Retirees - Avoid Risk and Perserve Assets

Dont'we all feel like to putting all our hard earned assets in a bond and forgetting about it. You feel like reducing all risks for your investments when we are nearing retirement but experts say that is not a good thing to do. If you put all your assets in bonds, treasury's or CDs then you can get a fixed rate return. But rates changes and the time when you need to roll over maternities may be the time when rates have dropped, maybe considerably. Then your returns will be much lower. Also inflation will cut into that interest you have been receiving making the purchasing power a lot lower.

Some stocks in your portfolio should help you keep pace with inflation. There are many no load balanced funds like Oakmark Equity Income Fund - OAKBX and American Century Equity Income - TWEIX, that will help your portfolio keep pace with good returns while offering low risk to market declines. Also with the dropping dollar, a good idea is to put a portion of your portfolio in a hard currency fund like Mark Hard Currency Investor Shares - MERKX, a no-load mutual fund that invests in a basket of hard currencies from countries with strong monetary policies assembled to protect against the depreciation of the U.S. dollar relative to other currencies.

Also keeping your portfolio well diversified with Asset Allocation is a key element in your long term success. Investing in broad categories of investments such as stocks, bonds, real estate, hard currencies, and money market funds will help you stay diversified and balance your returns to lower risks. Pick up a good book about Asset Allocation like "All About Asset Allocation" by Richard A. Ferri, CFA and this will give you everything you need to know about the subject.

My good friend Jim McCoy, somewhat of an investment guru, recomments the following asset allocation:

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