“My husband and I are both 40, we have two great kids, and two jobs we enjoy.
We have saved some money for retirement, but we disagree on how it should be invested. He keeps his IRAs in bank CDs. I invest my IRAs in mutual funds in the stock market.
I say that we have more than 20 years until we retire so we should try to get higher returns. He says he would rather go slow and steady.
Who’s right?”
Disputes between husbands and wives are easy to answer. The wife is always right.
There’s a wide spectrum between CDs and the stock market. There’s a wide spectrum between ‘slow and steady’ and appropriate and sensible. The key to your question is the timeframe. You have more than twenty (20) years before you will access these funds. That much time supports taking the risk of the market – at least until you both get within two or three years of pulling the trigger on retirement. At that point you would most likely adjust your investments to more of a 50-50 approach. Ironically, that is where you are today, but it’s fifteen (15) or twenty (20) years too early.
If your husband’s anxiety is simply too much for a full blown equity portfolio, he might want to start with a high quality balanced fund. This would allow him to get his feet wet in stocks, but have the advantage of a professional fund manager adding some bonds to the mix as well. This will often soften the ups and downs of the market from a full-on roller coaster ride to the kiddie rides at the fair.
Best of luck.
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