How not to destroy your retirement portfolio

Retirement » How Not To Destroy Your Retirement Portfolio

Don't sell all your stocks
Don't sell all your stocks © Gunnar Pippel/

The financial crisis blew a big hole in many investors' nest eggs. So why not eliminate all or at least a big portion of those risky stocks in favor of seemingly safer investments, such as bonds, in your retirement portfolio?

Big mistake, financial advisers warn.

From the next devastating hurricane to the European debt crisis to changing Federal Reserve policy to events in Syria, any number of factors can send stocks plunging. Rather than panicked selling, the better strategy is to stay the course.

"We typically advocate reducing, but not entirely eliminating, equity exposure when approaching retirement," says Dan Kern, president and CIO of Advisor Partners in Walnut Creek, Calif. "Individuals in retirement may need their portfolios to generate income, but will also need capital appreciation and inflation protection to preserve purchasing power."

Diane Pearson, a CFP professional with Legend Financial Advisors in Pittsburgh, agrees. In place of the traditional 70-30 or 60-40 split of stocks to bonds in one's portfolio, she recommends a more equal 50-50 split, giving more weight to domestic stocks over risky emerging market stocks.

Achieving retirement success Whether your retirement plans involve a part-time job or full-time leisure, be sure to think through the details to ensure your dreams come true.


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