5 Savvy Retirement Quotes

These quotes can not only amuse but also impart useful advice that can make your retirement more pleasant.

Big and small minds alike have thought and quipped about retirement. The retirement quotes below aren't all meant to be profound, but each has a lesson or two for us -- and they can help us attain more comfortable retirements.

Here are a few retirement quotes that are not only pithy, but helpful.

"The best time to start thinking about your retirement is before the boss does."
-- Author unknown

What can you do to avoid being forced to retire you're ready? Well, if you save aggressively and invest effectively for retirement, starting it early will hurt less. You might also take better care of your health, to reduce your chance of being unable to work anytime soon. Above all, don't keep putting off thinking about and saving for retirement.

"The question isn't at what age I want to retire -- it's at what income."
-- attributed to George Foreman

This is brilliant, as it reminds us that we have the power to make our retirements more or less comfortable, depending on how well we save and invest for retirement.

By tweaking the amount you plan to save each year, how long your money can grow, and the average annual growth rate you expect, you can arrive at a workable plan. For example, if you have $50,000 in retirement accounts now and can sock away $8,000 per year, aiming to average 8% in annual growth, you can end up with more than $600,000 in 20 years.

Retirement: It's nice to get out of the rat race, but you have to learn to get along with less cheese."
-- attributed to Gene Perret

Retirement quotes such as this are great reminders that we will probably have to rein in our spending in retirement, as we'll likely be living on a smaller income. To some degree, this will happen automatically.

We will no longer be dry-cleaning suits, putting a lot of miles on our car commuting, buying lunches from eateries near our workplace, etc. It can be offset by increased spending on travel, though, or healthcare. To pare down your spending without going as far as moving into a smaller and cheaper home, you might sell one of your household's vehicles or trade in your cable TV for an inexpensive streaming service, among many other possibilities. (Stopping smoking, for example, can save you thousands per year.)

"Retirement can be a great joy if you can figure out how to spend time without spending money."
-- Author unknown

Along the same line as the quote above, this one has a great recommendation: Finding inexpensive activities to engage in during retirement. You might, for example, cultivate an interest in board games and have regular game nights with friends. You might do a lot of volunteering, too. Some volunteering can simply make you feel better, while other kinds can entertain or enlighten, too, such as if you become a theater usher or museum tour guide.

"A retired husband is often a wife's full-time job."
-- attributed to Ella Harris

Retirement quotes such as this point out another feature of retirement -- that our relationships can change, or at least how we interact with each other. When one or both spouses retire, they may end up seeing a lot more of each other, which may turn out to be suboptimal. Simply losing your old routine can be unsettling, too, leaving many retirees restless and aimless. It can be good for some to find a part-time job, just to get out of the house on a regular basis, to have a bit of a routine, to socialize with others besides a spouse, and on top of that, to bring in a little extra income. - The Motley Fool

How to Save for A Comfortable Retirement

THE habit of saving for one’s retirement seems to be slowly becoming a thing of the past for the younger generation. These days, the Gen Y in Malaysia have an endless wish-list of items that they rather spend their money on, encouraging the culture of accumulating debt, and living beyond one’s means.

The recent study done by the Asian Institute of Finance (AIF) highlighted that Gen Y in Malaysia are experiencing significant financial stress early in their life with many trapped in the habit of emotional spending.

The study, entitled Finance Matters: Understanding Gen Y – Bridging the Knowledge Gap of Malaysia’s Millennials, showed that Gen Y were accumulating debt at a young age, with 70% of respondents who owned credit cards reporting that they tended to pay only the minimum monthly payment while 45% did not pay debt on time at some point. 

This fact, combined with the unpredictable performance of our ringgit along with the rising cost of living (what with the recent drastic toll hike), presents an alarming outlook for our future in a financial setting. Can we afford retirement, let alone sending our children overseas for education? 

Many of us live with the motto ‘Spend now, save later’, believing we should enjoy our hard-earned money while we can and that YOLO (you only live once).

However, the fact of the matter is, if you don’t start cultivating the habit of saving now, you will likely not ever develop it. After all, the longer you’ve gotten used to a certain lifestyle, the harder it is to downgrade to a more prudent way of living. 

Why is our savings so important? 

Savings play an important role in building a financially secure lifestyle. Besides acting as a cash reserve for emergencies, your accumulated savings does something of further importance – it helps you grow your money by way of investment, allowing you to achieve your desired life goals such as purchasing a property or retire at ease.

