Should you Be Wary of the Stock Market for your Retirement Planning?

Sept. 24, 2010 - PRLog -- September 24th, 2010, Andover Massachusetts – While stock prices have recovered significantly since they hit rock bottom in early 2009, their appeal as a long term investment option for retirement continues to be questioned by some. Millions of Americans saw most of their retirement planning go out the window as the stock market started to nosedive in late November 2008. Many jumped the gun and got out then, only to see prices recover to the point where loses are now less than 20%. But many who didn’t jump shit still are not seeing the returns they expected when they first started investing in the stock market. Due to this, millions of younger Americans are questioning whether or not stocks are they right way to save for retirement.

While the past two years have been extremely hard on all of us, the long term trends of the stock market still point towards stocks being a vital and large part of any retirement planning. The thing to remember when looking at the past 2 years of horrible returns is that retirement planning is a long term project. While millions of Americans who are near retirement age probably will have a hard time enjoying the retirement they had saved for, the rest of us have enough time to recoup the losses of the past 24 months and in fact enjoy quite strong returns moving forward. Obviously, stocks are much riskier than CD’s, money market accounts, bonds, or just plain old savings accounts, but they are also the only option that exists that can get you the returns you need to live in retirement comfortably. You would be lucky to get yearly returns over 1% with the previously mentioned retirement options, but stocks have a historical yearly return over 7%. While this number can be deceiving, it does indicate that over the long term, the returns offered by stocks far outweigh the risks and fluctuations that come with investing in the stock market.

Remember, market investing, especially for retirement is a multi decade process so although the past 2 years have been tough on your portfolio, you should see returns over the long run that will far outpace anything else on the market. My advice, don’t follow the daily stock market fluctuations. All it will do is cause you to lose sleep and over analyze everything. If you are just starting out in your career or are still young enough where you have another 20 or so years of working ahead of you, stocks are still the best option to secure yourself a safe and comfortable retirement. Having said that though, diversification is the key to any well designed retirement plan. You should never have 100% of your portfolio in any one investment option. Diversify so that your portfolio will be better suited to handle the ups and downs that come with investing.

Readers, have you weathered the storm of the past 2 years or did you bail on the market during its worst times? Are you still confident that stocks can get you financially ready to retire or are you looking at different assets such as bonds, precious metals, or annuities?

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.

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Stephan Tavernini
Marketing Coordinator
Certified Educator in Personal Finance
Certified IAPDA Debt Arbitrator
stavernini@pfs1.net

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Preferred Financial Services is the leading voice in the debt settlement industry. PFS has worked with hundreds of creditors to help negotiate realistic goals for those drowning credit card debt.