Maximize Your Retirement Investments Page: 2
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Don't worry about ups and downs in the market
meantime, don't worry about the short-term ups and
downs of the stock market-even huge swings, such
as those that occurred in the bear market that began
in 2007 and lasted through early 2009. You're a long-
term investor who will benefit from putting time to
work for you. And that means not cashing out your
investments when the market tanks or borrowing from
your retirement account to fund short-term needs,
such as buying a car or taking a vacation. Your goal is
to build as big a retirement kitty as possible-without
taking unreasonable risks. The key word here is
"unreasonable" and leads us to rule #2.
Rule #2: All investing involves some risk. Investing
is a bundle of trade-offs between risk and reward. A
willingness to take some risk with your money today
provides you with the chance to earn a bigger return in
the future.
In fact, the hidden risk of retirement investing
comes from not taking enough risk. By stashing all of
your money in supersafe investments, such as bank
certificates of deposit and money-market funds, you
forfeit your chance at bigger gains-and a more secure
retirement. In effect, you swap one kind of risk-invest-
ment volatility-for two others: the risk that your nest-
egg performance won't keep up with inflation or that
you'll outlive your money.
Certainly, it can be nerve-racking to stick to your
long-term investment goals during times of severemarket volatility. But keep in mind that even if you
retire tomorrow, you don't need all of your money
tomorrow. And even in retirement, you're still a long-
term investor, so you'll need to keep a portion of your
assets invested for growth to carry you through a
retirement that could last 20 years or more.
The real losers during the latest market meltdown
were those who panicked and bailed out as the mar-
ket fell, locking in losses. Those who continued to in-
vest throughout the downturn were rewarded. Theyscooped up bargain-price shares that grew more
valuable as the market rebounded. That's just one
example why time in the market-and not trying to
time the market by constantly buying and selling-
is the best strategy for long-term investors.
The more time you have to reach your retirement
goal, the more investment risk you can afford to take.
The best approach is to start out with higher-risk
investments, such as stocks or mutual funds that
invest in stocks, when you're in your twenties, thirties
and forties. Then, as you near retirement in yourU
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Kiplinger's Personal Finance. Maximize Your Retirement Investments, pamphlet, 2010; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth639278/m1/4/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.