What can we expect from stocks, bonds and cash in the coming decade? This was one of the topics we discussed with SF Bay Area clients, subscribers and shareholders last month at our FundX Open House.
Most investors allocate their portfolio to stocks, bonds and cash based on past returns. Since 1925, stocks have handily outperformed bonds on average, and bonds have outpaced cash, which has essentially kept pace with inflation. But the problem is that returns are rarely average, even for periods of a decade or longer. Over the last 10 years, for example, stock returns have been far lower than their historic average, while bond returns have been much higher than average.
When we look at stocks, bonds and cash today, we find that Continue reading “FundX Outlook for Stocks, Bonds & Cash” »
Retirees want to make sure their retirement accounts last longer than they do, but investors can’t know precisely how much they’ll need in retirement or how long they’ll be living off their retirement accounts.
There are a few ways that investors can increase the probability of outlasting their money, and a June 9, 2013 New York Times article, For Retirees, a Million-Dollar Illusion, highlighted three of them:
1. Investors can withdraw less from their retirement accounts; and/or
2. Investors can delay their retirement age; and/or
3. Investors can add stocks to their portfolios.
A chart that accompanied the article showed how each of these options reduced investors’ probability of running out of money in retirement.
Some of these options may be more feasible than others. Not all investors can change their cost of living or retire at a later age, but most investors can invest in stocks. The Times’ chart indicated that investing in stocks can dramatically reduce the probability of running out of money in retirement. The charts showed that a couple who retired at 65 and was entirely invested in bonds would have a frightening 70% chance of running out of money. If the couple invested 60% of their portfolio in stocks and 40% in bonds, they’d have less than a 20% chance of running out of money.
We include stocks in the retirement accounts we manage for clients Continue reading “3 Ways to Avoid Running Out of Money in Retirement” »