As I get older, should I shift investments from stocks to bonds?

People’s priorities change as they get older. If you’re approaching retirement age, you may have already started to reconsider your investments. For most folks, that means taking money out of volatile stocks and putting it into comparably stable bonds.

Deciding If You Should Reinvest in Bonds

Conventional wisdom suggests that the stock market is a young person’s game. While everyone has their own risk tolerance, the coronavirus pandemic has shown us that, if nothing else, modern markets have the potential to be incredibly volatile. When you’re approaching retirement, the last thing you want is for your life’s work to lose half its value overnight.

Bonds, on the other hand, are seen as comparably conservative investments. Treasury bonds, for instance, average annual returns of about 0.8%—far below the projected 6.98% annual real return of an S&P 500 index.

However, U.S. treasury bonds are largely risk-free and can be quickly exchanged for cash.

Since the stock market does not offer the same level of security, it can make sense to reallocate investment assets, moving them out of the stock market and into bonds.

Your Solution Should Be Tailored to Your Needs

As you approach or surpass retirement age, you might have to reconsider your investments. However, even if you are cash-strapped, the last thing you should do is panic.

A financial adviser and professional wealth manager can help you reallocate your money in a way that minimizes your tax burden, manages risk, and gives you the best chance at a happy, healthy retirement. Oftentimes, this means not making any quick, spur-of-the-moment decisions. You might be best off gradually reinvesting your money instead of rapidly disinvesting.

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You’ve worked hard to get where you are today. Quraishi Law & Wealth understands that your money is your money: we customize our wealth management solutions to help you meet your long-term goals in a way that reflects your values.

Send us a message online today to schedule your initial consultation.