Personal Finance: The New Mix for Retirement Investing

Traditionally, financial professionals have recommended that individuals saving for retirement invest 60 percent of their assets in stocks and 40 percent in bonds. That’s no longer going to do it, though, according to chief executive officer of BlackRock Inc., an international asset management company, Lawrence “Larry” Fink. Fink told the Council on Foreign Relations in New York City that he believes this old style of investing will be “inadequate in a new world” and even suggested being “100 percent in equities” as something he would do himself during that speech[1]. BlackRock Inc. is a global investing firm that, as of December 2011, managed a total of $3.513 trillion for its clients[2]. Fink has been chairman and CEO of BlackRock Inc. since 1998, when the firm was formed. He was CEO of the firm’s predecessors for the previous decade[3].

Fink emphasized in the speech that it is time for all investors, regardless of the magnitude of their investments, to “get off the sidelines and get your money working again.” However, he added, using old methodologies in a new world with “an aging population, a reduction in borrowing and risk-taking by individuals and governments, and a greater role of emerging markets” will not work. “Most investor need a diversified portfolio,” he said; “but virtually every investor has to find ways to achieve a better return than they’ll get in cash or government bonds for the foreseeable future.”

Are you a “traditional” retirement investor? How are you changing things up to make your retirement work in the “new world?”

References:
[1] http://www.bloomberg.com/news/2012-02-29/fink-says-savers-need-to-be-investors-in-disruptive-new-world-.html

[2] http://www2.blackrock.com/global/home/AboutUs/index.htm

[3] http://people.forbes.com/profile/laurence-d-fink/12231

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