When constructing a retirement portfolio, diversification and asset allocation are key.  I can help with both!  Diversification means not having all your eggs in one basket.  Different classes of assets like stocks, bonds and cash can rise and fall independently of each other. 

Foreign stocks and bonds can also act independently of U.S. assets.  We live in a global economy and some exposure to foreign assets as a part of diversification and mitigation of risk may be suitable for some investors.  Proper diversification is a way to properly manage risk. 

Asset allocation is a related concept and is a function of analysis of an individual’s or couple’s risk tolerance and age.  The old rule of thumb is that you should start with 100, subtract your age, and that is the amount that one should invest in equities or stocks. 

That mantra doesn’t hold true anymore with retirees living longer.  Even older retirees need to invest for growth due to inflation and its ability to eat up your purchasing power. 

For the last several years, inflation has been between 1% and 2%.  But expenses that weigh heavily on seniors, especially healthcare, have been rising annually at much higher rates of inflation.  If an investor is deathly afraid of losing money and puts all their savings in CDs earning less than 1% while inflation is higher, they’re actually going in the hole. 

Inflation is the enemy: the biggest concern for retirees is outliving their savings and one way to do that is to fail to invest at all for growth.  I have lots of ideas for protecting your purchasing power…call me today!