In my previous post, I said that all these funds should be invested in target date retirement funds. For example, let's say you are 25 years old right now. Your social security funds would be invested in something like Fidelity Freedom Fund 2045 (FFFGX) or 2050 (FFFHX). If you want to know more about target retirement funds, search for Freedom Funds at Fidelity's site or go to Vanguard and search for Target Retirement. The way these funds work is that they reallocate their risk automatically based on how long it will be before you start to withdraw for retirement. So if you are 30 or 40 years away from retirement, the risk profile will be high, with more money invested in stocks and internationally. Over time, the investments get more and more conservative. So when you are 5 or 10 years away from retirement, it will have more invested in bonds and cash and less in stocks and international, etc.
Anyway, the point is, these types of funds are built with asset allocation, diversification, horizon, risk profiling, and automatic redistribution, all built in to mimic what a professional financial planner would do for you. The average returns are far superior to what investing in Treasuries would get you. And on top of that they are risk appropriate. Some folks would say that it is appropriate to invest everyone's retirement money in Treasuries because they are safe. But that is contrary to all the smartest financial minds in the business. One's retirement funds should be invested appropriately for their horizon to retirement and should be diversified. Investing it in just Treasuries is not just stupid, it's criminal, because our gov't is depriving us of decades of good growth, which means they are essentially stealing from us, because Treasuries barely even cover our inflation. Then on top of that, they don't pay us what we pay into it, so most everyone gets a negative return on the money they put into the system. It's all a big scam and you and I are the suckers. |
