Hi, I am going to retire in October 2023. I will be 67. I manage to have roughly $800,000 in taxable investments and about $1.2 million in IRA assets. I grew my portfolio by average monthly investments in McDonald’s
MCD,
-1.59%,
Walmart
WMT,
-1.68%
and Chevron
CVX,
-1.02%,
to name a few.
Long ago, I converted my 401(k) to an IRA, which has enabled me to triple some of my portfolio thanks to my early, risky investment in Amazon
AMZN,
+1.59%,
Tesla
TSLA,
+0.18%
and Facebook.
META,
+3.49%
I am at a crossroads. I don’t want to take risks with my investments, and I don’t need to. It’s time to park money to preserve my principal. About 30% of my portfolio now is in various short-term CDs, 3-month Treasurys and the rest are in money market funds. I am good for now, but I think a better option would be trimming my stock investment and long-term 10 or even 20 year Treasury? Am I doing the right thing? Uncertain and anxious See: I’ll be 60, have $95,000 in cash and no debts — I think I can retire, but financial seminars ‘say otherwise’ Dear Uncertain, Congratulations on your retirement! I want to focus on one thing first: you say you don’t want or have to take risk anymore, but I would caution you to reconsider that. I’m not saying you need to throw your money into very risky investments, but it is healthy — sometimes even necessary — to diversify your investments. Wanting to preserve your principal makes complete sense. You were successful investing in individual stocks for years, which is great, but definitely a risky strategy, and I completely understand why at this point you would want to eliminate all risk. But some sort of risk can be good. Here’s why: You’re 67 years old, and you’re retired now. Nobody knows for sure how long they’ll live, but when planning your finances, it’s better to err on the side of longevity because having that money last your entire life is ideal, while running out of money before you die is not. As a retiree, your income is likely fixed now, and you’ll be relying on your investments, along with anything else like Social Security or a pension, to take care of all of your expenses. You could live another 20, even 30 or more years, and it would be in your best interest to have your investments support you during that time frame. A little bit of healthy risk can help you there, since those investments could work for you in generating some more money. I can’t tell you how exactly to invest your money. I’m not a financial adviser (and specifically, I’m not your financial adviser). My goal with this letter and all others in this column is to give you a few things to think about as you make your plans. It wouldn’ …
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