The earlier you start saving and investing, the more years your money will have to accumulate interest, which gets compounded over time (Read - The Beauty of Compounding). In the case of retirement savings, the earlier you start saving, the less you will have to worry about enjoying a comfortable retirement. 

A HSBC report entitled The Future of Retirement, A Balancing Act released earlier this year, which reveals key findings of a global study, shows that on a global scale, retirement is not the main savings priority for 85% of working age people. 

Furthermore, 65% of retirees who did not prepare adequately for a comfortable retirement did not realise this until they had retired.

Relying on our EPF savings alone is not a good idea either. The EPF 2014 annual report released this February highlighted that by age 54, the majority of members (68%) had accumulated savings of only RM50,000 and below, due to the many qualified withdrawals they had made beforehand. This amount is hardly enough to live on comfortably beyond two years.

So, how does one ensure a good build-up of retirement funds?

Save first, then spend

Cultivate the habit of saving from now itself. When you receive your salary every month, pay off your bills and put aside about 20% to 30% of your income into a savings account which you should not touch unless an emergency arises. Continue this habit as long as you’re earning.

Grow your money

Savings alone is not enough. Keeping your money stagnant in your bank account is actually causing your savings to depreciate due to the rising rate of inflation.

Once you’ve built up a substantial cash reserve for yourself, invest a portion of your savings into things like unit trust funds, which will grow your money exponentially over time. Whatever the case, make sure your returns on your investments are above the fixed deposit rate of 4%.

Private retirement schemes (PRS) are also gaining in popularity due to government endorsement and incentives.

PRS works similarly to EPF, except that the contribution is completely on a voluntary and on an as-and-when basis. Your investments are able to be withdrawn once you hit the age of 55 years old, and in the meantime, you have the option of switching to other fund managers if you wish.

Up to RM3,000 of PRS contributions are tax deductible each year, and for those below 30 years of age, the Government will sponsor a one-off payment of RM500 for those who contribute a total of RM1,000 to your PRS funds within a year. These incentives were put in place to encourage both the young and old to take charge of their retirement planning from early on. 

How to begin investing your money?

You may think that investing takes up too much time and effort. However, one company has come up with an Internet-based investment platform which is increasingly attracting the attention of many investors.

Headquartered in Singapore, Fundsupermart.com is a financial products distribution platform which reaches out directly to investors in a B2C business model, as well as independent financial advisories and financial planners in a B2B business model. 

Mainly dealing in unit trusts, the platform makes investment easy by allowing do-it-yourself investors to buy into unit trusts, savings plans, and contribute to PRS, all through one online platform, Fundsupermart.my.

Take charge of your financial health and retirement planning before it is too late. Start your saving and investment efforts now to ensure that you have a worry-free and comfortable retirement. - The Star

The Beauty of Compounding

Slow versus Fast – The Beauty of Compounding

In 1998, a very successful stockbroker in Malaysia wants to change the way he lived completely. He quit his job, sold his house and other worldly possessions and go walkabout. 

Before he departed on his odyssey, he had the problem of what to do with the proceeds resulting from selling everything he owned. In the end, he bought a good pair of walking boots, a rucksack, a change of underwear and a one-way ticket to Australia. The balance, which amounted to a seven-figure sum, he invested in several reputable domestic and regional unit trusts. 

He started off as a jackaroo in a sheep station in deepest darkest Queensland, then trekked across the Indonesian archipelago and claims to have sighted the Yeti in Nepal before he returned to KL in June 2002.

During this period, he never looked at a Bloomberg screen, read financial section of a newspaper or came in contact with anyone with the remotest knowledge or interest in financial markets.

In his four years of walkabout, the KLCI rose an impressive 270% during his absence, but the net value of his unit trusts rose by a factor of 412%. He hasn’t cashed them in and today they are up a net 524%. If he had been following his investments regularly, he probably would have liquidated 500% ago. Instead, he has saved himself a lot of stress and made a lot of money simply by having faith in the undoubted long-term structural growth trend (with a few hiccups here and there) we are enjoying in Malaysia and Asia in general.

The unit trusts in which he invested were able to outperform a strong market due to luck, judicious stock picking from skilled fund managers and very importantly, reinvestment of dividends.

