Updated: Sep 3
Anyone who invests in financial products is forced to wrestle with the balance between risk and reward. Most people understand this, but nobody ever spells out exactly what it means for you in dollars and cents. My goal is to do that for you today.
Stocks offer the potential for large gains. For example, investors who bought Nvidia just two years ago have seen their shares rise nearly 300%.
However, stocks can also experience periods of severe losses. During the dot-com crash in the early 2000s, technology stocks lost more than 75% of their value.
Bonds, on the other hand, typically offer lower returns with lower risk. Over the long run, bonds tend to produce annual returns of 3% to 4%. While bonds can lose money in the short term, their declines are generally smaller than those seen in stocks.
Individual investors have always faced this tradeoff between risk and reward. For retirees or those nearing retirement, the stakes are even higher. Large losses in your 60s or 70s can devastate your retirement plans.
Since most investors have realized that buying individual stocks rarely works out, the focus has shifted to balancing risk and reward through mutual funds or ETFs. Investment professionals typically guide clients toward a mix of stock funds and bond funds.
But the range of available options—and the potential outcomes—remains limited. Here’s how the typical choices break down:
Investor Type | Stock/Bond Mix | Avg. Annual Return |
Zero-Risk Investor | 0% / 100% | 3.0% |
Low-Risk Investor | 30% / 70% | 4.8% |
Moderate-Risk Investor | 50% / 50% | 6.0% |
Higher-risk portfolios (e.g., 70% stocks) can increase returns, but most retirement investors avoid them because the potential for large losses is simply too great. Let’s now look at the downside risk for these typical investment choices.
Investor Type | Stock/Bond Mix | Avg. Annual Return | Typical Losses |
Zero-Risk Investor | 0% / 100% | 3.0% | 0% |
Low-Risk Investor | 30% / 70% | 4.8% | -12% |
Moderate-Risk Investor | 50% / 50% | 6.0% | -20% |
This table highlights why many retirement investors are frustrated. The no-risk option doesn’t keep up with inflation. The moderate-risk portfolio delivers only modest returns of about 6% annually, while still exposing investors to potential 20% losses during bear markets.
As a result, most people settle for the low-risk option—earning roughly 4.8% per year with more manageable drawdowns of around -12%.
The problem is that earning only 5% annually often leads to a tight retirement budget.
To illustrate this in real terms, consider a 60-year-old retirement investor with a $500,000 portfolio who continues working and contributing until age 65.
A typical low-risk investor could expect to generate about $45,000 per year in retirement income from their 401(k).
If they tried to chase higher returns by increasing their stock exposure, they could face losses exceeding $100,000 in a bear market.
I’ve always felt these options—and their associated risks—are terrible for retirement investors. Frankly, I think the investment services industry has done a poor job for individual investors. Is this really the best they can do?
I wasn’t willing to accept these poor choices. Over several decades of research, testing, and refinement, I developed a smarter investing system—one that delivers the same risk level as the low-risk option (around 12% potential short-term loss), but with much higher returns of 13% to 15% per year.
Here’s how that changes things for our retirement investor example:
Low Risk Investor vs. My System
Low Risk Investor | My System | |
Account Balance at Age 60 | $500,000 | $500,000 |
Stocks/Bond Mix | 30% / 70% | 90% / 10% |
Annual Return % | 4.8% | 14% |
Annual Retirement Income | $44,900 | $124,900 |
Total Retirement Income | $1.3 million | $3.7 million |
Potential Loss % | -12% | -12% |
Potential Loss $ | -$60,000 | -$60,000 |
For the same nominal risk (short-term loss of -12%), this investor could enjoy $80,000 more per year in retirement income—78% higher—which translates to an additional $2.4 million over a 29-year retirement.
Most retirement investors don't even know where they stand with their retirement finances. They are not fully aware of their risk exposure or their expected gains from their portfolio. This is why I am offering a free retirement planning session. I will analyze your portfolio to determine your expected future returns and your risk exposure. I will run a set of retirement projections so you will know exactly how much income you will have in retirement. And I will identify opportunities to improve your investment results and lower your potential losses in bear markets.
Schedule your free retirement planning session by clicking here.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
The impact of the AI revolution on jobs is no longer theoretical—it’s already happening. In fact, I believe we’re at a real tipping point right now.
