Stocks Rock – Volatility Is The Price You Pay For Attaining Wealth
By Paul Price, originally published at Seeking Alpha
When you reach your own retirement age there is one statement I can guarantee will be true.
Nobody will cut their asking price for a car, a house or your dream vacation simply because you were risk-averse in your retirement investment choices. Your ultimate standard of living will be determined by your ability to pay.
The decision to keep 100% of your retirement assets in equities flies in the face of all traditional financial planning. No CFP (Certified Financial Planner) could pass their qualification exam by saying that was prudent advice.
That does not mean it is wrong, though. Financial professionals have to worry about being sued if things go badly in the short run. Individual investors don't have that concern. Their primary goal should be to maximize the total wealth they will have to draw on.
Many people have been playing defense with their IRAs/401ks for their whole lives. They were more worried about not losing than in truly becoming wealthy.
Vanguard Group reported that only 17% of investors had 100% equity allocations in retirement accounts even back in the heady days of 2007. Following the 2008-09 debacle, that number dropped further.
By the end of 2012 only 9% of Vanguard's retirement accounts were 100% committed to stocks.
The 10-year, 25-year and 35-year results show that workers who accepted volatility ended up far richer than more timid souls…
Continue: Stocks Rock – Volatility Is The Price You Pay For Attaining Wealth
