Among 60-to-65 year olds, 30% have invested almost all of
their savings in stocks, while 52% have more than 70% of their nest egg in
stocks, according to an analysis of 10,000 users (split among three different
age groups) of FeeX, which helps users find lower investment fees. For a
well-balanced portfolio, financial planners say that savers in this age group
should have no more than 60% of their assets in stocks. The rest should be
split among more conservative assets like bonds and money market funds that can
cushion the blow of sell-offs like the one we're currently in.
Amid fears surrounding Ebola and slowing global
growth, both the S&P 500 and Dow Jones Industrial Index are
down more than 5% from a month ago, and some experts say it could signal the
start of a market correction, when the market drops by at least 10%.
While there's no way to know which direction stocks will go,
older investors simply don't have the time to ride out such big market
fluctuations.
When stocks are plunging, age-appropriate allocations can
help shield older investors from such steep losses, said Scott Tiras, a
Houston-based Ameriprise financial adviser who works mainly with older clients.
So what's an
overexposed Boomer to do?
Now is the time to check those 401(k) statements closely and
make sure you have the appropriate asset mix. To help you figure out what that
mix should be, try taking this risk tolerance quiz or using our asset
allocation calculator.
If you find that you're too heavily weighted in stocks, let
the current market volatility serve as a friendly reminder to put a more
conservative strategy in place. That may mean selling at a loss compared to a
few months ago. But stocks are still relatively flat for the year. And they're
leaps and bounds higher than they were in 2008.
Of course, you could also hold tight and see what happens in
coming weeks and months. But in that case, the market might do the re-balancing
for you.
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