Two of the most brilliant minds in financial planning, Wade Pfau & Michael Kitces, suggest that boomers approaching retirement or already retired should plan for a market correction after 5 years of a raging bull market. Ian McGugan, write in the Toronto Globe & Mail: "After five years of
surging stock prices, many people are nearing the end of their working lives
while sitting on big gains in the equity portion of their portfolios. A bear
market now could tear a massive hole in their retirement plans.While that risk is always present to some
degree, there's reason to think that the danger is particularly acute right
now."McGugan explains:
"The first strategy
consists simply of reducing your stock exposure in the early years of
retirement then gradually increasing it as you age. This, of course, is
precisely the opposite of the traditional strategy of paring back your equity
holdings as you age."
"The second strategy consists of reducing your
stock exposure at times – like now – when the market is seriously overpriced in
terms of what is known as the cyclically-adjusted price-to-earnings ratio."
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