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A Little Risk Can Go a Long Way

Have you ever wondered if you truly have enough money for retirement?

You’ve hopefully been putting money aside for your retirement for decades now, and ideally you’ve been able to increase your contributions over the years.

This hard work has given you a substantial nest egg, but you’re still worried that you’re at risk of running out of money during your retirement years.

Most people need to do more than just contribute to their retirement accounts; they also need to invest their contributions in order to try to accumulate enough money to fund a comfortable and secure life in retirement. But people who are close to retirement are also afraid that the market will fall and put their retirement assets—and future plans—at risk.

Mitigating risk is a critical part of retirement investing, and you may find that you don’t have to take as much risk as you think. That was the lesson one investor learned when he took advantage of our free retirement consultation. (Interested? Give us a call at 1-800-763-8639 and ask to speak with a portfolio manager.)

You May Need to Take Some Risk

John hoped to retire in the next few years, but he wasn’t sure if he’d accumulated enough money to cover his expenses in retirement, so he reached out to us for help. At first glance, he seemed to be in good shape. He’d been aggressively saving for his retirement years, and he’d put aside $1.5 million in his retirement accounts, and he was still adding a few thousand dollars to his account every month.

When it came to investing, however, he was extremely conservative. He’d been burned in previous bear markets, and he’d steered clear of the markets ever since. His retirement assets were entirely in cash. This was consistent with his low risk tolerance, but it wasn’t in line with his retirement goals. If he stayed in cash, he was likely to run out of money in retirement, given his expected withdrawal rate and life expectancy.

How could he improve his chances of success? One way would be to reduce his spending and try to get by on less money. Alternatively, he could take a little more risk and invest his retirement assets more productively.

Since he had saved a sizeable amount of money, he didn’t have to take a lot of risk. In fact, he didn’t even have to take any stock market risk. If he shifted from cash to bonds, he’d be much more likely to be able to maintain his current lifestyle throughout his retirement years. 

It wasn’t an easy decision for John. He was still scarred by his previous investing experiences, and he was nervous about bonds, given that interest rates appear to be on the rise. And yet, he also really valued his current lifestyle. He didn’t want to have to move into a smaller house or relocate to an area of the country where his money might last longer. So he came to terms with investing in bond funds, and he’s looking into strategies like our Flexible Income approach that are designed to adapt to changing interest rates.

Planning for a long, secure life in retirement includes mitigating risk as well as making sure that you try to earn enough to reach your goals. We’re here to help. Call us to set up a time to talk and find out if you’re invested in a way that’s consistent with your goals and risk. 

Find Your Comfort Zone

Need help? FundX portfolio managers can help you assess your risk tolerance and see if your current investments are compatible with your risk and your goals. 

Here’s how it works:

– Call us at 1-800-763-8639 to get started. 

– You’ll fill out an interactive questionnaire and get useful insights into your risk tolerance.

– We’ll review your current portfolio and show you how well your investments match your risk level.

– We’ll also determine if you’re invested in a way that could meet your financial goals.

Call 1-800-763-8639 and ask to speak to a portfolio manager. It doesn’t take long, and it can help you invest wisely and with confidence.

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