Markets Hit Speed Bump - Retirement Planning Study

Retirement Income Planning - Market Linked CDs
(Risks you face in funding your retirement income)

The financial markets hit a rather nasty speed bump yesterday, as the overnight (Monday) sell-off in the Asian markets moved West into Europe and then onto our shores. Foreign markets fell about twice what we experinced (Dow off 1.4%, SP500 down 1.6% and Nasdaq off 1.4%). Financial stocks, which led the market's rather robust 2012 start, suffered 1.5% to 2% lower. Still one day's action does not dictate a trend, but it bears watching closer. Commodities followed stocks down moreso, but bonds gained some steam as interest rates fell. We are busy watching the charts and allocating to cash or stronger market areas. Your portfolio positioning is ever important now, since you no doubt have some gains to crow about this year, and you may need a strategy to hold onto a few of them. Today prices are back up 1/2% or so. Gold and silver up also.

Stock Market Doubles since 2009.

The stock market hit the level of 13,000 last week, and that marks a double in price from the bear market lows registered March 6, 2009 around Dow 6,500. With such rapid movements and swings in stocks prices, this causes people to overeact and emotionally make decisions that are harmful to their finances. Question: what were your thoughts back in late 2008-early 2009?  Did you sell, buy, allocate money to cash, reballance to a pre-determined allocation across stocks, bonds and cash? Or did you have the nerve and fortitude to just stay put and not worry about it? I reported last blog that bonds and cash do deserve a portion of your investments, especially if your are nearing retirement age. The "safe money" strategies that I've written about should be considered seriously: we never know when the next 30% - 40% - 50% decline in stocks will start, and it would be VERY ill-timed to start your retirement income plan at the depths of a nasty market bottom. Being married to your spouse is great, but being "married" to the stock market with too much risk could result in a nasty financial divorce.