David Kirkpatrick

October 23, 2009

Some thoughts on retirement investing

Retirement planning is an ongoing process, and you really can’t count on Social Security to take care of all your retirement income needs. This means a major part of any retirement income plan is retirement investing.

Retirement investing is a different animal from other financial investments. Saving money for retirement isn’t enough because inflation is going to erode the future value of your savings, and wild speculation is not the investment answer because it’s simply too risky. For retirement investing you want a return that keeps you ahead of inflation and does some work in building your nest egg, along with exposing your investment to low or moderate risk. As you get older you want to invest in less and less risky vehicles to protect your retirement fund.

Here are some retirement investment options:

  • Stocks — over the long term stocks have historically performed better than savings accounts or bonds.
  • Bonds — you are more likely to get your investment back with bonds compare to stocks.
  • Annuities — provide a monthly income stream after a lump-sum investment.
  • Mutual Funds — pool many investors and invest that money through an investment strategy devised by the fund manager
  • Investment Partnerships and Hedge Funds — private investment partnerships and hedge funds are an alternative to mutual funds with a few significant differences including participating in a much wider assortment of investment vehicles and borrowing money for additional investment. Investment partnerships and hedge funds are riskier investments and typically require a sizable minimum investment to participate.
  • Exchange-traded Funds — ETFs are another alternative to mutual funds and hold large “baskets” off well-defined slices of the investment universe. Two ETF advantages over mutual funds are low expenses and very high liquidity.
  • Commodities — investing in commodities is investing the raw materials — metals, petroleum, agriculture, etc. — that go into production and consumption. Commodities trading is also a risky investment strategy.

October 10, 2008

Looks like another tough day on Wall Street

Maybe not as bad as yesterday, but mid-afternoon numbers don’t look too promising.

These figures come from the WSJ website and are current as of 2:37 pm EDT.

Dow Jones Industrials down 5.76%

S&P 500 down 6.53%

Nasdaq down 5.37%

10-year note down 0.81%

I guessing everyone is noticing a trend in direction in these indicators.

Update 2:32 pm CDT — There’s a bit of a rally heading toward the bell today and both the Dow and Nasdaq are pushing positive numbers — less than 1% into the green, but positive.

One story that seems to be getting lost in all the financial freak-out is oil is dropping like a rock. Crude is now below $78 a barrel.

From the link:

Crude futures sank to a 13-month low on the mounting threat to global oil demand from the financial crisis.

Light, sweet crude for November delivery settled $8.89, or 10.3%, lower at $77.70 a barrel on the New York Mercantile Exchange, the lowest settlement since Sept. 10, 2007. Brent crude on the ICE futures exchange closed at $73.65 a barrel, down $9.01.

Oil prices fell along with commodities from copper to corn, as well as the Dow Jones Industrial Average, which dropped for the eighth-straight trading day. Turmoil in the financial sector has resulted in a frozen credit market, cutting companies in the wider economy off from borrowing and threatening economic growth worldwide.

Final update 3:17 pm CDT — The markets close for the weekend and only Nasdaq held on for a gain. A 0.27% gain.