I am going to research this further, but it's occurred to me to question the validity of investing in stock market so much when a sensibly assembled and maintained portfolio of bonds--high yield, corporate and government, coupled with good preferred stock and maybe some stalwart, high yielding common stock would be the preferred method.
I mean, this question really comes up when I look at the results I've achieved with my ROTH (down nearly 50% from it's peak earlier this year - of course, this represents 3% of my total portfolio and it's where I make all my mistakes, investing on my own, thinking I'm the next Peter Lynch) - not to mention the results of the S and P, and all the world markets.
Is this really necessary?? Is this REALLY a risk we need to take to achieve a long term but gut wrenching 9% vs. a steady 6-7% with a MUCH safer approach I have always wondered why someone wouldn’t assemble a portfolio of higher yielding stocks, mixed with preferred etc. to get a nice stable 6-8% - as long as they’re invested in the individual securities, there’s no chance of losing principal other than default risk, which can be diminished, in fact nearly eliminated, by diversification.
So here's my thoughts: for the next 1-2 years, keep things where they are. I truly believe that the Dow and S and P will climb, led by the financial sector eventually, and maybe energy ... and the japanese and other asian markets. From there, once we've enjoyed a good "bump," I will start moving my ROTH ENTIRELY to fixed income or high div paying investments. We will have our Financial Planner move from Growth and Income to Income and Growth. We have a financial planner who holds around 80% of our money while I mange the other 20%, so I can "tweak" the mix even further toward the income side.
Anyway, that's it for my rambling! This is just one of those questions that I've realized has been burning inside for years, but I've either not sought the answer with enough vigor, or I've not recieved the answer ...
I mean, this question really comes up when I look at the results I've achieved with my ROTH (down nearly 50% from it's peak earlier this year - of course, this represents 3% of my total portfolio and it's where I make all my mistakes, investing on my own, thinking I'm the next Peter Lynch) - not to mention the results of the S and P, and all the world markets.
Is this really necessary?? Is this REALLY a risk we need to take to achieve a long term but gut wrenching 9% vs. a steady 6-7% with a MUCH safer approach I have always wondered why someone wouldn’t assemble a portfolio of higher yielding stocks, mixed with preferred etc. to get a nice stable 6-8% - as long as they’re invested in the individual securities, there’s no chance of losing principal other than default risk, which can be diminished, in fact nearly eliminated, by diversification.
So here's my thoughts: for the next 1-2 years, keep things where they are. I truly believe that the Dow and S and P will climb, led by the financial sector eventually, and maybe energy ... and the japanese and other asian markets. From there, once we've enjoyed a good "bump," I will start moving my ROTH ENTIRELY to fixed income or high div paying investments. We will have our Financial Planner move from Growth and Income to Income and Growth. We have a financial planner who holds around 80% of our money while I mange the other 20%, so I can "tweak" the mix even further toward the income side.
Anyway, that's it for my rambling! This is just one of those questions that I've realized has been burning inside for years, but I've either not sought the answer with enough vigor, or I've not recieved the answer ...