It’s Time to Think and Invest Differently for Retirement

For retirees, those close to retirement, or even anyone currently planning for retirement, we believe strongly that it is time to think and invest differently.

In our opinion, gone are the days of “set it and forget it” in your retirement portfolio.  Gone are the days of “buy and hold.” Gone are the days of 15% annual returns in the stock market. And gone are the days when the bond market was a low risk investment.

You probably are aware of the fact that stocks lost money for more than a decade during 2000-2012 as financial writers have dubbed the period following the turn of the century "the lost decade." You are likely acutely aware that real estate is no longer a sure fire way to build wealth. And it is a safe bet that you know yields on fixed income and CD’s are too low to live off of.

Yet, rest assured that there is reason for hope going forward.

You see, there are ALWAYS opportunities for growth and income (yes, there are always opportunities – even during severe market declines and periods of financial upheaval). You just need the knowhow and the tools to capitalize on these opportunities and – perhaps more importantly – a strategy to protect yourself from all of the very real risks that exist in the markets.

Enter the era of what we call Risk Managed Investing or RMI. RMI is an approach to investing that focuses on (a) protecting your capital, (b) managing the ongoing risks of the markets, and (c) identifying opportunities wherever and whenever they occur in the markets.

Managing Risk is Vital in Retirement

Managing risk is especially important to retirees or anyone close to retirement age. In short, no retiree wants to see their nest egg lose -30%, -40% or even -50% during the next bear market! Nor should they.

We believe Warren Buffett’s two simple rules for investing says it all:

  1. Don’t lose big money
  2. Never, ever forget rule #1

In sum, we believe ALL investors should incorporate risk management strategies into their long-term retirement investments. And it is for this reason that we’ve developed the Retirement Risk Manager Series – to help secure your retirement years and your retirement income.

Learn More About the Retirement Risk Manager Series

Four Dangerous Myths About Retirement Investing

The mutual fund and financial planning industries have done a decent job of convincing investors that they have to invest a certain way in retirement. Yet we believe many of the commonly accepted strategies for retirement are fundamentally flawed.

Dangerous Myths about Retirement Investing:

  • A diversified portfolio will protect you from the next severe market decline
  • You have to switch from growth to income in retirement
  • You can “set and forget it” with your retirement portfolio
  • You can’t lose money in bond funds
  • Buy and hold is the key to investing success

Download our Special Report on Debunking Myths about Retirement Investing

What is Risk Management?

We talk a lot about the concept of “risk management.” And while we deal with the concept and various risk management strategies on a daily basis, not all investors are familiar with a "Risk Managed" approach. As such, we feel we need to provide a definition.

We define Risk Management as: The art of keeping your portfolio’s exposure to market risk “in-line” with prevailing market conditions at all times.

In other words, the goal is to keep portfolios mostly invested during Bull Market advances and to reduce exposure to market risk during severe Bear Market declines. Doesn’t it make sense to have a strategy designed to preserve capital during bear markets and severe declines – in all kinds of markets?

We believe strongly that Risk Management strategies should be at least a part of every single investor’s portfolio. Bull Market, Bear Market, or anything in between, you should know that we believe in managing risk.

Why is Risk Management Needed?

To answer simply… because one of the best ways to have more money in the long run is to avoid big losses. It is safe to assume that no investor would have intentionally remained fully invested during the 2000 – 2003 Bear Market (or any other Bear Market for that matter) where the average Growth Fund lost -64%.

If you've ever had a big loss, you know that the "mathematics of loss" is a brutal lesson. While it's simplistic and overused, it is always amazing to realize that a -50% loss requires a gain of 100% to breakeven. 

For example, as we just noted, Growth Funds lost an average of -64% in the 2000 – 2003 Bear market. This meant that investors needed to gain more than +177% to get their accounts back to where they stood before the Bear began. Since the average Bull Market in the last century gained +81.2% on the Dow, investors who unwittingly let losses become large may waste the next Bull Market (or more) just to make up the losses.

The Problem: Unbiased Guidance for Retirees is Hard to Find

Lots of people want to “help" you with your retirement portfolio. Brokers, insurance agents, accountants, banks, mutual fund companies etc all want to be involved. But unfortunately, too many of those looking to "help" simply want to sell you a products. But what you need is unbiased guidance, not another sales pitch.

There was a time when retirees had it relatively easy. Prior to 1980, most people simply worked for the employers until they reached retirement age and then “took their retirement” when it was time to quit working. In those days, company retirement plans were called “defined benefit” plans because workers received their “retirement paycheck” from their employers. And it was the company’s job to invest the money successfully in order to fund the benefits paid to their retirees.

However, the days of defined benefit pension plans have dwindled. Today, the vast majority of companies have done away with those defined benefit plans and replaced them with 401(K) plans. The problem here is the job of investing successfully for retirement has been shifted from the company employee.

According to annual studies by The Profit Sharing/401k Council of America, just over half of all companies provide investment advice to 401k plan participants. Thus, most Americans are left to their own devices to figure out how best to invest their life savings for retirement. And as you might suspect, most individual investors are not equipped to do this all-important job.

Reuters columnist Chris Taylor opined recently that most investors aren’t qualified to effectively manager their portfolios.  According to the article, "Retirement saving is one of the hardest things that humans have to do, in terms of our thinking," says Dan Ariely, a behavioral economist at Duke University and author of books like Predictably Irrational. "When you're saving for something in the future, 30 or 40 years from now, you really have no clue about what you'll be getting. So it's no surprise that it's something most people can't do very well."

It is for this reason that we have developed The Retirement Risk Manager. You see, the Retirement Risk Manager has one goal – to help you develop a properly diversified retirement portfolio and to manage the ongoing risks in that portfolio.

Introducing the Retirement Risk Manager Series

The Retirement Risk Manager is a series of professionally managed portfolios designed to help you:

  • Produce a monthly “retirement paycheck” 
  • Manage the ongoing risks of the markets
  • Protect your nest egg
  • Combat the vagaries of inflation
  • Capitalize on growth opportunities when they present themselves


Explore the Retirement Risk Manager Series