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Now, conventional conservative thinking was that you didn't want to take any foolish risks with retirement savings. This has been drummed into almost everyone's thinking about retirement investing. You wanted to diversify your assets by allocating some to a few growth and value funds, some to a bond fund, maybe a token international fund, and have a chunk in a money-mart fund. You certainly didn't want to risk losing your retirement capital by putting it into individual securities. This was the common thinking before the birth of the cybertrading revolution. |
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This is how many financial planners and accountants will advise you todaydon't take undue risks with retirement money. But the stock market is too hot. There is too much to be made for us to invest by these conservative and out-of-date guidelinesguidelines and thinking that are pre-cyberinvesting savvy and pre-deep-discount brokerages. The whole game changes when you've got access to information. All the rules are rewritten when you pay almost nothing or when you get to trade commission-free. How can we not take more risk given the technology, the knowledge, and the know-how? And especially with the glut of baby-boomer savings that have helped create the greatest bull market in history? I mean, you can park your savings and retirement in bond funds or a nice, safe CD if you like. |
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Better yet, you can put a chunk into an index fund that tracks the S&P 500 and do pretty well. But you are still going to lose between 30 to 50 percent or more to the clever online traders who are gobbling up hot, leading-edge technology and Internet-related stocks as fast as they can be offered up. But you must be willing to handle the downside risk as well. |
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Remember, you don't need a whole portfolio of hot, but risky stocks. One or two that bring a great gain can more than make up for some of the positions that earn little or even go down. All it takes is one high flier to bring up one's total portfolio. |
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Yes, the risk goes up and you can get whacked if the whole technology sector takes an extended dive. But would you rather be taking that risk with an index fund, or Coke or Disneynone of which is a sure thing? Or would you like to take a chance with Internet and telecommunications stocks that can double and triple your investment? If you want to take the added risk, you better have the stomach to watch them dive 20 points in an hour or less without woopsing your cookies, as my mother would say. |
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