Here’s what I’ve been seeing.
If you follow quarterly earnings reports from major public companies, as I do, you’ll notice a big shift this quarter. For the first time, many companies are openly discussing their AI initiatives—and, more importantly, quantifying the impact on jobs. Some are announcing layoffs directly tied to AI-driven productivity gains, while others are eliminating roles they had originally planned to add.
That’s a big deal at such an early stage of AI development.
To understand why, it helps to know how CEOs operate. Public company CEOs answer to their boards of directors, who in turn represent shareholders (the company’s owners). A CEO’s performance is judged primarily on sales growth and profit growth—metrics that directly drive the company’s stock price. When the stock price rises, investors are happy, and the CEO keeps their job. When it doesn’t, pressure mounts.
That’s why, in quarterly earnings releases and conference calls, CEOs focus only on the most impactful initiatives—the projects that truly move the needle on profits. They don’t waste time on small or experimental efforts.
So, when CEOs are highlighting AI in their reports, it tells us two things:
1. They’re already seeing meaningful results. If AI weren’t producing real gains, it wouldn’t make the cut for these investor updates.
2. AI adoption will now accelerate. That’s how capitalism works—once investors see proof that AI cuts costs and boosts profits, they pressure every management team to push harder.
And make no mistake: investors love job cuts, because reduced payroll means higher profits. From here on, CEOs will compete to prove how effectively they can use AI to lower headcount and improve efficiency.
Meanwhile, AI technology itself is advancing at breakneck speed. Vendors are rolling out AI agents that can handle an ever-wider range of job functions. IT roles were hit first—programmers working alongside AI coding assistants are seeing massive productivity boosts. But now AI bots and agents are spreading into nearly every department of both large and small companies.
Some CEOs are already reporting thousands of jobs cut due to AI. Soon, that will grow into tens of thousands. Multiply that across thousands of companies, and the impact on unemployment could be profound.
We all knew this was coming—but I didn’t expect it to arrive so soon.
For my thoughts on where this all ends up, see my recent blog post Click here.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
Is your retirement account built to survive a Stock Market Crash?
I would imagine that you remember the stock market meltdowns in 2001 and 2008. People who retired in the year 2000 were extremely unlucky. Their timing could not have been worse.
The stock market dropped by 49% in 2001 and 2002. And just when the market recovered in 2007, it dropped by 54% in 2008. Prices did not recover from the 2008 crash until 2013.
People who retired in the early 2000’s had their retirement plans destroyed.
If you are in retirement or nearing retirement, how would your investments do in an ugly bear market?
Stock prices are at all-time highs, and many are worried about excessive valuations. In fact, the last time the stock market was overvalued by this much was in 1999 before the dot-com crash.
As a result, it can be an uncomfortable time to be an older retirement investor. The market will recover from any potential market crash, but it can take up to four years on average. Older investors don’t have the time to simply “Buy & Hold & Suffer”.
Nobody knows exactly when the next ugly bear market will occur, but it will happen.
What are you supposed to do? You learned in 2022 that sticking with the plain-vanilla investment strategies recommended by the investment industry don’t protect you from major losses. Bonds lost as much as stocks in 2022.
Panicking is not the answer either. The worst thing you could do is to invest emotionally and get out of the market at the wrong time.
The only good solution is a disciplined and proven approach to managing your retirement investments.
I have created a smarter way for older people to invest.
The investment professionals put you in a cookie-cutter portfolio that includes a mix of stock and bond funds that produces mediocre returns and does not always keep your money protected when markets fall. They ask people to stick with this strategy through thick and thin. They only do a simple rebalance once per year.
After decades of research and testing, I discovered that the stock market goes through three different trading cycles over roughly 8-year periods. Utilizing a different investment strategy in each trading cycle produces significantly better investment results (potentially doubling your investment returns).
Most importantly, my proven and effective investment strategy protects your savings during the dreaded bear market cycle. Bear markets lead to average losses of about 37% on average. The bear markets of 2001 and 2008 produced losses of roughly 50%.
My system has proven that you can have both high growth in your investments AND protection against losses at the same time.
Today, I would like to give you a free copy of the latest research on how to protect your life savings. This guide will show you exactly how we achieve such outstanding results for our clients.
Click here to get your FREE copy of this important report for older investors.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
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