It is becoming more evident that most investment advisers are no longer certain how much stocks and bonds are to go into what can be considered a “balanced” investment portfolio.
What had been a simple assumption prior to the recent financial meltdown is now subject to a lot of conjecture. That’s due to the fact both stocks and bonds fell in unison, and may react differently during recoveries.
The standard 60% stocks and 40% bonds balanced formula of the past may not be that standard. And change in formulae adjustment as investors age, no longer may hold. Some funds are offering “absolute returns” where losses could result under past stock/bond arrangements.
The solution? Flexibility. There is actually no set formula an investor can use for holding stocks or bonds. Too many factors will affect the choice.
Upcoming inflation. Retirement age and the health of both investor and beneficiary relationships come into play. And the possibility that bonds may return more than stocks in coming years. Even taking the inflation factor into account.
No comments:
Post a Comment