Income vs. Growth
We had a plan to double our money in roughly seven years, so that at the end of 7 years, wed have two million. That plan, frankly, has been shot to hell near term, but maybe weÂre not down and out yet!! However, my guess is that itÂs best to stick with our current "growth and income mix" (65-35 stock bond index fund type mix), based on history repeating itself and stocks doing really well SOMETIME over the next 1-4 years.
So, Assuming we enjoy above average returns for the next few years, would it behoove us THEN to begin moving to more stable investments once we "make up for lost time". In other words, letÂs assume that history repeats itself and the best place to be for the next 2-3 years is stocks because theyÂll "bounce." We are basing our plan on a fairly modest return (6-8%) which should be obtainable from mostly fixed income investments anyway, coupled with safe, stable dividend paying common, foreign and preferred stocks and funds?? Either way, in no way are we willing to be in a position, ever again, to endure a downturn like weÂve had. I no longer have (as much) faith in the old adage of "ya gotta be in stocks to beat inflation!!" Anyone who started investing in the market even twenty years ago may have been better off in CDs.
I have always wondered why someone wouldnÂt assemble a portfolio of higher yielding stocksÂcommon, preferred and foreign--mixed with various bond-type income products to get a nice stable 6-8% - as long as theyÂre invested in the individual securities, thereÂs no chance of losing principal other than default risk, which can be lessened, in fact nearly eliminated, by diversification.
I welcome any and all thoughts!