Retire with Money July 8

Fallout from Britain’s vote to exit the European Union continues—the latest being that on Tuesday the yield on the 10-year Treasury bond fell to its lowest level in U.S. history. Meanwhile, the dividend yield on the Standard & Poor’s stock index is more than half a percentage point higher. That presents a huge dilemma for retirement savers seeking income. Do you start piling into dividend-paying stocks? Not a great idea if your goal is safety. Stocks aren’t bonds, and they carry far greater risks—as anyone who held shares during the financial crisis can tell you. What’s more, investing based on recent trends is usually a mistake. Take a look at this table of historic returns for different assets, which shows the frequent rotation among best and worst performers. In the end, the best strategy is to stay diversified, holding both stocks and bonds, even in retirement. And don’t forget to hold some cash, too. At times like these, a “bucket” strategy, keeping liquid assets on hand for short-term needs, is a great way to maintain your peace of mind.

Best wishes,

Penny

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