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How Do Retirees and Pre-Retirees Diversify Safely into Bonds and Stocks?

Cassie05/15/2012

How do retirees and pre-retirees diversify safely into bonds and stocks? You have a few options.

1.  You can do your own research in order to pick what you believe is "best."

2.  You can subscribe to investment research to help make your selections.

3.  You can hire someone to select stocks and bonds for you, such as a broker, mutual fund, exchange traded fund or private investment manager.

But there is a real dilemma:  Most people, including amateur investors, brokers and professional managers, underperform the market, especially over longer periods of time.

So what do you do?

An investor should choose passively engineered, globally focused investing. Proactive investment management uses analysis, asset allocation and disciplined rebalancing to support a passively engineered philosophy.

It’s the cool-headed approach, which history suggests makes for better returns, providing steadiness in good times and in tough times, according to the Standard & Poor’s Indices Versus Active Funds Scorecard and Asset Management: Active Versus Passive Management by Rex A. Sinquefield. Studies show that portfolios using passive asset-class funds can be designed to deliver a higher expected return for a chosen level of risk over time. Ultimately, the proactive approach, as we call it, rewards steady, life-long investing.

For more insight, listen to Jentner Wealth Management’s weekly podcast by clicking here.

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