While it may seem enticing, it's essential to recognize that a lengthy retirement can have its share of unexpected downsides. Let's explore three potential drawbacks you might have yet to consider, along with strategies to help you prepare for them.
Mixed market U.S. stock indexes started the week on a negative note but shifted in a positive direction on Thursday and Friday. Results varied widely, with the NASDAQ posting a 2.5% total return, the S&P 500 adding 0.3%, and the Dow slipping 1.0%.
While many investors are focused on the timing and severity of the next recession, Jared Franz has turned his focus to longer term questions: What could be the catalysts for a subsequent recovery? And what are some of the implications of that recovery for investor portfolios?
Buffett's first rule, "Never lose money," highlights the principle of capital preservation. He believes protecting your capital should be a primary focus because losing a substantial portion of your investment can significantly hinder your ability to generate long-term returns. By avoiding significant losses, you can ensure that your capital remains intact and has the potential to grow over time.
Maximize your contributions to retirement accounts: Take full advantage of contribution limits in your retirement accounts, such as 401(k) plans or IRAs. For individuals aged 50 or older, catch-up provisions allow additional contributions beyond the regular limits.
Diversify your portfolio: Diversification is a fundamental principle of investing. Spread your investments across different asset classes, such as stocks, bonds, real estate, commodities, and various industries and geographic regions. This helps reduce the risk associated with any single investment and can mitigate the impact of a recession on your overall portfolio.
The major U.S. stock indexes posted weekly gains, with the NASDAQ outperforming the S&P 500 and the Dow for the fourth week in a row. The S&P 500’s gain of 1.6% lifted that index above a narrow range that it had been stuck in since the start of April.