Rest Easy in A Crazy Market

Just how much volatility can you take?

The stock market swings are just sickening- it's become so wild that you almost want to laugh, until you realize it's people's life savings in the death throes. Massive evaporation of wealth in an afternoon, followed by a roaring rally to bring us back to square one…

And while those 20% rallies in a few days do wonders for our portfolio balance, what does it do for the mind?   Is this the retirement you dream of? I bet it's not.

Most people nearing retirement envision a life of ease, with enough income to support their needs and to finally take it easy.  Now, if  you dream instead of revising your standard of living by 20-30% on a weekly basis, by all means stay in the equity markets.… 

This week (11/7/11) the Wall Street Journal has a fascinating roller coaster of a chart to consider-

Now this is hard to see, so I have a larger size image- just CLICK THE LINK HERE.

Look at the swings in value- a $100,000 portfolio on June 30th 2011, up to $101,846 by July 22… and down to $84,766 August 8th.  Come on.  It's just too much to bear.  Please- do yourself a favor and disregard the funds, ETF's and stocks my beloved Journal tacks on to the chart.  Find a refuge in something safe.

Some highlights of the article:

October's surge helped many mutual funds bounce back from recent lows. It was also a vivid reminder of what has become a fact of life for stock investors: It's crazy out there. And it seems to be getting crazier all the time.

If the market's roller-coaster ride has caused you a lot of heartburn, this might be a great time to do something about it, before another slide is just one too many.

One too many swings indeed. 

If you didn't learn your lesson before, learn it now: When your current stock exposure makes you queasy, take advantage of rallies to trim it back to a level—perhaps to around a third of your overall holdings—where you won't be tempted to bail out the next time the Dow Jones Industrial Average plummets 400 points.

The tortoise and hare fable teaches us that slow and steady win the race.  Mainstream media wants you to believe that buy and hold = slow and steady.  This is no longer true.

Retirees can not face a future where their net worth swings 10-20-30% in a few days, and their income therefore swings with the market.  Many plans and dreams are built and budgeted on income- plans like housing, trips, groceries, basic living costs. 

Can you stomach cutting your basic living costs by 30% because your stocks are down?  Skip Christmas for the grand-kids because your portfolio is down?

There is a better way to ensure your income.  It's not a '4% rule' or an allocation strategy or an ETF, or anything your stockbroker will talk to your about. 

This is an old line, but it's never been more true-

You insure your home, you insure your health, and you insure your life…. Why not insure your retirement??


Annuity Straight Talk is ready when your are to discuss your retirement income planning needs.


Article Source: WSJ

Written By

Bryan Anderson

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