Discussion in 'Stock Market Forum' started by JR Ewing, Jun 24, 2015.
hahah. is that serious?
So their argument is basically that because the stock market is doing so well, that funds that mainly invest in very safe ( and low yielding) vehicles like treasury bonds will be forced to invest in higher yielding vehicles because they look bad in comparison? That is investing 100 risk vs reward.
Honestly this feels a bit like someone going out of their way to criticize when the stock market is doing great. Yes, it is true.. funds that invest in ultrasafe stuff will indeed compare poorly to investors who are putting their money in the stock market and riskier endeavors.
This mainly affects retirees who invest conservatively for income and capital appreciation. Most of my clients are retired or near retirement (these are generally the people with the most money to invest), and they're at least somewhat or primarily concerned with maintaining their principal while earning a sufficient income from their investments to live on.
It's becoming more and more of a challenge to find bonds and insurance products paying a decent yield without taking on excessive risk. Some stocks pay nice dividends, but many such stocks aren't necessarily where a 70 or older retiree may want to put their money. Believe it or not, many people won't be thinking about "doubling down" when their favorite dividend stocks that did great in a bull market drop 50% - they'll be freaking out about "losing" so much money in many cases.
Older / retired people are generally not aggressively looking for 20% a year, at least not with most of their money... unless they happen to be very wealthy and have enough on the side they can invest to pay sufficient income. They may be able to invest the rest in more aggressive ways if it's money they won't need during their lifetimes.
I meant to type "capital preservation" is usually top priority for older / retired folks (along with income), not capital appreciation.
yeah, I agree with you. But from my reading of the article it isn´t necessarily about how low the yields are on those vehicles ( which basically have always been low) it is that returns of other funds are so good that it is making the low guys look bad.
I hope as our generation gets older, we start to question some of these rules we seem to have set up. There is so much capital going around, and the world is connected so well that in reality, huge multinationals are not as risky as some treasury bonds. For instance, I have much more confidence in Coca Cola than I do in the US Congress not messing up our credit rating with some stupid showmanship stunt. My opinion.. just because you are getting up in age doesn´t mean you can´t be 100% in the stock market.
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