CD and Bonds versus the market
Terry,
I am currently receiving Social Security and a Pension. I have my retirement money mostly in government bonds but a small percentage is also in some less risky stock market sites that my Financial Advisor suggested. Some growth with these stocks but still a risk. Would I be better off at the age of 68 years to put the Stock Market money in my banks CDs? Also what are your feelings regarding government bonds for someone my age?
Terry Says
The actuarial tables say you’re likely to live at least 20 more years! And there has never been a 20-yer period when you would have lost money in a DIVERSIFIED portfolio of large company US stocks, with dividends reinvested — even adjusted for inflation. That would be a S&P 500 stock index fund inside your IRA, where dividends are not taxed each year.
So that would be my recommendation for a portion of your retirement funds — but only if you have the self-discipline to ride out any bear market and keep your investment throughout a potentially painful period. If not, stick with CDs and short term T-bills — knowing that this portfolio will likely not keep up wiht inflation. Thankfully, your SS WILL be adjusted for inflation each year.
