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To: expat_panama

This morning a neighbor who is fully invested in the stock market came down with a case of the jitters. He said with the stock market collapse almost imminent (probably just after the election was his prediction) and the dollar collapse equally so where should he put his money?

I said I would put his question up to you folks. I know he’s not fond of gold or silver and he figure jewels aren’t the way to go so any ideas you have I’ll email to him.

He’s in his 70’s and his home is free and clear.


3 posted on 07/20/2014 4:17:28 PM PDT by B4Ranch (Name your illness, do a Google & YouTube search with "hydrogen peroxide". Do it and be surprised.)
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To: B4Ranch

Farmland, then rent it out.


4 posted on 07/20/2014 4:19:11 PM PDT by jjotto ("Ya could look it up!")
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To: B4Ranch
It's not some evil rigged market we need to worry about, the real enemy is our own fear and greed.  

If he's honestly convinced that stock prices will fall then he can sell shorts.  If he's also afraid to do that then he's got to admit that he really doesn't know what stock prices are going to do.  If he decides there's a chance of either way then there are all kinds of ways he can hedge --half'n'half stocks/cash, stocks along side of downside options, etc.

6 posted on 07/20/2014 6:06:50 PM PDT by expat_panama
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To: B4Ranch

Anyone at that age (70s) that is fully in equities is not properly allocating assets. He should be in fixed income in the 50 to 60 percent range, depending upon his risk tolerance

When you are younger, and have time to make up for down markets, one’s assets should be more in equities. Investing for the long term will even out the down years.

But at advanced ages, when (WHEN, not IF) a down market hits and you are fully in equities, you’re risking heavy losses, with a short lifespan to make it up.

Also, one should never do drastic moves with ALL of one’s assets all at one time. Work at the margins.


8 posted on 07/20/2014 6:18:16 PM PDT by abb ("News reporting is too important to be left to the journalists." Walter Abbott (1950 -))
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To: B4Ranch

More on Asset Allocation

http://www.bogleheads.org/wiki/Asset_allocation

Asset allocation is one of the most important decisions that investors can make. In other words, the importance of an investor’s selection of individual securities is insignificant compared to the way the investor allocates their assets to stocks, bonds, and cash equivalents.

Rules of thumb

Although your exact asset allocation should depend on your goals for the money, some rules of thumb exist to guide your decision.[footnotes 1]

The most important asset allocation decision is the split between risky and non-risky assets. This is most often referred to as the stock/bond split. Benjamin Graham’s[6] timeless advice was:

“We have suggested as a fundamental guiding rule that the investor should never have less than 25% or more than 75% of his funds in common stocks, with a consequence inverse range of 75% to 25% in bonds. There is an implication here that the standard division should be an equal one, or 50-50, between the two major investment mediums.”[7]

John Bogle recommends “roughly your age in bonds”; for instance, if you are 45, 45% of your portfolio should be in high-quality bonds. Bogle also suggests that, during the retirement distribution phase, you include as a bond-like component of your wealth and asset allocation the value of any future pension and Social Security payment you expect to receive.[footnotes 2]

Investors choosing to increase their equity proportion, either through less conservative guidelines or a desire to increase return, should understand why they feel they have the need, ability, and willingness to take on the greater inherent risk.[footnotes 3]

All age-based guidelines are predicated on the assumption that an individual’s circumstances mirror the general population’s. Individuals with different retirement ages (earlier or later), asset levels (those who have saved enough to fund their retirement fully with TIPS, or needs for the money (e.g. college savings) would be well-advised to consider what circumstances make their situation different and adjust their asset allocation accordingly.

http://finance.zacks.com/long-term-investing-asset-allocation-8067.html

By Age

Asset allocation by age is often used by people planning for retirement with accounts such as 401(k)s. The theory behind age-based asset allocation is that a younger investor has more time to recover from losses and take advantage of potential gains, making stock market investing more beneficial. As you age, you invest more in less-volatile investments such as bonds, possibly even switching to ultra-safe investments like certificates of deposit as you reach retirement. Even at retirement, some of your nest egg may not be used for many years, so stocks still could make sense for a portion of your funds.


12 posted on 07/21/2014 4:46:03 AM PDT by abb ("News reporting is too important to be left to the journalists." Walter Abbott (1950 -))
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