Saturday, June 22, 2013

Investing for income: Get ready for volatility - Retirement Weekly ...

By Robert Powell, MarketWatch

When it comes to the current market environment, Michael Livian, CFA of Livian & Co., says there are at two things for retirees to consider: volatility and inflation risks.

Volatility (across asset classes) is likely to increase. Margin debt levels have grown to pre-2007 levels, suggesting that any move in the markets is going to be exacerbated by leverage. Retirees should learn to tell between true risk and volatility. They should have a sound investment plan and ignore the noise. Easy to say?not so much to do.

The main risk that retirees are facing is inflation risk. There are no signs of inflation yet. However, as the aggregate private sector credit metrics advance, so should the velocity of money. In the next decade you may see a pickup in inflation rates along with employment and credit expansion. Given that, retirees should:

Source: http://www.marketwatch.com/story/investing-for-income-get-ready-for-volatility-2013-06-21

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