Protect against risk in your investments

Protect against risk in your investments
News from Tulsa World:

The real risk with retirement savings, the thinking goes, is being too cautious with your money and earning a meager return.

The “stocks for the long haul” mantra has become somewhat muted now that bonds have trounced stocks in the total-return sweepstakes for a considerable period. But the concept of managing personal finances with a goal of maximizing returns by owning stocks is still dominant.

The insurance framework for managing money didn’t get much attention until the Great Recession. Its proponents preach that rather than reaching for riches, you should first put money into safe investments to limit the downside. In fact, they say, stocks are too risky to be the average person’s core investment, even if held for the long term.

Extreme proponents of this insurance perspective favor Treasury inflation-protected securities. U.S. Treasuries are the world’s most creditworthy securities, and TIPS offer the advantage of hedging against inflation by offering interest payments tied to changes in the consumer price index.

The purpose of putting your money in safe assets, such as TIPS, Treasury bills, FDIC-insured certificates of deposit and the like, is to have the minimal sum of money you need when it comes time to pay the bills……………. continues on Tulsa World

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