Topic: How To Invest

What is Pat’s commentary for the week of April 4, 2017

Article Excerpt

Dear Inner Circle Member, In mid-March, I wrote about a question I often hear from investors: “Should I invest in stocks in retirement?” Here are two more points on that subject. First, many investors disregard the similarity between pensions and bonds, insofar as both provide a fixed annual return. For instance, consider a retired investor with pension income of $50,000 a year, and a $1 million stock portfolio that generates dividends of $30,000 a year. The $50,000 pension provides around the same income as a $1.25 million bond portfolio (although the pension ends when you die, while your heirs would be able to sell the bonds).  This investor may worry that it’s risky to be “100% invested in stocks.” After all, in any given year, the value of a stock portfolio can drop, say, 40%. With that in mind, he may wonder if he should switch some funds out of stocks and into bonds, to cut his risk. The possibility of a 40% drop should…

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