As we sail through the turbulent waters of economic uncertainty, retirees are searching for safe harbours to anchor their investments. Christopher M. Naghibi, Chief Operating Officer at First Foundation Bank, cautions that despite a resurgent S&P 500, the shadow of market correction looms over both the stock and real estate sectors. “We are still in an inverted yield curve,” Naghibi notes, stressing the importance of holding cash or low-risk cash equivalents.
Daniel Dusina, Director of Investments at Blue Chip Partners, echoes this sentiment, highlighting the allure of bonds: “The average forward returns for domestic bonds… have historically shown that the opportune time to allocate to the bond market is after the Federal Reserve pauses.” Amidst this, bank CDs have emerged as a fortress of stability, with institutions like Capital One and Synchrony Bank leading the charge with rates over 5%.
The realm of dividend stocks also beckons, promising regular income for those on fixed earnings. Companies like Bank of America Corp. and Discover Financial Services offer substantial dividends, blending income with potential capital growth. Likewise, money market funds and long-term investments are vigilant against inflation, with financial planner Shinobu Hindert recommending funds like the Fidelity Government Money Market Fund.
The strategy is evident as the year winds down: a blend of 60% stocks to 40% low-risk investments, such as bonds and CDs, might be prudent. However, Robert Johnson from Creighton University urges retirees to consider de-risking assets as they approach retirement, a strategic maneuver to mitigate the blow of a market downturn.
The financial odyssey towards retirement requires a map drawn carefully considering current economic tides. Holding a diversified portfolio with a mix of low-risk investments is not just wise; it’s essential for weathering the storms ahead. As Naghibi wisely states, “The only real hedge against inflation is to keep investing.”
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