The Accountant Sep-Oct-2016
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WORK PLACE<br />
short-term reserve to help weather<br />
a prolonged market downturn—it is<br />
recommended two to four years’ worth<br />
of living expenses, if you can. This<br />
short-term reserve will prevent you<br />
from having to sell assets in the event<br />
of a down market. This money can be<br />
invested in high-quality, short-term<br />
fixed income investments, such as shortterm<br />
bond funds.<br />
c. Invest the rest of your portfolio<br />
When it comes to your main portfolio,<br />
remember that your overarching goal is<br />
to create a mix of investments that work<br />
together to preserve capital, generate<br />
income and grow. Your specific mix of<br />
stock, bond and cash investments should<br />
be appropriate for your age, income<br />
needs, financial goals, time horizon<br />
and comfort with risk. With a year’s<br />
worth of cash on hand and a short-term<br />
reserve in place, invest the remainder of<br />
your portfolio in investments that align<br />
with your goals and risk tolerance.<br />
d. Match your investments to your<br />
goals and needs.<br />
<strong>The</strong> combination of stocks and bonds,<br />
along with an appropriate allocation to<br />
cash investments, can help protect you<br />
against market volatility while keeping<br />
you invested for long-term needs.<br />
Bonds provide a cushion that’s generally<br />
less volatile than stocks and provide a<br />
regular source of income. Stocks provide<br />
potential for growth, as well as dividends<br />
that may increase over time.<br />
Summary<br />
<strong>The</strong> hard truth is that only a small<br />
minority are accumulating enough<br />
savings to provide for their income<br />
needs during decades in retirement.<br />
This uncomfortable reality is<br />
particularly true given the overall rise<br />
in life expectancy, sharply rising medical<br />
costs, the trend toward more active and<br />
costly retirement lifestyles, and, not<br />
least, the relentless toll of inflation. For<br />
the financially fortunate with sufficient<br />
personal savings, Social Security<br />
benefits, and corporate pensions to meet<br />
all their retirement income needs, the<br />
main financial challenges of retirement<br />
are how to invest and spend wisely and<br />
perhaps provide for their heirs as well.<br />
SEPTEMBER - OCTOBER <strong>2016</strong> 45
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