Risk Free Investing?

Posted by Diane H. Blackwelder, CFP on 15 June 2009 | 0 Comments

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After a year like 2008, it is easy for investors to consider throwing in the towel on investing. Wouldn't putting money in T-Bills be better than riskng it in the market?  Sure, the approach solves one type of risk - investment risk, but introduces another type of risk - purchasing power risk.

David Booth, Chief Executive Officer of Dimensional Fund Advisors, discusses the importance of balancing volatility risk and purchasing power risk when investing for retirement.  He explains that T-bills have not produced the real returns necessary to preserve living standards over the long haul, and illustrates how investors can manage both types of risk through an appropriate commitment to stocks.
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