Are you buckled in? The equity markets are said to be heading for a correction. A stock market correction is defined when major market indexes decline at least 10%. Drops greater than 20% are considered to be bear markets. In the last 15 years, stocks have experienced multiple corrections and two bear markets*.
Gambling on Your Retirement
Stock market volatility is a fact of life. Younger investors can afford to give some back because they have time to recover. For retirees it’s a different story entirely. Those of us at or nearing retirement can’t afford to lose 20% of our portfolios because of the shortened investment horizon. Think about it. Could you handle a 20% decrease in income? What about 40%-50% less like we saw in 2008?
Capital Preservation is Key
After saving all those years, once in retirement, your goal is to protect your assets and create a predictable, stable income stream. Of all the risks out of your control, such as health risk, inflation risk, interest rate risk and longevity risk, market risk is one you CAN control. You can choose to expose yourself to market risk or not. And there are alternatives that protect and grow your savings and produce income at the same time.
When you invest in the stock market, you take on 100% of the risk. Did you know there is a way to totally eliminate market losses, achieve desirable growth and create an income stream you can depend on as long as you live? Ask your advisor about this idea. Then you can get back to getting a good night’s sleep.
*Source: Investopedia http://www.investopedia.com/terms/c/correction.asp