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Risk and Strategy
From low to high
Balanced, Income, Convertible Securities, Equity Income,
The risk is rated based on a five year return for each sector, but doesn't necessarily mean that what is risky now will stay that way in the coming years.
And that my friends is another investment curve ball. What do you do. Treat it like a marriage.
There are certain things that you have come to expect from a marriage and the good ones stay true to some simple facts.
And you realize that there is some give and take. You give them money and you expect them to invest wisely and maturely. And you expect that you will be treated the same. Mutual Funds are attempting to do their part by addressing some of the more obscure language and some of the long bloated fees that they charge.
The mature investor knows this and is loyal to his investment scheme. At the BlueCollarDollar we want only for you to stay with your plan. Unlike marriage though, you do not have to stay with the same mutual fund throughout your entire life. Just stay with your strategy.
On another somewhat related note...When I was first learning my investment strategy, I moved quite frequently among fund families before settling on the ones that I have now and the strategy that I am using. Looking back, the moves were mostly unnecessary with few exceptions. But that is the learning curve that I share with you. The BlueCollarDollar has a list of the favorite fund families and while we are not recommending that you put your money in any of them, we suggest that you consider them for the basic characteristics essential to any good investment. Good steady returns on your money, healthy management styles, low expenses and good solid investments. The BCD's best can be found here.
Also, we want to take a little look at retirement ages and what they mean to you. Lately, we have been told that retirement ages will be pushed farther into the future allowing those that contribute to Social Security to pay into it longer for those that will retire soon or are already retired. Of course, this is easy to say if you currently do not work a job that requires you to work at your physical limits day in and day out. Two things come into play here.
One: Is the projected short fall a real event? Possibly but not probably. Any shortfall will not occur for another thirty five years or so, and that will happen only if the current returns fall below the 3% level. And that gap will not be as large as previously expected. But if minor changes are made, and the returns stay at 3%, there will probably be no problem at all.
Now the concern is to whether you will be collecting at the set retirement age. If you have been investing wisely for your own retirement in addition to what the SSA will provide, when you do become eligible, the monies from Social Security will be a windfall of fairly sizable proportions. If you have a pension or a 401k in addition to your IRA, you should be in pretty good shape to wait out the additional years for full benefits. But it all goes back to getting that debt down now while you still have a chance.
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