal opportunity and economic empowerment is both morally right and good economics, because discrimination, poverty and ignorance restrict growth, while investments in education, infrastructure and scientific and technological research increase it, creating more good jobs and new wealth for all of us.~Bill Clinton
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