You do not have to own equities. While now does not seem like a good time to be selling, it doesn’t make you dumb if your recent experience has you thinking that you would rather avoid the risk of equity ownership in the future.
You can make a financial plan work without them.
If you don’t want to own equities, it just means that you should use a lower lifetime rate of return assumption for your planning. But rate of return is just one assumption in your plan.
You have other options.
You could:
- Save more.
- Retire later.
- Spend less in retirement.
- Leave less to your kids.
(During one of the lighter moments in one of my presentations someone pointed out that there is a 5th option: you could die earlier…)
The nice thing about these other levers is that they are things that you control. You have NO control over the return you will earn in equities, but you can control how much you spend, or when you retire, and making one of these adjustments can have a massive impact in the expected success of your plan.
So please realize that financial planning is NOT about trying to talk yourself into putting all your money into stocks and then dealing with the pain in down markets. It is about deciding which levers to pull and when.
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I think as a first step is you decide the first 5, 1-4 + life expectancy.
From there base your risk level you'll be needing to take / rate of return.
Deal with the ones you can contrl first =)
But, if you prefer to invest in stocks, don't forget that the conservative collar strategy insures that you cannot suffer a significant loss. In return, profits are limited. The decision for the investor is willingness to accept that trade-off
I think as a first step is you decide the first 5, 1-4 + life expectancy.
From there base your risk level you'll be needing to take / rate of return.
Deal with the ones you can contrl first =)
But, if you prefer to invest in stocks, don't forget that the conservative collar strategy insures that you cannot suffer a significant loss. In return, profits are limited. The decision for the investor is willingness to accept that trade-off
I think as a first step is you decide the first 5, 1-4 + life expectancy.
From there base your risk level you'll be needing to take / rate of return.
Deal with the ones you can contrl first =)
But, if you prefer to invest in stocks, don't forget that the conservative collar strategy insures that you cannot suffer a significant loss. In return, profits are limited. The decision for the investor is willingness to accept that trade-off
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