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Legal Staff News & Views Newsletter Investing for Retirement - I Know This is Boring, But... It used to be, leaving the work force meant selling all your stocks and putting your life savings into interest-bearing securities to preserve your principal and generate enough income to last the rest of your life. That was all right for Mom and Dad, but today's retirees need a hefty helping of diversification and growth in their investment mix to make it comfortably through retirement. Reassess your tolerance for risk. "Retirement
is not the time of your life to be financially adventuresome,"
says Dee Lee, co-author of "Complete Idiot's Guide to Retiring
Early." When you don't have time to make up your losses and you
don't have income from a job to replace lost savings, you can't afford
to take big risks with your money. The possibility of losing money
in the market is not the only risk that retirees face. Over the length
of your retirement, inflation-even at today's low rates- can do just
as much damage to the real value of a portfolio as falling stock prices.
Your first priority, of course, must be to make sure your everyday expenses are covered. Financial advisers recommend keeping at least three months' worth of living expenses in low-risk, highly liquid investments, such as money-market funds, certificates of deposit and short-term Treasury securities. Then turn your attention to dividing the rest of your savings between stocks and bonds. While your personal risk profile should guide you to the exact amounts, financial experts typically recommend that you keep a minimum of 25 to 35 percent of your portfolio in stocks throughout most of your retirement, and perhaps as much as 50 to 60 percent in the early years. Experts point out that over periods of 10 years or more, stocks have typically outperformed all other investments by a comfortable margin. "Stocks can't go down forever, which means that now could in fact be an ideal opportunity to buy," says Wall. In the stock portion of your portfolio, for example, Lee recommends putting the bulk of your money into shares of big, established U.S. Companies with predictable earnings, preferably by investing in a well diversified domestic stock fund that owns a variety of shares across many different industries. Among the types of funds that fit the profile: an index fund that tracks the Standard & Poor's 500-stock index; a value fund that focuses on stocks selling below their intrinsic worth; and income-oriented funds with plenty of high-dividend stocks in their portfolios (the dividend income helps cushion any declines in stock prices). Quality and conservatism should be the bywords in the fixed-income portion of portfolio. That means concentrating on highly rated bonds with little or no risk of default, like U.S. Treasury securities and corporate bonds rated A or better. It also means sticking primarily with intermediate or short-term bonds and bond funds, which typically lose less money than longer term issues when interest rates rise, as they eventually will again. (Basic investment rule: When interest rates rise, bond prices fall). Investing for retirement is an ongoing process, not a one-time event. Certificates of deposit that are insured may offer a fixed return. You may incur charges for early withdrawals. Although none of the investment instruments mentioned are guaranteed or insured, government bonds and Treasury bills are backed by the full faith and credit of the U.S. Government. Common stocks are considered to have the most risk, followed by corporate bonds, government bonds and Treasury bills. Treasury bills are exempt from state taxes; otherwise all of these vehicles are subject to tax. Some state investments may be exempt from federal tax, check with your tax advisor. If held to maturity bonds offer a fixed rate of return and fixed principal value. Return and principal value of an investment in stocks will fluctuate with changes in market conditions so that shares, when redeemed, may be worth more or less than original cost. Mutual fund investments are not insured or guaranteed and offer a variable return. Mutual funds consist of pooled money managed by investment professionals. The objective, risks, and types of investments made by a mutual fund are stated in the mutual fund prospectus. F.Y.I... Attention Family Law Practitioners, Paralegals and Legal Secretaries As you know, pursuant to Local Circuit Court Rule 15.01.3, within 60 days of filing of a Response (or Appearance) to a Petition for Dissolution of Marriage, each party is required to complete a Comprehensive Financial Statement (CFS) (Form 3417). This form has been available through the DuPage County Clerk's on-line forms, http://www.dupageco.org. The site is very user friendly. All you have to do is download Acrobat Reader to access the on-line forms. Previously you were able to print out the form but information had to be typed in manually. Good news - the form has now been updated - when you input figures, i.e., payroll deductions, monthly living expenses, the template automatically calculates the totals and balances for you. This will save you much time and when completed, you have a very professional looking work product. Many thanks to Michael Haeger at the Clerk's office for listening and following through with our suggestions. Clemie Klancir What's Cookin... BACON RANCH DIP 1 Pkg. Ranch DIP (Not salad dressing) Mix all ingredients together and refrigerate for at least one hour before serving. From: Kim Imig, AT DAY'S END Is a single heart rejoicing over what
you did or said;Does the man whose hopes were fading, now with courage
look ahead?Did you waste the day, or lose it? Was it well or sorely
spent?Did you leave a trail of kindness, or a scar of discontent?As
you close your eyes in slumber, do you think that God will say,"You
have earned one more tomorrow by the work you did today?" For information contact Gloria Norton at DuPage County Bar Association, 126 S. County Farm Road, Wheaton, IL 60187-4597, Telephone 630-653-7779, Fax to 630-653-7870 or E-Mail to: gnorton@dcba.org. |
