by Ernesto R. Martin

As mentioned, the old rule of thumb was that stocks make more sense for younger people, but those at or nearing retirement should instead own bonds rather than stocks. The reason is volatility, namely that the price of stocks can swing, sometimes negatively and drastically. If you Google "should retirees own stocks" you'll get a wide range of opinions, but most recommend having at least some stocks. For those needing to augment their income, mutual funds (including index funds) that invest in companies that pay high dividends might be advisable, and some approaches for this are suggested in the Stocks chapter. Older folks who have a kitty of funds that they won’t need for 5 - 10 years and a reliable income stream, should have some of their money in growth stocks, preferably through an S&P 500 index fund.