When I became an investment adviser more than 40 years ago, there were a few tried and true rules for where to put your long-term savings. For example, subtracting your age from 100, then putting that percentage of your assets into stocks, the rest into bonds.
Another popular rule was the 60/40 rule: 60% of your savings in stocks, 40% in bonds. The idea was to achieve growth with the stock portion, and income with bonds.
These simple ideas worked for generations. But they don't work so well anymore. Why? Because bonds are no longer a safe, reliable income-producing asset. Interest rates are laughingly low, and should rates rise (about the only direction they can go from here) bonds, especially long-term bonds, will take a sizable hit. (Bond prices move inversely to interest rates.)
So, what should investors be doing, especially those approaching retirement? That's the topic of this week's "Money!" podcast. We're going to explore some ideas, see if the 60/40 formula is truly dead, and if so, what we should be doing instead. Our special guest is Roger Whitney, star of the Retirement Answer Man podcast and president of Agile Retirement Management.
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