Reinvestment of dividends demonstrates what is commonly known as “the beauty of compounding”: if you have a share in a company which pays out a regular dividend, and you use the dividend to buy more of the same shares, your assets will grow exponentially.

The benefit of the beauty of compounding can also be derived from “Dollar Cost Averaging” when you systematically (Systematic Investment Plan) and regularly invest a fixed amount of money, irrespective of price at the time of investment is made.

The below image illustrates the effect of compounding interest of 2 investors who started the SIP on different timing. This implied the cost of procrastination for the investor who started the SIP 10 years late was simply huge.  

This story published in local newspaper written by a MD of an asset management company and he wanted to share with investors.

Alternative Investments Combined with Fee-based Services Are Changing the Investing World

Financial advisers would be wise to embrace a fuller mix of services to satisfy today's investors and differentiate themselves.

The growing popularity of alternative investments is having a profound impact on investment firms and the growing practice of fee-based advisory services. And it's not just alternative specialists who are affected, but the entire asset-management landscape, from traditional wirehouses to private banks and platform providers.

Firms would be wise to embrace a fuller mix of services to satisfy today's investors and differentiate themselves from other asset-management firms.

The growing interest in alternatives is characterized by the demand for a more flexible asset allocation, with funds apportioned among various instrument types based on an ever-changing investment environment. And why not? After all, investors increasingly desire diversification and investment options suitable to various long-term goals and risk tolerance.

But the issue is not simply flexibility, it’s also performance. Yes, asset managers and their clients want to match performance benchmarks from traditional asset types. Then, by adding alternative products, they can gain true net yield.

In addition, the practice of charging a fee that’s based on the value of an investor's account, rather than a trading commission or flat fee, is particularly suitable to an alternative asset world.

Taken together, alternative investing and fee-based advisory services complement each other admirably.

A CHANGE IN APPROACH

It wasn't too long ago that the typical portfolio was all about conventional stocks and bonds, with perhaps an occasional hedge fund thrown in for a particularly adventuresome investor. Investing and client engagement were pretty commoditized, portfolios were made up of a few favored mutual funds, and any one investment firm had very little to differentiate it from the one down the block.

Today, the range of alternative investment vehicles extends well beyond hedge funds, including such asset classes as private equity funds, commodities, real estate, alternative mutual funds, venture capital, precious metals and more.

Investors' desire for increased and sustainable long-term investment returns is showing up in the flow of capital. Between now and 2020, alternative assets are expected to grow to as much as $15.3 trillion on the strength of friendly monetary policies and stable economic growth, according to PricewaterhouseCoopers' “Alternative Asset Management 2020: Fast Forward to Centre Stage.” That's up from $7.9 trillion in 2013, with the greatest growth in private equity, real assets and hedge funds (or funds of hedge funds), according to the study.

We anticipate that alternative assets will likely comprise 15% of client portfolios within the next five years as investors become more sophisticated and demand greater strategic variety in their portfolios.

This is where alternative investments and the fee-based advisory model have become natural mutually reinforcing partners.

A BETTER CLIENT RELATIONSHIP

Alternative asset advisory and investing, administered via fee-based advisory services, provide for greater client interaction and a “sticky” customer base. Clients may remain loyal to their advisers when returns are excellent, but in most economic environments (and especially today) what they really want is a richer adviser-client dialogue. This in itself helps cement a closer bond between the two, and encourages long-term relationships.

Naturally, regulators expect to see evidence that new types of products are reviewed and understood by operations, risk management and stakeholders. Since alternative products are relatively new compared to more traditional investment vehicles, they can require greater due diligence by a new-products committee, and new approaches to training, assessing customer suitability, marketing and robust liquidity risk management.

The greater challenge is how to differentiate one firm from the competition. Investors are rightly asking their investment firms about what makes them unique enough to do business with.

Devising new business models in which asset variety and customer engagement are paramount, and a better fee structure is an undeniable plus, can go a long way toward answering that question. - Investment News

10 Best Tips to Invest, Spend and Save Better

How many times have you been told to 'spend wisely' or 'save more'? Most of the advice we get are almost always vague and don't delve into the how, where and how much.

Planning your finances is important and it doesn't end at having a heavy bank balance-investing your money in the market is equally essential. While it may not give immediate results, patient and disciplined investment, experts say, definitely yields fruitful returns. Here's a list of advice from financial experts around the world on how to invest, spend and save better.Planning your finances is important and it doesn't end at having a heavy bank balance. Investing your money in the market is equally essential.

