Can I Put My Retirement In Stocks

I had one of my readers ask "can I put my retirement in stocks?" The answer is that it depends on how old you are. My mom for example is 73 and still has almost all of her retirement money in stocks. I'll have to say that 2008 hurt her retirement fund badly. So, I think if your time frame is short or you are already retired, you are going to want to sit down and evaluate how much risk you are willing to take. However, if you have a longer time frame, say over 5 years, you've got to be invested in the stock market because over the long term, you'll have a greater opportunity to earn a higher return. The longer the time frame the more risk you can tolerate. The thing you want to avoid is for the market to be tanked when you need the money.

As you inch closer to retirement, you've got to reduce your risk tolerance for your investments. How much depends on how much money you have saved up. The more money you have accumulated, the more money you can put at risk in the stock market. Ideally, you want as large a retirement as possible so that you can have a portion of your money stock market investing portfolio in equities as a hedge to inflation.

Inflation is the biggest enemy to your retirement account because higher inflation erodes your purchasing power. If you are in a position where you have to keep all of your money in certificates of deposit or money market funds, you won't keep pace with inflation. The ideal scenario is to save as much money as you can now so you can continue investing in stocks when you are older.