There’s a lot of investment and financial planning advice out there, particularly with regard to retirement planning and long-term wealth management. But for those approaching retirement, it can be difficult to cut through the chatter and boil things down to the basics. Here is what you need to know from a strategic standpoint:
Beware of uncertainty. Volatility is not your friend at this stage of the game, and with more than a few intelligent folks worried about a significant global financial crisis in the next 12-18 months, there is plenty of volatility out there. As you approach retirement, think safety and security above all else; reduce your exposure significantly.
Consider timing. You simply won’t have the time to “make up” short-term losses, and you don’t want to be contributing maximum amounts and see your 5-year total be the same as it is today.
Don’t be tempted. The government is artificially keeping interest rates at near historic lows, prompting some investors to make riskier decisions because they’re getting a low yield through traditional “safe” investment options. At this point, it pays–literally and figuratively–to stay conservative.
Know your limitations. Sometimes it’s better to do nothing than to do the wrong thing; sitting on the sidelines might be a good idea when the game is going poorly. If you do leave significant assets in the market, look for safe plays like dividend bank stocks. The bottom line, which I really cannot repeat enough, is this: don’t have money in the market it if you can’t afford to lose it.