In today’s environment, what is a good investment mix for someone in retirement?

In today’s environment, what is a good investment mix for someone in retirement? Mark in Barneveld, WI


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In today’s environment, what is a good investment mix for someone in retirement?

Investing is like riding the volatility roller coaster. When I was a kid, you loved all the crazy fair rides. The more spinning and turning, the better. I remember adults saying they could not handle all that and I thought they just didn’t know how to have fun… Fast forward to a few years ago when I was taking my son Asa on rides at the fair. There was no one there that day, so they allowed you to stay on for multiple rides. After two rounds on the Tilta World, I had enough. He wanted to go again, but I was now the adult who didn’t like to have fun!

Same is true with investing. When your younger, the ups and downs of the market do not bother you, but the closer you get to retirement, the lower your tolerance becomes.

We use the rule of 100 as a good starting point in determining your investment mix. You simply take your age and subtract it from 100; the answer is the most you should have at risk (example 100 – 60 = 40% of at-risk investments).  Now, remember that is a guideline, some will have a little more at risk and be a little more aggressive, some will have less at risk and invest everything more conservatively.

Bonds have typically been considered a good place for the 60% in the above example and many firms still use bonds and bond funds for that portion. However, with the stock market at an all-time high and the talk of interest rates rising (when interest rates rise, bond values fall), we could be poised to see a bear bond market coming, maybe even at the same time as a bear stock market.

A Market Watch article said it this way, “Many investors in the past few years have discovered a different strategy for a portion of their bond portfolio that retains the fixed nature of bonds will offering protection from both bond and equity market declines. It’s called a Fixed Indexed Annuity, or FIA.”

Roger Ibbotson, best known as the founder of Ibbotson Associates, an asset allocation research firm, has published new research championing fixed indexed annuities as an alternative to bonds for investors approaching retirement.

I personally believe FIA’s are one of the best-kept secrets in the financial world. If you are interested in learning more about FIA’s, you should google the David Babbel annuity interview or buy the book, Stress-Free Retirement by Patrick Kelly; this is an easy read that makes FIA’s understandable for anyone.

For more information, to request a free copy of our book or to submit your questions, go to www.CreatingYourDreamRetirement.com

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Michelle Bertram and Beverly Bertram are financial advisors living in Mineral Point WI and serving the surrounding communities. Michelle Bertram does financial planning for retirees along with business consulting. Beverly Bertram specializes in retirement planning and income planning for her clients. Michelle Bertram and Beverly Bertram are authors of the book, Creating You DREAM Retirement and creators of the DREAM Retirement Process.
Serving Madison WI, Verona WI, Mount Horeb WI, Barneveld WI, Dodgeville WI, Dubuque IA, Platteville WI, Lancaster WI, Cuba City WI, Fennimore WI, Darlington WI, Monroe WI, Spring Green WI, Black Earth WI and beyond.

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