1. KEEP THINGS SIMPLE, DON'T FALL FOR QUICK PROFITS: According to legendary investor Warren Buffett, one must invest in places one knows best. He was quoted as saying, "If you don't invest in things you know, you're just gambling." Elaborating on the same, in the 2014 letter to his shareholders, he had said, "You don't need to be an expert in order to achieve satisfactory investment returns. But if you aren't, you must recognise your limitations and follow a course certain to work reasonably well. Keep things simple and don't swing for the fences." To those lured by quick gains, this is what Buffett has to say, "When promised with quick profits, respond with a quick 'no'."

2. THE 'RICH AND POOR' PHILOSOPHY: A popular perception in financial planning is that we need to save a little after all the spending and invest that little saving. Robert Kiyosaki, American author of the book Rich Dad, Poor Dad, believes otherwise. "The philosophy of the rich and the poor is this: the rich invest their money and spend what is left. The poor spend their money and invest what is left," he says.

3. THE FRUGALITY APPROACH: When overcome with guilt at the end of the month for spending too much on that watch you loved or the new iPhone you absolutely had to pocket, you make idealistic promises to cut down spending on 'frivolous' things. Is it the right approach though? Can we realistically achieve equilibrium by taking drastic steps? Ramit Sethi, author of the popular book I Will Teach You to Be Rich, proposes Planning your finances is important and it doesn't end at having a heavy bank balance-investing your money in the market is equally essential his idea of frugality. "Frugality isn't about cutting your spending on everything. That approach wouldn't last two days. Frugality, quite simply, is about choosing the things you love enough to spend extravagantly on and then cutting costs mercilessly on the things you don't love."

4. LIMIT YOUR BORROWING: Credit cards can be alluring. Borrowing money that is unaffordable now somehow becomes affordable in a couple of months. Here's what Buffett says about the practice of borrowing: I've seen more people fail because of liquor and leverage-leverage being borrowed money. You really don't need leverage in this world much. If you're smart, you're going to make a lot of money without borrowing.

5. MAKE A PLAN: We spend a lot in a certain month, curb spending in the next to make up for it, and end up in a vicious cycle of debt and little savings. Make a simple expenditure plan as well as an investment plan without delay. As late Americanborn British stock investor Sir John Templeton once said, "The four most expensive words in the English language are 'This time it's different'." Closer home, some of our investment gurus have words of caution and advice for those stepping in or already kneedeep in the markets. They all seem to impart one common advice: 'Be disciplined in your investments'. - Business Today

6.INVEST FOR THE LONG TERM: You must have a long-term view and invest in an asset class that thrives in a period of market upturn. Well-known certified financial planner Surya Bhatia lives by this philosophy. "Look at equity as an asset class of your portfolio. Yes, you do equities, the volatility goes hand in hand and the risk is there; that's why we always talk about long term. Look at longevity of asset classes and create a portfolio which is meant to be invested for the long term.

7. SIPS TAKE AWAY THE HUMAN BIAS: A systematic investment plan (SIP) is something experts harp on. It is believed to be a disciplined form of investment. Sundeep Sikka, chief executive officer (CEO), Reliance Capital Asset Management, says, "SIP is the easiest way to create wealth. We are all aware of RDs-recurring deposits-in which a small amount that moves out of the bank account goes into a fixed deposit month on month; it's very similar to that."

8. REVIEWING YOUR PORTFOLIO IS AS IMPORTANT AS MAKING ONE: A sound investment plan is nothing but matching your assets and liabilities, believes Abhishake Mathur, head, investment advisory services, ICICI Securities. This is how he defines a good financial plan: Assets comprise all your investment and liabilities. "A successful plan is one which ensures that you have the required assets at the required time to meet a goal, and that's why asset allocation is very important. Classifying goals into critical and discretionary helps one make a sharper plan."

9. DO YOUR HOMEWORK: While there are financial advisers to fall back on, it is easy to gather knowledge of your own in this Internet age. Before you invest, find out about the industry you're investing in, the company you want to buy stocks from and the general market conditions at the time of investing.

10. THE ANSWER LIES WITH YOU: As an extension of the previous point, it is important to note that nobody can truly understand your goals and financial needs. If the question 'How should I pick the right scheme?' ever occurs to you, the answer is simple: it lies with you. - Business Today

Protect Your Investment Portfolio From Market Shocks

Since investment is subject to individual needs and requirements, there can’t be a single approach; rather, there should be many roads leading to a single goal.

