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Section 2
Stocks Provide the Growth
You Need
Why Stocks?
Stocks offer the potential to outpace inflation. The cost of
living in retirement will continue to rise over time, and this
requires returns that will outpace inflation. Stocks are the only
financial investment that have overcome the effects of inflation
over extended periods of time. Despite fluctuations, the stock
market has continued to grow, decade after decade.
Would you be happy to earn 5% to 7% from your investments
during retirement and spend that income to meet your needs?
Five to seven percent doesn’t sound so bad. But now think
about inflation. We know that taking the same amount of
income year after year is not going to be enough. You’ll have
to keep up with inflation in order to maintain your standard of
living. If we assume that inflation might average 3% to 5%, the
math from here is pretty simple. What we’re really looking for in
retirement is a vehicle that can provide us with an 8% to 12%
return.
Chapter 3: You Must Have Growth In Your Portfolio
