Buy and Hold is becoming Outdated

Dean Barber of Barber Financial Group said, “Buy and Hold is Outdated“. He adds, “you should remember to take profits and redeploy them into lesser-risk, low-expectation areas”.

You can read his article on Yahoo Finance called, “Protecting Your Nest Egg in Recession” written by Laura Bruce from Bankrate.com.

In keeping with my own beliefs this is the right strategy we Baby Boomers need to adopt in retirement. It makes no sense to me to sit and watch my nest egg lose 40% of its value and then be told I should wait 5-7 years for it to come back – when I need it right now!

The article also talks about the need to have a written plan and to know when you will exit the market in a downturn. We all tend to focus on returns and ignore risk. The need to avoid large losses entails assessing the risk in any investment and deciding what action we will take if the investment does not work out.

Buy and hold is not the answer when in retirement. We need to use defensive strategies to protect our investment and keep out nest egg safe. The returns in a bull market will not be as good, but the losses in a bear market could be substantially less.

This will leave you with more money to earn returns when the market turns bullish again. You won’t be recovering your losses from the recent bear market. Remember most Baby Boomers who retired in 2000 have not recovered their nest egg yet and may never recover it as they draw a pension.

It is all about insuring your nest egg against a serious loss that is more important than chasing high returns when in retirement. If you are 25 years old go for it. If you are over 50 then prudence and care is what counts.

I looked at Mr Barber’s web site and believe it is worth spending some time there. There are some things that might appeal to you.

First take a look at the video presentation called “Barber Wealth Management System“. As you know I am a great believer in financial management systems. I like the concept of having a Wealth Manager handle everything to do with my retirement including storing my will and other important documents. I like too the remote access they allow for me to check my portfolio myself or give access to other important people in my retirement. This is a one-stop shop and may be worth a look. I’d just get more details on their investment philosophy. I’d want to know how they protect my nest egg to avoid large losses and then get me back into the market when it is “safe” to do so.

Something well worth looking at too is their Radio Show page. There are regular audio’s of the shows covering many of the topics we Baby Boomers are concerned about. I liked the one where they are talking about the inflation being very low if you don’t include food and fuel. As they said if you don’t eat and you don’t go anywhere you should be fine! But what I am saying is they appear to take an objective view on financial topics that affect us Baby Boomers. Please listen to some of the audio’s.

Once again I say you need to look outside of your local area to find a financial planner or wealth manager that puts themselves out there so we can get to know them from their articles, website, radio and TV appearances. They must have a direct hand in their business and be keen to preserve their reputation. Dean Barber appears to be doing that. But as always check them out yourself and ask them about their Buy and Hold alternatives.

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