Many baby boomers are starting to transition into
Investment management firm Capital Group identified
five rules retired Boomer investors found to be “essential” to
a secure retirement.
Investing isn’t just reserved for hotshot Wall Street
types — it’s something that all Americans can do.
The baby boomer generation is starting to approach retirement.
And with that, they are getting into the retirement mindset.
In a recent report, investment management firm Capital Group
shared its “Wisdom of Experience” survey, which looked at the
changing dynamics for boomer investors, aged 53 to 71, as they
transition into retirement.
The survey identified five rules retired boomer investors found
to be “essential” to saving for a secure retirement, which could
be useful for younger investors who are just starting out.
Some of these rules might seem obvious, but, to some degree, that
is the point. Investing for retirement isn’t something that’s
reserved for hotshot Wall Street types, but is something that all
Americans can do.
They survey was conducted by APCO Insight, a global opinion
research firm, in March 2017, and consisted of an online
quantitative survey of 1,200 American adults — 400 of which were
baby boomers — of varying income levels, who have investment
assets and also who have some responsibility for making
investment decisions for their families.
Below, the five rules boomer investors found to be essential,
according to Capital Group’s survey:
1. Stay invested for the long term.
The vast majority of retired baby boomers surveyed — 92% — think
Americans need to save more for retirement by getting and staying
invested in the market. Four out of five believe Americans should
go for a consistent investment strategy with long-term
objectives, and only 32% said they would change their strategies
based on the fluctuating markets.
On a related note, billionaire investor Warren Buffett also
stay-in-it-for-the-long-term strategy. At the height of the
financial crisis, in October 2008, he wrote in a New York Times
“Over the long term, the stock market news will be
good. In the 20th century, the United States endured two
world wars and other traumatic and expensive military conflicts;
the Depression; a dozen or so recessions and financial panics;
oil shocks; a flu epidemic; and the resignation of a disgraced
president. Yet the Dow rose from 66 to 11,497.”
2. Keep an eye on fees.
94% of retired boomers said they want to be able to “easily”
understand what fees they’re paying. And 78% said low-cost,
simple investments are better for the long-term.
3. Diversify your portfolio.
85% of those surveyed said that a diversified portfolio is one of
the most important things for “a safe path to a better
In other words, regular Americans just trying to save up for
shouldn’t risk putting all of their money in things like
4. Protect yourself against market downturns.
80% said it’s important to protect “your nest egg” and lower your
risk of losses when markets swing downwards. And 30% said they
wished they knew earlier about what to do when markets start
5. Start saving early and often.
79% said they think putting a portion of one’s monthly income
toward retirement is one of the best things you can do. Moreover,
60% of respondents said they wished they had started investing as
young as possible.
Although some younger investors might think diving into investing
right away is intimidating or boring, those who start investing
earlier could end up with significantly greater returns.
As Business Insider’s Andy Kiersz reported last year, the
team at J.P. Morgan Asset Management showed a powerful
illustration showing outcomes for hypothetical investors who
invested $10,000 a year at a 6.5% annual rate of return over
different periods of their lives.
The differences are remarkable: Chloe, who invested over her
entire career from age 25 to 65, ends up retiring with nearly
$1.9 million. Lyla, who started just 10 years later, has only
about half of that, at $919,892.
And, somewhat astonishingly, Quincy, who invested only from ages
25 to 35, ends up with $950,588, slightly more money than Lyla,
who invested for 30 years. That shows how important early
compounding is to investing.
JP Morgan Asset Management