Baby Boomers are NOT Investors but Capital Preservationists

The more I read about the need to have investments in the stock market in retirement regardless of the market volatility the more I realise this is fund managers trying to get your money just to gamble. You need to remember they get paid on the size of the funds under management NOT the returns they create for you or the losses they minimise for you.

Since the stock market eventually recovers they can keep wasting your hard earned money trying to time the market until it eventually turns bullish. That’s when they will be right and they’ll tell you how smart you were to buy and hold through the bad times. They forget that you might now need to recover 10, 20, 30% of your capital they lost trading it in a down market.

When they start seeing returns on your money they are likely to start putting their own money in the market as the Bull will be back.

There is a major difference between their needs and Baby Boomers. They want to increase the funds under management to get their bonuses and are prepared to risk your money (not theirs) to do it. Using other people’s money with a disclaimer if they lose it is nothing short of fantastic for them. Your investments are not risk free but their trading your money is risk free for them. This means they can be reckless with your money if they want to be.

A Baby Boomers needs are completely different. You are first and foremost a capital preservationist. You need to protect your capital for the long term and if the opportunity arises make a return on it above inflation. The first rule is to avoid large losses. You don’t do that by putting a high percentage of your nest egg into stocks or equity funds in this market if you are in retirement.

Investing in stocks or equity funds is risky at the best of times but in retirement it is very dangerous if not done right.

There are Baby Boomers that have excess funds and this really doesn’t apply to them. I’m talking about Baby Boomers like me who have a nest egg and some surplus cash maybe but the bulk of their money is needed to fund their retirement income.

So whenever your financial planner asks you to dream about what you want to do in retirement and have you list your goals, just put down one – Avoid Large Losses which is another way of saying capital preservation. Tell them that is the one job you want them to do for you. It’s none of his business what you want to do with the money.

Writing down your goals is for the birds. It will only lead to disappointment if the market goes against you and your financial adviser doesn’t help you preserve your capital. If you can preserve your capital you can decide what you want to do at any time.

Why not go out today and get a plaque made to give to your financial planner to put on his desk. It should read –

Rule #1 – Avoid Large Losses

And next time you see them introduce yourself as a Baby Boomer and a Capital Preservationist, not an investor. Hopefully they will eventually get the message.

8 Responses to “Baby Boomers are NOT Investors but Capital Preservationists”

  1. Paul Petillo says:

    I’m not so sure we should wrapping ourselves around the capital preservation idea too soon. For those of us that have yet to come to grips with the fact that the money we are saving is what we will be using when we retire, slowing the potential growth of that cash because you want to protect what you have might be foolhardy if you believe any one of the following: At age fifty (the last edge of the Boomers) stops trying to grow their portfolio instead of protecting it, they will have given up almost twenty years of growth. Financial planners work for you – act like an employer who has an at-will agreement with your planner. And lastly, avoiding large losses is just as difficult as posting big gains. Moderation, diligence, and realism all trump.

  2. admin says:

    Thank you for your valued comment. I have just taken a look at your website and blog. They look great and have a mine of information on them. However I could not find any information about Baby Boomers who are in retirement and are not accumulating their nest egg. You have a wide audience with your expertise and knowledge I’d be keen to read what you would say on this subject. But back to my response to your comment….
    Maybe I should have said Baby Boomers in Retirement. The emphasis being in retirement. I’m not saying you should not be in the stock market ever. I am saying you should preserve your nest egg capital first and look for returns second when in retirement. (If you have surplus funds then you can take more risk with those) As it stands most Baby Boomers have their nest egg in a WRAP account consisting of mutual funds. They buy and hold these funds. In retirement we just cannot allow our capital to drop 40% as it did on 2000-2003 in the USA. The math clearly shows it may not recover if you are taking a pension as well. Financial Planners should be working for you, but many espouse the buy and hold strategy even in retirement, which can work against you. At age 50 you may want to take more risk and that’s fine if it is your decision.
    I respectfully disagree with you on it being difficult to avoid large losses. A simple 10% stop loss on stocks or an instruction to your financial planner to exit your mutual funds if they lose 10% will definitely help you avoid large losses.
    That is what I consider to be a moderating, diligent and realistic approach.
    Thanks once again for visiting my blog and posting your comments.

  3. […] Baby Boomers are Capital Preservationists first, then Investors […]

  4. […] retirement it is not about seeking high returns. Its all about capital preservation. Returns take second place to avoiding large losses and high […]

  5. Cathy Warren says:

    Many retirees are finding it necessary to re-enter the workforce in order to supplement their income. They are changing mind-sets and re-inventing themselves, contributing their experience and knowledge . They are making things happen for themselves. Being conservative and proactive will build financial security for those golden years.

  6. admin says:


    I apologize for taking a while to approve your comment.

    I want Baby Boomers who have taken care of their retirement responsibly to be able to chose if they want to go back to work, not have to.

    That is why I am pushing so hard for Baby Boomers to learn how their nest eggs can be taken from them and why they need to protect them.

    I do agree Baby Boomers are very much believers in their ability to re-invent themselves if they have to. But choice is the key here not necessity.

    Thank you for your comments.

  7. Cathy Warren says:

    I appreciate your response, and do understand that choice is key. No one wants to be forced into returning to work during retirement, but it is comforting to know the options available. With the economy so unstable nest eggs are taking big hits. Protection is essential. Even those that have been responsible are finding their diligence is being tested.

    I have been visiting this blog and decided that I can continue to learn a lot and hopefully can contribute a lot to the dialog. But first, I want to be up front about my intentions. I am associated as a technical liaison with a new web site called the This web site was originally created to cater to the needs of “seniors over the age of 60,” and is now being expanded to include “Boomers, Seniors, and those who follow.”

    We recognize that many individuals who reach the age of 60 are not physically, mentally, or financially prepared to enjoy the so-called “Golden Years.” In order to meet the challenges we face in these days of great uncertainty, many Boomers and Seniors need to re-examine how they approach and solve problems. Over60Exchange is developing guidelines to help Boomers and Seniors evaluate and evolve their current “mind-sets.” Those who are willing to engage in critical assessments of current mind-sets can observe and/or participate in online forums focused on “personal reinvention.”

    I invite you to check us out at And remember, we are evolving this web site. You can watch the progress and offer suggestions. Then, when we are ready, you can participate in “Personal Reinvention.”

    I look forward to your comments and suggestions.

    Cathy Warren

  8. admin says:


    Thanks for your comments and for your support.

    I will take a look at your site hopefully later today after I write my post and will get back to you.

    David Bates

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