Being Tested

There is no doubt our current crisis will test many of the theories of investing and retirement planning we may have simply accepted as valid.

Guess what? Nothing has changed.

It doesn’t matter if you are twenty-five or seventy-five, the quest for financial security still requires strategies that have been and remain valid.

Keep to the basics:

1. Save and invest as much as possible as early as possible.
2. Invest on a regular basis as the markets go up and down.
3. Long term growth requires investing in stocks.
4. Diversify; that means invest in large companies, small companies, international companies, growth companies, dividend paying companies and bonds and for some perhaps real estate.
5. If you are an average investor as most of us are, consider using mutual funds or exchange traded funds (ETFs) as opposed to picking individual stocks or bonds.
6. Never miss receiving an employer match on your savings.
7. Think seriously about the relative value of pre-tax vs tax free earnings.
8. Reduce the portion of your total assets represented by more volatile (risky) investments as you age (presumably closer to retirement).
9. Keep cash on hand. That includes the traditional emergency fund, but for those close to or in retirement it means more. It means having one asset that can be used when depending on investments is difficult or undesirable. We should have learned that lesson in 2009 and we are being reminded in 2020.