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4 Best Ways to Crashproof Your Retirement

By    |   Saturday, 13 June 2015 01:04 AM

Many forward-thinking consumers and investors would likely enjoy more peace of mind if they knew how to "crashproof" their retirement investments from a market implosion.

Analysts offer several strategies for keeping thoughtful investors out of trouble in the worst scenarios. Those require thoughtful planning and and open mind moving ahead.

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1. Diversify
Plan to diversify broadly — with your stock choices, across many sectors and in your asset classes, financial adviser Paul Merriman tells investors. "Own thousands of stocks via mutual funds," he writes on his website, making selections from telecommunications, healthcare, technology and several others. Also don't forget to spread the wealth among small-cap, large-cap, high-growth and even value stock offerings and look beyond the S&P 500 for those choices.

2. Think geographically
Chose international index funds to continue that diversification pattern globally, not just investments at home.

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3. Stress test your portfolio
Put your current portfolio through a series of what-if stress tests, Money magazine suggests. Run several scenarios "to see how you fare, assuming different magnitudes of losses and different responses," the magazine urges investors. Using previous market crashes (2008's financial crisis is one identifiable recent benchmark), put your own investments up against those numbers to see how you might fare. Plan a future strategy based on that down scenario.

For example, the S&P was devalued by 37 percent in 2008, so if you had a 50-50 stock and bond split, you would have lost about 15 percent, Money noted of the stress equation.

4. Don't put all your investment eggs in one basket
Some of your portfolio must go into fixed-income investments, not simply all of it in the stock market, Merriman cautions. He adds that fixed-income funds act as stabilizers and suggests finding those with the help of an investment adviser.

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Many forward-thinking consumers and investors would likely enjoy more peace of mind if they knew how to crashproof their retirement investments from a market implosion.
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2015-04-13
Saturday, 13 June 2015 01:04 AM
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