It sounds like a smart move, right? After all, CDs, Treasuries and the like protect your principal, while one big downturn can wipe out your stock-market gains.
But going lean on stocks leaves you open to two big risks: that you’ll outlive your savings and miss out on the long-term gains only the stock market can offer.
Consider these numbers from the Society of Actuaries: if you’re a 65-year-old man, you have a 41% chance of living to 85 and 20% odds of hitting 90. If you’re a woman of the same age, your chances jump to 53% that you’ll make 85 and 32% for 90.
But here’s the part most retirees overlook: if you’re married, the odds one of you will still be around at 85 take a big leap—to 72%.
That’s the lifespan side of the equation. Here’s the investment side: according to Oppenheimer, the S&P 500 notched an average annual return of 7.2% over any 20-year holding period from 1950 to 2010 (measured in rolling monthly periods). Try getting that kind of performance out of a Treasury or a CD. Continue Reading at Contrarian Outlook...