Boring is beautiful. On this edition of the podcast, we’ll explain why a boring portfolio brings stability in retirement.
(Click the featured times below to jump forward in the episode)
Puzzle Of The Week:
- [3:41] – If you’re about to retire, your investing life should be boring. After all, you want stability, not excitement.
[5:22] – A Boring Portfolio Is A Stable Portfolio.
- If you’re planning for retirement, you want consistent results in your portfolio. Now is not the time to make daring trades with the potential for high rewards and devastating losses. This doesn’t necessarily mean you should expect eight to ten percent gains every year either, but it does mean you should maintain a well-diversified (Boring!) Portfolio.
- If you were to chart your stable portfolio on a graph over time, you’d noticed a gradual upward trajectory without the high octane zips and zags. As you approach retirement, you don’t want your investing life to feel like a roller coaster ride. Rather, look for dependable results over time.
[7:26] – Stop Bringing Up Your Portfolio At The Water Cooler.
- One of the worst things you can do is talk about your portfolio with others. The quickest way to most assuredly feel your strategy is wrong is to discuss it with someone who is truly uninformed. There’s always going to be your friend Bill whose hot tech stock is killing it right now. The misinformation here is mind-boggling. Who’s to say whether he’s actually telling the truth, and even if he is, this event has already occurred. We all know what they say about hindsight, right? Everyone’s a winner in the past.
[8:06] – The Price Of Diversification.
- Diversification isn’t necessarily exciting. Unlike your friend Bill, you’re not going to “kill it” by dumping your entire portfolio into one company or asset class. However, your portfolio will experience significantly less volatility, and when the hot stock goes the way of Enron or the market comes tumbling down, you’ll be prepared to take the hit. In the meantime, you’ll receive steady growth over time by being diversified amongst asset classes and within asset classes.
- [6:09] – Past Performance Is Not Indicative Of Future Results.
- [9:05] – Diversification Is Like Roulette.
Question Of The Week:
- [11:56] – Pete asks how many international stocks to hold in his portfolio.
Puzzle Solver Assignment:
- [15:39] – Homework time! Download this article from the SEC website on how to properly build a well-diversified portfolio. We also want you to get a real idea of what you own. Find out where your money is invested and whether it’s properly allocated.
The Full Picture:
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The host: Dan Cuprill – Schedule A Time To Meet – Or Call: (513) 563 – 7526
Your Money Jigsaw Newsletter
The Investment Answer
SEC Article On Building A Portfolio