The last few articles have discussed investing strategies for people at varying ages. For those who are beginning their retirement savings, through age 40-something, retirement is far enough away to allow for some risk in investment choices. At age 50, however, investment strategies should begin to change, making saving enough more challenging. When your retirement horizon is around 10 years or less, it is important that you consider shifting your retirement savings to less risky investments, such as bonds and CDs.
Valerie RumboughMoving them over at the rate of approximately 5 to 10 percent a year is a good rule to follow. That way, as you near retirement, your portfolio becomes “safer” and any extreme market fluctuation that may occur can be weathered a lot better.
Many times, when the market is doing well, those who need to start shifting to safer investments are tempted to stay in riskier positions. Their strategy is to take the chance that the market will continue its upward swing, thus increasing the size of their retirement nest egg. If you are tempted to do this, take a lesson from those who made that choice over the last two years. They are now finding that they will have to delay retirement in order to gain back what they lost.
Whatever your investment strategy is, be sure that it is a prudent plan and then stick to it. Of course, retirement investments are only part of the picture. Another big part is your investment in the kingdom of God. Typically, when we consider giving to our church or other charity, we are thinking about our current income, which on average comprises about 9 percent of our total net worth. Other assets, such as our homes, life insurance, etc. (the other 91 percent), are not even considered.
What are your investment plans for those items? Consider investing in the kingdom of God by naming your church or other charity in your will. What a great way to make a significant difference after you no longer need those assets. Leaving a legacy can be a very rewarding thing to do, no matter how much or little you may have now.
Rumbough, CPA, CFP, is chief operations officer with the Baptist Foundation of South Carolina. Contact her at (800) 723-7242. In accordance with IRS Circular 230, any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.