Estate planning: How to leave IRA to heirs


What is the single greatest lesson of the most recent stock market crash and subsequent recovery?Probably “patience,” according to Morris Gartenberg, an adjunct business professor at Southern Technical College in southwest Florida.Few people who saw the Dow Jones industrial average sink more than 50 percent from October 2007 to March 2009 could have predicted the stock market would be near all-time highs today, Gartenberg says.But investors who were determined to “go long” throughout that period were rewarded. Such patience is crucial to investing success, Gartenberg says.He adds that a well-diversified portfolio can go a long way toward smoothing out what is sometimes a very bumpy ride.Gartenberg expands on those thoughts in the following interview.
2015 is a new year, which offers investors a clean slate. What general advice would you offer to people that can help them become better investors this year?
Cautious optimism! Let’s look at what has occurred over the past year-plus. The U.S. produced more oil. Lower oil prices have pushed highly leveraged companies and countries to the brink. The Fed has helped keep interest rates and bond yields at low levels. A large number of companies repurchased their shares. A number of currencies have fallen against the U.S. dollar. Deflation and little or no growth abroad are spreading.While world GDP is slowing, slower economic growth, particularly outside the U.S., is most likely the outlook for 2015.
Since 2009, the stock market has been on a tear. A lot of people on Main Street have watched from the sidelines as the party on Wall Street has grown more raucous. What advice would you offer to investors afraid of getting back in when the market is near all-time highs?

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Timing is tricky. The U.S. has led the recent bull market. Prior to that, foreign stocks led the bull market. And for most of the 1990s, the U.S. led. Does this mean that right around the corner foreign stocks will lead? Perhaps.An investment strategy should consider sources of income, the flexibility of a budget and tolerance for risk. Then you can consider investing for the long-term in a portfolio that includes an asset allocation of cash, (a) well-diversified collection of stocks, bonds and, yes, some global. Together, (that) may be the optimal way to minimize the ups and downs of the market.Long positions in companies like technology, health care and consumer staples may be a good posture right now, as is investing in a stock index or bond index.
Investors look to bonds and bond mutual funds to provide safety and stability in their portfolios. However, many investors now fear that rising interest rates could decimate their bond holdings. Are such fears well-placed, or exaggerated?
With issues abroad, as I noted above, more money will most likely go into the safety net of Treasuries. Declines in the long-term bond yields and 10-year Treasuries may surface. Again, the long-term strategy mentioned above can be used for bonds also.
Millions of Americans turn to financial news television networks, websites and print publications to try to gain the edge they need to beat the market. In your opinion, is this time wisely spent?
There is no perfect formula for besting the market. It ultimately comes down to determining your tolerance for risk. Then, make a decision about cash, stocks and bonds that is comfortable for you.
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