Gary Hidden: “As a 63-year-old retiree with all retirement savings in
fixed income investments, I continue to have serious doubts about the wisdom of
my ultra conservative approach since you as well as all the other investment
gurus advise a more balanced approach with up to 70% of investments in
equities. At 63, is it really too
late to start as you say on the last page of your book or should I switch some
assets from fixed income to equities at this late date?”
F I wouldn't rush
to switch now. Nor would I have too
much of my money in low-yielding long-term fixed income investments,
because I fear interest rates may rise.
But if/when the market is really scary low – and to me, 10,000 on the
Dow is not scary low – you should consider putting some money into index
funds. Or how about this? Embark, now, on a program of putting, say,
1% a month, or maybe just 2% a quarter, into a couple of the funds recommended
at the back of my book. After three or
four years, by which time you’ll have 30% or 40% of your assets in the market, stop. If the market has gone up significantly,
you'll be glad you at least did this much.
If it has gone down a lot, you'll be glad you didn't do it all at once. And eventually it will come back to where
you started and you'll have a lightly-taxed profit.
There’s nothing like sleeping well. So keep a good chunk of your money safe, especially now when
stocks pay such low dividends and tend to sell, still, at high valuations. (This is one of the reasons that – for tax-sheltered
retirement money only – I put a chunk of my own funds into TIPS.)
Then again, if you’re not a smoker and you lead a relatively
happy, healthy life, your life expectancy is another 20 or 22 years. And each year, it gets a little longer. If you do make it to 85 and haven’t taken up
any wild or wicked ways, your life expectancy will then be 7 or 8 more years,
to 93. And at 93, it will be longer
still. My God, Gary, you could be . . .
The
First Immortal! So don’t be too
short-sighted in your investment horizon, either.
MATH QUIZ
If you lost 1% of your money every month, how much would you have
left after 100 months?
(Math Quiz Answer: about 37% of what you started with.)
EVERY CARROT’S FAVORITE
Robert M. Youngman, II: “If you like carrot juice, try this: 12
ounces chilled carrot juice and two ounces chilled vodka. In college, we called it a Bugs Bunny.”
Coming Soon: The Wisdom of Dick
Davis!