06-01-2017 Columns

What does conservative investing mean to older investors?

 If you’re a certain age, or getting close to it, you might hear something like this: “Now that you’re older, you need to invest more conservatively.” But what exactly does this mean?

For starters, it’s useful to understand that your investment preferences and needs will indeed change over time. When you’re first starting out in your career, and even for a long time afterward, you can afford to invest somewhat aggressively, in stocks and stock-based investments; because you have time to overcome the inevitable short-term market drops. At this stage of your life, your primary concern is growth – you want your portfolio to grow enough to provide you with the resources you’ll need to meet your long-term goals, such as a comfortable retirement.

But when you finally do retire, and perhaps for a few years before that, your investment focus likely will have shifted from accumulation to preservation. And this certainly makes some sense. Even though you may spend two, or even three, decades in retirement, you actually have many shorter time frames for withdrawing money – that is, selling investments – from your retirement accounts, such as your 401(k) and IRA. In fact, you may be taking withdrawals every month – and you don’t want to be forced to sell investments when their price is down. Consequently, you’ll want a portfolio that’s less susceptible to market downturns. This means that you may need to reduce the percentage of stocks in your investment mix and increase your holdings in investments that have less growth potential but offer greater stability of principal, such as bonds.

If you follow this formula, you will have become a more conservative investor. But this evolution – from aggressive to conservative – isn’t that simple, or at least it shouldn’t be. If, as mentioned above, you are retired for two or three decades, you will have to deal with inflation. And even at a relatively mild 3 percent annual inflation rate, your purchasing power will decline by about half in just 25 years. This is a real threat to retirees, who, unlike active employees, can’t count on increases in earned income to overcome increasing costs of living.

Given this reality, you will have to find your sources of rising income in your investment portfolio. One possibility: Dividend-paying stocks, some of which have increased their dividends for many years in a row. Still, like all stocks, these dividend payers can lose value from year to year, and they can also reduce, or even eliminate, dividends at any time. In other words, they aren’t risk-free – which brings us back to the question of how “conservative” of an investor you can really afford to be when you’re retired.

In the final analysis, there’s no simple answer. On one hand, you probably shouldn’t be as aggressive an investor as you were when you were much younger and still working. On the other hand, if you were to primarily own certificates of deposit and U.S. Treasury securities, you might face the prospect of outliving your money. Ultimately, you’ll need to maintain a balanced portfolio that helps you control risk today while providing you with growth opportunities for tomorrow.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Enjoy free fishing weekend

 Living in Michigan, we are blessed with the opportunity to take part in numerous outdoor activities with our friends and families throughout the year. As we enter the summer months and the weather starts to warm up, I wanted everyone to be aware of a great chance to enjoy one of our exceptional outdoor activities, fishing, for free. Michigan has a tremendous variety of fishing locations with more than 3,000 miles of Great Lakes shoreline, thousands of miles of rivers, and more than 11,000 lakes, of which over 100 are in Van Buren County.

This year’s Summer Free Fishing Weekend presented by the Michigan Department of Natural Resources, is June 10 & 11. For these two days, all fishing license fees are waived on both inland waterways and the Great Lakes for both residents and visitors alike. However, all fishing regulations will still apply. This is a great time to introduce new anglers, both young and old, to the joys of fishing or start a new family tradition. Who knows, maybe they’ll have a “reel” good time and get “hooked” on fishing.

I hope you and your friends and family are able to take advantage of this and other great Pure Michigan opportunities this summer. To find out more about Summer and Winter Free Fishing Weekends you can visit the DNR’s website at www.michigan.gov/freefishing or contact my office toll free at 800-577-6212 or via email at BethGriffin@house.mi.gov.

Tick bite prevention

 As the weather gets warmer, the tick population activity in Berrien County begins to increase. As residents spend more time outside, the Berrien County Health Department would like to remind people, especially those spending time outdoors and children at summer or day-camps, to protect themselves from tick-borne illnesses by taking a few precautionary steps.

Ticks can carry illnesses such as Lyme disease, the most commonly reported vector-borne disease in the United States. In Michigan, 220 cases were reported in 2016 with the most exposures occurring in the Upper Peninsula and along Michigan’s western shoreline. The number of Lyme disease cases has slowly increased over the years in Michigan.

Ticks are typically found in wooded or brushy areas with tall grass and leaf litter. Prompt recognition and treatment is essential to prevent serious illness and death. Residents can prevent tick bites by doing the following:

Avoid tick-infested areas.

Use insect repellent; spray repellent containing DEET or Permethrin on clothes and on exposed skin.

Bathe or shower as soon as possible after coming indoors (preferably within two hours) to wash off and more easily find ticks that are crawling on you.

Perform daily tick checks. Always check for ticks after being outdoors, even in your own yard.

For more information about diseases carried by ticks, please visit www.bchdmi.org or www.cdc.gov/ticks.

Giving students a leg up in landing an in-demand job

 It is graduation season, and although Michigan’s economy is growing and creating jobs, many positions remain unfilled. A key factor in our skilled jobs gap is a lack of focus on training and education in fields where positions exist.

As new graduates head out into the world, we must consider the next step in helping students land a well-earning job and providing them with available career information so they may choose their own path of success.

I introduced Senate Bill 344 to allow a Michigan student to receive a science, technology, engineering and math (STEM) certification as an incentive for taking additional STEM courses. If the bill is enacted, Michigan would be the first state to allow such a STEM certification opportunity.

Michigan is a leader in allowing students to focus their education on these key fields, and this would be an excellent way to reward students who take extra STEM classes, to highlight their accomplishments and to give them an advantage in landing a well-paying job.

I also sponsored SB 343 to require schools to provide students with the most recent available analysis of in-demand occupations for their region.

The information can be a tremendous resource for those looking for work, people considering a career change and especially students contemplating a career path.

This is about ensuring that every Michigan high school student receives this information for their area and helping all our students make the best decisions they can about their education and their future.

As always, I look forward to hearing your comments and feedback on the important issues facing Michigan. You can contact me at 517-373-6960.

Memorial Day message

 Memorial Day is a sacred and solemn day. It allows us to recognize a basic truth that our country was forged, and then protected, by those who have served and by those who have made the ultimate sacrifice for us and our freedoms. Originally observed as Decoration Day after the Civil War in 1868, Memorial Day eventually came to honor all Americans who perished while serving our country in the military.

As we take the day to remember those who served, were injured, or who died, let us also be mindful that we owe our veterans a great deal. Too often our veterans do not receive the proper attention or treatment for afflictions they incurred during their service. Last week in Congress, we passed a number of bills that helps us keep our promise to our veterans and their families. These bills will help make sure we are doing our part to repay those for the great service they have provided our country, but it is only a start.

As we continue to work on fixing our broken support system for veterans, if you, or a family member, is having trouble getting the proper services from the VA, please do not hesitate to contact my office.

So as we look forward to warmer weather, joining with friends and families for backyard barbeques, parades, and festivals – let us keep in our hearts and minds the sacrifices made by servicemen and women, and their families, of the past and indeed the present. We are truly the land of the free because of our brave. Memorial Day is for them.

To learn more about this and other important legislative issues, please visit my website: upton.house.gov or call my offices in Kalamazoo (269-385-0039), St. Joseph/Benton Harbor (269-982-1986), or Washington, D.C. (202-225-3761).