Millions are Missing this Opportunity to Bolster Retirement Lifestyle

March 9th marked the bottom of the hideous bear market.  Unfortunately, for many, that day also marked the day of their final capitulation and the day that probably marked a period where the maximum damage was done to the vast majority of savers.  We know because right about this time the amount of money in cash yielding below 1% was at its maximum.  And then the stock market soared +45%.

We had made the case that stocks are typically under represented in a person's portfolio because stocks are rising income investments that will hedge against inflation.  It is not merely enough to know how much money you will need at retirement and how much income you will need at that point.  You must understand that inflation is the cruelest tax and without rising income investments to combat the erosion of purchasing power in retirement, you could wind up with far less than you need to live a life of dignity in retirement.

Turner investments has this take on inflation in this morning's Morningstar front page:

So historically even above-average inflation hasn’t constrained stocks. As we see it, stocks are the best way to keep up with inflation and the rising cost of living (even with 3% annual inflation, prices double in 24 years). If inflation does accelerate going forward (and we think it probably will in 2010, although not to extremes), stocks such as energy-services, heavy-equipment, fertilizer, mining, and restaurant shares may do particularly well, based on past patterns.                    Chris McHugh, Portfolio Manager Turner Investments

Our Value Aligned Investing process was designed with all this in mind.  We create portfolios of great companies that have systems in place that are likely to guide the company well into the future. We diversify just the right amount so we can reap the benefits of undervalued shares rising over -time to a more fair valuation - with as little short-term risk as possible to mitigate our human tendency to deviate from well thought out plans when panic sets in.

If you are not sure that you will have enough in retirement drop us an email at David@BerkAdvisory.com for a FREE second opinion.

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