Investing for Income vs Growth in Retirement: Finding the Balance
The Importance of Balance
A balanced investment portfolio is key to navigating retirement successfully. Combining growth and income strategies ensures both stability and long-term returns.
Income vs Growth Stocks
Over the past decade, growth stocks have outperformed value stocks, offering higher returns. However, value stocks excel during downturns, highlighting the need for diversification.
Portfolio Allocation Strategy
A practical approach includes:
- Keeping a cash reserve for short-term expenses.
- Allocating 40% to bonds for stability.
- Investing 60% in a diversified mix of stocks, primarily from the S&P 500.
Evolving Investment Strategies
Modern portfolios increasingly emphasize growth investments for higher returns, moving beyond the traditional focus on dividend-paying stocks. A strategic mix of growth and income ensures retirees can weather market shifts while securing their financial future.
Casey Smith
President, Wiser Wealth Management
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