It’s a scary feeling when you retire and cut the cord from your full-time job. I stared at our brokerage statements and realized my new job was investment manager. I had to make our money last so we could enjoy the rest of our lives.

Several friends had recently rolled their 401k into self-directed accounts, and we discussed our feelings. My friend Pete said it best, “If you are not a little bit scared, you don’t understand the problem!”

I was confident in my investing skills and had done well in building our nest egg. Like most investors, I learned some expensive lessons along the way. Once retired, things changed overnight. In the past when I took a loss, I had my job and the benefit of time as my security blanket. With that security blanket removed, risk tolerance, confidence, and the emotional reaction to taking losses all changed.

My stockbroker invited me to an event. The president of their bond department was conducting a class on bond basics. His credentials were impressive, so I signed up.

He did a good job of covering the basics, bond ratings, explaining different types of bonds and associated risks of default.

I quickly realized this was a sales pitch disguised as an educational workshop. He said things like, “Our bond experts can custom tailor a group of individual bonds to suit every investor’s needs. We have a perfect track record, our clients have never lost money.” I would hope not! If you pick top-rated bonds with a low chance of default, you shouldn’t lose money.

When it came time for questions, I asked about inflation. He frowned and said inflation is not really a problem. If you are concerned, they will build a portfolio that does not go out more than ten years. I did not respond. Sure, I want yield plus safety from default, but I need to protect the buying power of our nest egg also. No one knows what inflation will be next year, much less 5-10 years from now.

At the end of the workshop, retirees rushed forward to get in line to sign up. I’m sure he generated a great deal of additional business. Those who invested probably did well as inflation has been under control.

My concern was basic. Sure, investing in bonds is one element of a diversified portfolio. Wouldn’t an investor that truly understands all the risks be better off? Knowing all the risks will factor into the decision of how much money you want to invest in that sector.

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