I recently came across an article in Outside magazine online describing a study that sought to determine which form of exercise is better for health and longevity. The choice was between cardio, or aerobic, exercise and weight lifting, or resistance exercises. It is a longstanding and controversial question among people who study health and fitness.
As I suspected, the study found the choice is a false one. The best health results were achieved by the test subjects who engaged in both aerobic and resistance exercises. The best practice is to mix up both types of exercise and work on all parts of your body. I’ve seen other research that indicates it also is important to add flexibility and balancing exercises to your routine. It also is best to alternate and change your exercise routine. In other words, don’t make it a routine. You need variety to maximize the benefits of exercise.
It is the same way with your finances. Most discussions in the media (and a lot of questions I receive) ask whether a person now should be invested in stocks, bonds or cash. It’s a bad question, because your investment choices aren’t restricted to one asset or the other. The answer is you should have balance and diversification, owning all three assets and others. You can overweight or underweight one or more assets but should do that only when you have a strong conviction. You also should have tax diversification, balancing your assets among taxable accounts, traditional IRAs and 401(k)s, Roth IRAs and health savings accounts. Balance and diversification are key to many parts of your finances.
That brings this month’s discussion to a close. Congress is back in session and promising a lot of action. I don’t expect much to happen, but I’ll be monitoring things for you. We’ll be back together again next month to review what’s happening in the markets and with Federal Reserve policy. I’ll offer my latest research and recommendations on estate planning, managing your IRA and more.
P.S. You’ll want to sign up for the Retirement Watch Spotlight Series, because it presents key retirement issues in much more detail. A recent edition was my detailed semiannual investment and economic review in which I lay out where the economy and markets are heading. Another edition explained how to establish a retirement paycheck with lifetime, guaranteed income, regardless of what’s happening in the markets. The Spotlight Series consists of on-line seminars in which I present key retirement financial issues in detail. You can view these webinars whenever you want from wherever you can access the internet. To learn more about the Spotlight Series, go to the top of the RetirementWatch.com home page, and select the Spotlight link.