Page 66 - Ready Set Retire

Stephen J. Kelley

which can’t be taken back. That’s compound return and it’s
real. You own both the principal and the return and need not
remove it from the return-generating instrument to keep it
safe.

To reiterate: safety is the most important element you can
introduce into your portfolio to ensure that you have enough
money to last your lifetime. It makes sense, doesn’t it? If you
were coming up short on your monthly bills, would you take
your life savings to Vegas? Think about it. And if you were
employing a financial planner who recommended taking your
savings to Vegas, what would you think?

So why are we so sanguine about having so much of our money
in the market? How in the world does that make any sense? It
doesn’t. And we know it. And our parents knew it. And their
parents knew it. That’s why for so many years people relied on
safe assets for their retirement. Assets like Treasuries, CDs,
pensions, income annuities, etc. These were the stuff of
retirement, not risky market assets.

Safety. It’s the most important element of retirement income
planning.

Myth #2: Bonds are the Safe Alternative

For decades people have been sold on the idea that bonds are
safe, and that a diversified portfolio of stocks and bonds will

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