A lot of retirees are wondering how they should react in the current economic crisis. My “Top Five” list of things for retirees to consider (or at least what I’ve told my retired parents) includes the following:
1. Some of your portfolio should be in cash. For years, long before this crisis broke, Vanguard’s experts and others have recommended that retirees consider holding 6-12 months’ worth of annual expenses in a money market or other liquid account. More than 6-12 months may be appropriate only if you’re really risk-averse or extremely pessimistic.
Read more »
Universal lessons are just that—they apply to everyone, or almost everyone. Sometimes, though, even the most knowledgeable people stray from what they know to be the better decision.
For example, asset allocation is critical, and rebalancing should be done periodically—particularly if your portfolio is more than 5% out of balance. At Vanguard, we promote these practices quite regularly. They’re good practices that disciplined investors should—and do—incorporate into their investing decisions.
What’s surprising (though maybe it shouldn’t be) is that, as a January Wall Street Journal article by Jason Zweig explains (subscription required), even some of the most well-known mavens of the investment world digress from their own investment philosophies.
Read more »
