Updated: October 17, 2016
It’s an old investing saw that should have been taken out behind the barn years ago.
You’ve no doubt heard it before: “As you get closer to retirement, you should shift out of stocks and into fixed-income investments.”
You’ll often hear it in combination with some arbitrary rule, like: “The percentage of your portfolio devoted to stocks should be 100 minus your age.”
An Overblown Fear
On the surface, it seems like sound advice, right?
After all, CDs, Treasuries and the like guarantee your principal, and stocks don’t.
But it’s based on a dangerous misconception: that “guaranteed principal” and “no risk” are the same thing.… Read more