INVESTORS WHO BOUGHT UNDERVALUED SECURITIES AFTER THE ECONOMY TANKED HAVE SEEN THEM RISE FOR FIVE YEARS, AND 2008 SHAREHOLDERS WHO KEPT FAITH DURING THE RECESSION HAVE WATCHED SHARES RECOVER. BOTH GROUPS ARE ASKING THE I SAME QUESTION: "WHAT SHOULD WE DO NOW?"
BE experts tell you where to go from here by sharing long-term investment tips that they've gleaned from the five-year bull market. They advise investors of every age how to benefit no matter the market's condition.
You can follow the advice of five of our investment specialists whether you're in your 20s, 30s, 40s, 50s, or 60s. You can come out strong and secure your retirement.
Edward D. Williams, founder and president of Dew Financial Management Group Inc., a Fairfax, Virginia-based independent investment, financial, and retirement planning firm, says that a distant retirement horizon gives those in their 20s special opportunities.
But first, you must consider: When might invested funds be needed? How much can you invest consistently? What is your risk threshold? What are your goals? This age group must also understand "that putting aside a small amount on a monthly basis over 30 to 40 years will be better for them than waiting until later in life and trying to play catch up," says Williams.
A 401(k) or other qualified plan is likely to be their investment entry point, and its automatic investing creates the habit of making consistent contributions into their portfolio. Those in their 20s must also learn everything about their firm's retirement saving plan's cost, investment options, and vesting periods.
Young investors can use that knowledge as an investment primer, and investigate mutual funds, individual equities, and structured investments while rejecting get-rich-quick schemes. Market volatility should also be viewed positively as a way to purchase quality shares at a discount. Such information will help them build an asset foundation for homeownership, their children's education, wealth accumulation, retirement, and a financial legacy. Williams recommends large allocations in equities, 60% to 80%; fixed income, 10% to 20%; and cash, 0% to 10%.
Rebalancing your portfolio
The philosophy of John W. Rogers Jr., chairman, CEO, and chief investment officer of Chicago-based Ariel Investments (No.7 on the BE asset managers list with $4.9 billion in assets under management), is finding undervalued stocks and holding them long term.