Stocks Market

Stock market has been touted as the best place to invest money for a long term. However, for the last decade this has not proved to be so. But what else has done better ? Real Estate, Precious metals and the rest ? Modest risk free gains are still available in several other places, but stock market remains a darling of the people. Hence risk management, rebalancing of portfolio at regular intervals, asset allocation and prudent selection of a mix of various kinds of investments is necessary for a steady growth, and for the protection from big losses.

Many a times just one target date fund, and just one diversified ETF can do all the trick, without ever lifting a finger for decent performance of portfolio, if one can show some patience and not fall into the trap of frequent buying and selling.

For younger people almost 90% of portfolio should be in stocks for growth, it is high risk, high return account since the time to recoup any losses is plenty. For older people close to retirement, the mix of stocks and bonds becomes 50-50, during the period 5 years prior to and 5 years after retirement. One has to sacrifice the high return of stocks for the safety of bonds, as there is not enough time left to handle any set backs and reversals in the market.

However, many a times bonds may be more volatile than stocks due to interest rate fluctuation. Even at ages past 90, one still needs some stocks in the portfolio to act as kicker and generate decent returns.

One should take into account a diversified portfolio in vari