Disclosure: I currently subscribe to Money magazine (due to airline miles expiration), and this is my second or third iteration. I sometimes will read their articles online as well. Typically, there is quite a bit of good advice (special mention to Walter Updegrave), but there is also some bad advice mixed in.
Case in point: today's article, written by Sarah Max, on a widow who is trying to save for retirement:http://money.cnn.com/2013/02/13/retirem ... .moneymag/
Newly widowed, liquid assets of $159,000, income of $105,000, newly relocated from NY state to Arkansas. Home listed on the market, with $36,000 in equity (not sure how much of that will survive the transaction costs of selling). Most of her investments, other than a chunk of cash, are in individually selected "growth stocks" that were picked at whim. It is unclear how old she is, but I'd estimate about 50. She feels panicked about her future.
Jeremy Kisner of SureVest Capital Management in Phoenix recommends she tone down the risk by selling her individual stocks and buying some bonds, as she would've been down 40% in 2008-2009.
For safety, Kisner suggests adding 15% bonds, and individual stocks that "grow more slowly but are dependable."
Further recommendations are to jump in and buy a new house before her old one sells using a 3.5% FHA loan, since she believes it will take several years to save up a 20% down payment on a $150,000 Arkansas house. Kisner says that she "deserves to have a place she can truly call home." Given that she has $44,000 in taxable investments and a Roth IRA, I'm not sure why this is the recommendation, but it's not the worst of the bunch -
His fund recommendations are Blackrock Global Allocation, MDLOX, and First Eagle Global Fund, FESGX. "Both carry sales loads, but annual fees are low."
MDLOX: Front-end load 5.25%, ER 1.07%
FESGX: Deferred sales load 1.00%, ER 1.89%
The rationale is that "[f]or relatively small amounts of money, a global allocation fund is easier than choosing a bunch of funds based upon market trends," as if those are the only options. Sadly, the woman is leaping to follow the advice of Kisner.
Retirement investing is a marathon.