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After all, humans are programmed to hate losing more than we like winning.
But when you’re in your 20’s, you have a long time until retirement and can afford to ride out downturns.
CD’s usually guarantee a yield (averaging 0.54% in October 2014); money market returns hover around 2-3% but almost never lose money.
Vanguard took a look at the annual returns of all three groups from 1926 through 2015.
Here’s a summary of their findings: Basically, an aggressive portfolio gets you much better returns on average.
So how should you balance a fear of risk with a need for good returns?
Target-date funds are mutual funds tailored to a certain retirement date - target-date 2060 funds are for people who aim to retire in 2060, target-date 2030 funds are for those who retire in 2030, and so on.
A conservative investment portfolio is weighted towards bonds and money market funds, offering low returns but also very little risk.
This is the kind of portfolio you’d want if you’re more scared of losing money than not making money - for example, if you’re retired and these funds are your sole source of income.
Aggressive portfolios are heavily weighted towards stocks, and are better for those who can handle a few bear markets in exchange for overall higher returns.
There’s variation within these two groups - for example, a swing-for-the-fences aggressive portfolio may feature high-growth, small-cap stocks, while a less risky aggressive portfolio may focus more on blue-chip stocks.
You often hear the miracle of compound interest cited as a reason to contribute to your retirement funds as early as possible (and you should! It also highlights the importance of maximizing the returns on those contributions - a conservative portfolio’s slight lag in performance becomes massive gap as years go by. You want to contribute ,000 annually towards your 401(k).Tags: Adult Dating, affair dating, sex dating