Over the past 3 years, investing has been tough on investors’ nerves. We went through multiple situations creating lots of uncertainties. How should we handle volatility in our 40’s, in the accumulation phase, or if we are past 65, retired, and living off our portfolio income?
- The important difference between Risk, Hazard and Volatility Tolerance.
- How can volatility be your best friend in the accumulation phase and how your emotions are the real enemy.
- Being in your 40s is the best time to learn how you feel about volatility and take notes for the future.
- At retirement, market fluctuations can affect your budget and create some nightmares. Combined with a bad withdrawal timing, it can lead to a catastrophe.
- A cash reserve is a good way to prevent disasters and avoid panic selling.
- Fixed income could be a good option for retirees. However, it reduces the power of total return. Investors must understand a few concepts aligned with the strategies to make the best decision.
- Another way to improve your retirement income is to continue investing in equities to generate better returns. The types of stocks retirees choose will play a big role. You split them into three categories: core holdings, educated guesses, and falling knives.
- If a holding changes categories, does it mean investors need to sell?
- Mike ends the episode by summarizing how investors should handle volatility at 40 and 65.
Creating categories in your portfolio (core holdings, educated guesses, and falling knives) will help you easily identify problems and ease your buy & sell decisions. Mike explains how in the episode below.
Here’s Mike’s Dividend Income Report, in which he discusses the real impact of his bad choices.
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