Should you invest differently given the impending retirement of tens of millions of baby boomers? This is a question I’ve received from advisors and investors in recent weeks, and one which, quite frankly, I’ve given little thought to throughout the financial crisis. (It always seemed like a topic of conversation when the Dow was at 14,000 and not at 7,000.)
In 1976, Vanguard launched its 500 Index Fund, making it the first index mutual fund available to non-institutional investors. The creation of an index fund intended for individual investors was an important salvo in the now long-running battle over which investing approach—active or passive—is superior.
This is a 35-year-old fight (at least) that I certainly don’t think I can settle. But in discussions of the issue over the years, I’ve found that a few points are really critical, and often not appreciated by more casual participants.
This comment on Steve Utkus’ recent post about retirement struck a major chord with me:
“Our children’s incomes are not increasing, and they have their own children to support, let alone saving for their own retirement. No one is to blame or is being stingy; we simply must plan for and take charge of our own later years.”
The national debate on health reform has me thinking about a particular angle of the question: paying for health care in retirement. Let’s put aside for the moment long-term care costs (i.e., nursing homes) and focus on regular medical care—doctors’ bills, hospital fees, drugs, and so forth.
You probably know that Vanguard advocates periodic rebalancing as a way to manage risk in investment portfolios.
Our Investment Counseling & Research Group, overseen by my fellow blogger John Ameriks, has written a detailed white paper on rebalancing. John weighed in as part of a post discussing whether buy-and-hold investing is a dead idea. And we’ve written numerous other articles and blog posts on the topic of rebalancing.
