From
Your Perspective:
Retirement catch-up for late starters
Invest more aggressively
As you decide how to invest your retirement assets, you’ll need to weigh your tolerance for
risk
against your financial goals, since you need to achieve as much
investment growth as possible in the time you have available. As a
general rule, if you want your investment portfolio to grow in value
over time, you should consider allocating at least a portion of your
assets to
stocks,
stock
exchange traded funds,
stock
mutual funds,
and
managed accounts
that invest in stocks. While stocks may fluctuate in value sharply over
the short term, over longer periods of time they have historically
provided much stronger returns than other major
asset classes,
such as
bonds
and
cash equivalents.
You may be able to offset some of the
volatility
and short-term risk of investing in stocks by
allocating
part of your portfolio to
fixed-income investments,
such as bonds. While bonds generally provide more modest rates of
return than stocks, they pay regular income and may provide a stronger
return in some periods. You might also consider asset classes whose
returns aren’t
correlated
with equity returns.
If you invest very conservatively — or don’t invest at all — because you fear losing some of your
principal,
you run the risk of not meeting your goals. That’s because the rate of
return you’ll realize will be so low that your investments won’t
outpace inflation.
