Avoid Tapping Your Nest Egg in a Down Year

August 20, 2007 - Excuse me, but I have to say this:

"DUH!" 

Another example of stating what SHOULD BE the obvious, but all too often in this day of underqualified investment professionals and slanted journalism IT''S NOT OBVIOUS AT ALL! In fact, it seems it's so far removed from being obvious that most retirement professionals seem to be OBLIVIOUS to this one simple fact: Money needed for different jobs should be invested differently! In other words, money that is to be used for current income shouldn't be invested the same as money that needs to grow for 10 or 15 years and be used for income down the road. 

Two different jobs for the money, two different investment styles for the money. 

Now, you'll hear a lot of talk about "diversification" and "asset allocation" but when you pull the curtain back on most portfolios, you'll find a mish-mash of high-fee, high-commission investments that were very good for the broker, and garbage for the investor. Rob talks about what I call the "typical broker approach" in his article. 

And Retirement Income Planning? Forget about it. The typical approach is "Buy this mutual fund, and sell shares for the income you need. We can have it set up to happen automatically!" Or, like the author talks about in this article, allocate between stocks and bonds and rebalance periodically. But wait a minute... don't you still have to sell stuff to get the income you need?

The writer, Rob Wherry, has had articles in the Wall Street Journal, Forbes, and other high-profile places, but he frequently misses the proverbial mark. Here's an example: Is Rob Wherry For Real?

I haven't done any research on this guy... yet - but I can tell you that in the past I've frequently found ties either to buddies in the upper echelons of mutual fund companies, brokerage firms, or some tie to whatever conclusion they come to as being the best solution. Since he doesn't even mention thehundreds of  'safe-money' alternatives available for retirees that work WAY better than the tired "bond and stock" porfolio allocation model, I'm guessing Rob has buddies in the securities industry.

Care to comment, Rob?

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