Ever wondered if there is a way to guarantee success through investments? Which is the best asset class or asset mix to have? Investing is a systematic approach towards creating wealth, if practised on a regular basis. The approach doesn’t stop here; the money invested needs to go into appropriate asset classes, which should suit one’s risk appetite to optimise risk-adjusted returns.

Since investment is subject to individual needs and requirements, there can’t be a single approach; rather, there should be many roads leading to a single goal. Some basic principles, if kept in mind, can bring substantial growth to one’s wealth.

1. Power your wealth with a multiplier effect by investing early

It is rightly said that the early bird catches the worm. An investment made early helps one to multiply wealth and create a higher corpus. This is brought about by the compounding effect over a period of time, in which returns start earning returns. Your money starts working for you rather than you working for your money.

2. Build your portfolio systematically by investing in mutual fund SIPs

The first step is usually confusing and difficult. Thus, it is ideal to start investments with a Systematic Investment Plan (SIP) of a mutual fund scheme. SIP is a form of continuous and regular investment in mutual funds, which in turn invest in equity markets. However, allocating money to a mutual fund scheme should be based on one’s risk appetite. The allocation can be towards large cap, mid and small cap, balanced and debt funds.

3. Don’t put all your eggs in one basket — diversify your portfolio

Knowing where to invest and how to divide your money into different asset classes is one of the most important skills. Effective diversification of investments will help reduce risk as well as enhance returns. However, the question is how to diversify and what are the different levels of diversification.

Diversify across different asset classes like equity, debt, gold
Scout within the available universe. For example, within equity, if you choose to invest in mutual funds then the same should be spread across categories like large cap, mid and small cap, balanced fund and arbitrage fund.

Diversify across different geographies to hold investments in different countries. These can either be through a structured investment platform or mutual funds.

4. It’s not just about generating returns, you should also protect your money

The golden rule for investment is: do not lose money. This is the first and the most important principle, so design your investment mix in such a way that it stays above the water and impact on your investments by a dip in markets or volatility will be minimal. In this way, your portfolio is safe from market shocks. It is believed that the best offense is a good defence.

While investing, one of the objectives is to earn higher returns, but risk level should not be compromised.

5. Look for asymmetric risk/reward

Higher the risk, higher the returns is the most commonly-followed perception in the investing world. However, the case is not so. Even within an asset class, returns can be optimised for the level of risk assumed and earn higher risk-adjusted returns. It is often said, “Be greedy when others are fearful”. This means buy when people are reluctant to invest. This is often seen when there is a huge correction in the market, leading to panic. In such a scenario, people choose to stay away from investing. In this state, investments are often available at a discounted price. Also, the SIP mode of investments in the equity market helps one to garner higher risk-adjusted returns since it ensures averaging of costs in the long term.

6. Tax efficient avenues

The key to earning higher returns lies in allocating investments smartly and in choosing tax efficient avenues. - The Hindu

Sales of Structured Products Tell Us a Lot About the Global Search for Yield

Reach for returns, retail edition.

What can this year's sales of structured products tell us about investors' mindsets?

A lot, according to the flows and liquidity team at JPMorgan Chase.
Annual sales of retail structured products are expected to reach their highest level for seven years, according to analysts led by Nikolaos Panigirtzoglou. 

Global sales of retail structured products reached $466 billion in the first 10 months of the year, on track to reach $560 billion by the time the curtains are drawn on 2015, driven mostly by demand from Asia.

While the world's collective search for yield has sparked a rise in total sales of structured products, it has, conversely, also led to a relative decline in the safest such products that come with the smallest returns for investors. The portion of structured products boasting full capital protection, which are generally favored by risk-averse investors, has fallen to a fresh all-time low level of 33 percent of total structured product sales.

As the JPMorgan analysts note (rather dryly): "The sharp fall in the universe of structured products with 100 percent capital protection is likely a reflection of the still low level of interest rates, which effectively makes the purchase of zero coupon bonds for capital protection purposes a lot more expensive. It is almost impossible for issuers to currently offer both 100 percent capital protection and a decent yield or upside."

In the meantime, sales of reverse convertible bonds — which can be converted to shares at the discretion of the issuer — are also said to be booming. Investors in such notes generally receive a higher coupon to compensate them for bearing both the credit risk of the issuer plus downside risk in the equity, but don't get any extra benefit if the shares rise.

