5 Ways to Tame Your Money Fears
Joe Light writes in Money magazine:
Lisa DeAngelis and Randall Cobb look like investing geniuses right now. While the S&P 500 has dropped more than 40% since last year’s peak, the Atlanta couple’s retirement portfolio is sitting pretty, earning 4% or so a year.
DeAngelis, 45, and Cobb, 54, aren’t stellar stock pickers; they aren’t brilliant market timers either. They just have almost all of their savings in Treasury notes and cash. Always have.
“I can’t stand to see my portfolio go down,” DeAngelis says. “My mother, a Depression-era baby, taught me that Treasuries are the only investment that will never fail you.”
Sorry, Mom: History begs to differ. Though a 4% gain may look downright spectacular these days, the all-cash-and-Treasuries approach is far from fail-safe. DeAngelis and Cobb hope that slow but steady will guarantee them an on-time retirement.
But inflation – historically 3% a year and a projected 4.4% in 2008 – will erode the ultra-low rates they are earning now. Over the past 80 years, intermediate-term Treasury notes have returned about 5% a year on average and 30-day Treasury bills, a cash equivalent, have earned 4%.
Category: Baby Boomers, Money/Finance
Subscribe
If you enjoyed this article, subscribe to receive more just like it.
