Lessons From The 2008 Meltdown

March 6, 2013
Excerpt by Michelle Perry Higgins

Start Shopping for Long-Term-Care Insurance at 45Build a ‘Defensive Barrier’ Outside the Stock Market

The correction of 2008 was brutal and I am glad that party is over! Unfortunately, the odds are that you will experience several more corrections in your lifetime. The stock-market cycles will not stop, but they may look and feel slightly different than they do today. Therefore, an investor and her well-diversified portfolio must be able to weather the storm and stay focused on the long term. I advise having what I call a “defensive barrier,” within a diversified portfolio. This is the portion of an investment portfolio that is not in the stock market, and it should be large enough to adequately cover an investor’s income needs through those unpredictable stock market cycles. I advise my clients to stay focused on the long term and keep the emotions and irrational decisions at bay. Whatever it takes to do that, whether it be yoga or long walks, do it.

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