Most financial advice I see floating around surrounding what retirees should do as they approach retirement and the need for income increases in their portfolio centers on minimizing portfolio risk.
The idea of giving up potential returns in favor of lowering the risk profile of a portfolio is not new; the focus of such advice on retirees, however, is something I am opposed to.
All investors should work to minimize portfolio risk.
Whether you are a new investor just getting your feet wet in financial markets, or you are a seasoned investor approaching your golden years, engaging in risk-minimization trading techniques such as diversifying your portfolio across different asset classes, geographies, and sectors is what many economists note is a pareto improvement for the risk-adjusted returns of a portfolio over an extended period of time.
As this bull market continues on and macroeconomic indicators such as rising interest rates (on a global scale) and flattening yield curves have shown us in the past, keeping market or systemic risk to a minimum is something which will serve all investors well.
Even for those who may be able to stomach a short-term dip in their portfolios at the outset, a substantial dip at any point during an investor’s investment window can limit the long-term growth potential of such an investor over a long period of time, if risk is not properly minimized.
Invest wisely, my friends.