"The strong demand for reverse convertibles is reflective of the high appetite by retail investors for stable and high coupons and/or their doubt of the upside potential of the equity market," the JPMorgan Chase analysts conclude. - Bloomberg

When It Pays to Be a Naïve Investor

Naïveté is not normally considered a positive, especially in a take-no-prisoners world like Wall Street. However, an investment portfolio-building approach called “naïve diversification” -- also called the “1/N portfolio strategy” -- is simple, cheap and easy enough for any retirement saver to do it.

Naïve diversification is straightforward and intuitive. You take the number of asset classes or individual investments you plan to invest in and divide it into 1 to get the percentage of your portfolio that will go into each asset class.

Say you are going to invest in three asset classes: stocks, bonds and real estate. Dividing one by three gives 1/3. You put a third of your money into each of those asset classes. That’s it.

This is far simpler than the portfolio optimization pioneered in 1952 by economist Harry Markowitz, who won the 1990 Nobel Prize for it. Today, Markowitz’s complex mathematical formulas underlie Modern Portfolio Theory, which fund managers and their ilk use to attempt to most effectively and efficiently balance risk and return.

Interestingly, for his personal portfolio Markowitz eschewed the complexity and used naïve diversification. In interviews, he has revealed that he himself put half his savings in stocks and half in bonds. No struggles with portfolio optimization, Monte Carlo simulation or any arithmetic that couldn’t be done on the back of an envelope. Markowitz later said he wanted a portfolio that performed about as well as the overall market and didn’t want to risk doing a lot worse.

Portfolio theory’s premise is that different asset classes, such as stocks and bonds, tend to move in different directions. Relatively speaking, one tends to be up when the other is down. This allows an investor to, among other things, buffer the effects of a downturn by having funds invested in different, uncorrelated asset classes.

Nobel notwithstanding, the theory has showed a few holes, notably during market declines like the one in 2008, when all asset classes lost big and diversification provided little protection. The problem is that average asset class correlations can cover up major fluctuations, and nobody can predict when one of those outliers is going to hit.

“It relies on the idea that you have an accurate forecast of how every asset class is going to perform,” explains Marcy Keckler, vice president of financial advice strategy for Minneapolis-based Ameriprise. “And we don’t really know that.” Some studies suggest the estimation challenge is so significant that it would take centuries for an optimized portfolio to reliably beat naïve diversification.

Another objection is that recently asset classes that seemed uncorrelated have correlated more closely. “Over the last couple of years, whether you owned large caps, small caps, domestic or international, they’ve all been moving in unison,” says Michael Chadwick, a financial advisor in Unionville, Conn. “Even stocks and bonds had been negatively correlated and now they’re correlated.”

So if naïve diversification performs about as well as fancier approaches, why not do it? One problem is that as assets gain or lose in value relative to each other, investors need to maintain the 1/N ratio.

“If one doesn't periodically rebalance, then one has an imbalance of securities as the outperforming stocks will have a larger weight than the stocks that have underperformed,” explains Robert R. Johnson, president and CEO of The American College of Financial Services in Bryn Mawr, Pa. “Moving forward, stocks that have underperformed in the past tend to outperform in the future. In other words, there is a reversion to the mean in stock returns.”

Having said that, Johnson says 1/N diversification can be effective. And you can do it by investing in just a handful of stocks. “Somewhere in the range of 90% of diversification benefits are achieved with as few as 10 stocks,” Johnson said. “You don't have to have dozens of individual holdings to diversify.”

The easiest, most effective and efficient way for individual investors to do naïve diversification is through funds. Johnson says investors could look at index funds, which attempt to represent the composition and performance of a broad index like the S&P 500. Keckler says another option is target funds, which are managed to achieve diversification appropriate to a person retiring in some specific future year, such as 2025.

Chadwick, skeptical of diversification’s ability to help investors prosper during periods of high volatility, favors a more sophisticated approach involving managed futures. These allow individual investors to hedge against risk with the help of professional money managers.

While financial advisors differ about whether naïve diversification is sufficient, as well as the details of how to go about it, they agree that attempting to manage risk by investing in different assets classes is centrally important. “We do know what when some asset classes are performing well, other asset classes might not be performing as well, and vice versa,” says Keckler. “That’s really the heart of a diversification strategy.” - The Street