Buy and Hold is Only Part of a Great Retirement Portfolio

Buy and hold investing is still an important part of long-term retirement savings plans. According to Rob Isbitts, the chief investment officer of Sungarden Fund Management, it’s important for investors to resist both complacency and impatience when investing for the future. The two-generation-long run in bonds and the decade-long run in the S&P 500 aren’t a good enough reason to invest and walk away, expecting to see great returns after ten years of doing nothing. As people get closer to retirement, and as they enter retirement, this attitude becomes dangerous.

Isbitts says investors must designate a portion of their portfolio that won’t turn over. Then, complement that with a portion of the portfolio designed for stocks that come and go. Increased volatility in the market and market segments can cause stocks to go up 15% to 20% and then back down again. Because of this volatility, the net return doesn’t help the portfolio gain over time. The tactical part of investing becomes very important in this portion of a portfolio. For many people, it’s crucial to get professional help managing these funds.

For most Americans, simply dedicating a portion of their income to investments is a key component of becoming financially successful enough to afford retirement. To help set goals, the advice of a financial planner is key.

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5 years ago