Is a “buy and hold” strategy is still alive?

If you Google “buy and hold investments,” you will easily find dozens of products that are tried and true strategy articles.

And you almost are a lot of people say it is outdated and overrated found.

This is accurate? It depends on the individual investor to a large extent.

In short, buying and holding is a passive investment strategy that emphasizes long-term growth in the short-term market timing or thinking of an old-school. Who adopt a buy-and-hold strategy of active investors pick stocks and mutual funds, but once you do, do not care about short-term price movements and technical indicators.

An investor’s age played a role in the buy and hold

Strategy is often justified, a young investor who is accumulating retirement assets, but does not p LAN the soon to attack them at any time. Young investors usually have a few years, even decades, to recover from the negative stock market volatility.

For example, the 2008 market crash, when the S & P 500 index in less than a year and a half lost 51% of the process, many investors are scared to grow up, and sold at a significant loss it holds. Those who lost the most is who got out near the bottom of the market, did not participate in the big rally his men. Hang in there for those who have long-term focus has paid off.

But for the older investors who are in or approaching retirement age, this strategy may not be as effective. If you are fully invested in the 2008 bear market, and has taken a withdrawal, you may have to take a 40% reduction in income to keep your assets long enough not outlive your money.

To buy and hold it may be a bad idea if you do not have much money to invest, such as the stock market correction can be, but to destroy you – especially if you ultimately need these funds, the market fell. 2000 after that – bubble 2002 dot-com ( “DOT- bomb”), many market commentary, including author and Fox Business news anchor Lou Dobbs said the money “you should not invest in the stock market, you Why we can not afford to lose. period. “

You might want to rethink the” 4% rule “too old rule

ThumbHard to get in any case laid down in – and the financial industry is no exception. Another popular strategy, dating back to the 1990s, aims to ‘ensure’, your money will last at least 25 years of retirement, is E “4% rule,” it said, from typical portfolio every year 4 % of turnover should be an amount “statistical safe”, although no guarantee that last a lifetime.

Recently, reporters from various sources, experts say 4% rule is no longer realistic because of lower interest rates, longer life expectancy and show recent market correction than normal and five years most of the recovery period is much larger or more. Some people say that the ratio should now be 3% or less. In 2013, the folks at Morningstar published to find out who wanted to “achieve a 30-year time span after retirement income and a 90% probability 40% stake in the portfolio” should be withdrawn only 2.8%, research retirees.

Based on these numbers, if you have assets of $ 1 million, you will be safe and T ake a $ 28,000 per year. Most people might say, very different, they will need in retirement.

Direction to another, rather than

So, what else is there, if you do not want to run out of money, savings and investment you need to supplement your other sources of income protection what?

An increasingly popular strategy is to use a fixed index annuity guaranteed lifetime income riders to create another reliable revenue stream with your Social Security benefits and pension income go together.

These annuities are not directly involved in the market, but to win the interest credited to the principal – the amount of the upper limit – when the market rises. Your principal remain secure. You only upside market participation (UP to the ceiling, but if the market rises above this, you will not share in these higher returns). When the market pull back, you will not lose principal.

Since this is guaranteed and protected by insurance contracts offered by insurance companies, it can be a good way to keep your assets safe. By increasing the income of the rider, the carrier is able to guarantee your income, as long as you are alive, you can pay up to more than 5-6%, depending on the terms of your contract and your age. There is almost always associated with riders provide security for costs, so as to understand the costWork, growth and death benefits, including how they are calculated, if they can change during the contract period is very important, and how they might affect the opposition carats. It is worth to educate their costs and benefits to make sure they make sense of your retirement income plan.

If you have not heard of this type from your broker or advisor annuity, this may be because it is not safe, it is an insurance product, while under the “umbrella of Wall Street” is not suitable or typifying normal brokerage internal model of the product. More often, you will pass independent financial adviser who also has an insurance license found that the guaranteed income products. Financial advisors need to work as a trustee, and there is a legal obligation, first of all put their clients’ interests.

Bottom line: do not rely on the experience of the old rules, through retirement, let you. Keep an open mind and check into all the options available to you.