|
E-mail this page to a friend!
Baby Boomers Turn to Safe Investing as They Near
Retirement
| |
 |
|
| |
Click
graphs for larger view. |
|
Aug. 3, 2005 – Late Boomers, the leading edge of
the 76 million Baby Boomers, who are about to reach 60 and be eligible
for some retirement benefits, have invested their money in large-cap
stocks. They have nearly 40 percent of their assets in these blue chip
stocks, which are most often favored by conservative investors. They are
a little more conservative than younger Boomers, according to a survey
of how Boomer executives are investing their money.
To get a snapshot of how Baby Boomers who are
executives are investing for retirement, Clark Consulting issued its
Executive Retirement Report - The Baby Boomer Edition.
According to Clark's Executive Retirement Report,
Baby Boomers overwhelmingly favor large-cap stocks, with these funds
comprising 36.9% of all assets measured. Money markets were a distant
second at 13.2%, while fixed income was a close third with 12.7% of
total assets measured.
"As part of the largest demographic group in our
country, the investment choices of Boomer executives may be an economic
bellwether," said Tom Wamberg, CEO of Clark Consulting, himself a Baby
Boomer. "My peers and I comprise nearly 26% of the U.S. population. We
have impacted American society since the 1960's youth culture and
spawned the consumer-based yuppie culture of the 1980's that still
exists." Wamberg continued, "Baby Boomers have become accustomed to a
high standard of living, and where and how we invest for retirement will
definitely have an impact."
| |
What are Large-Cap Stocks? |
|
| |
Stocks of the largest companies such as IBM
or GE and other movers and shakers of the economy--are
classified as large-cap stocks. These are large established
companies (many are blue chips). They often keep large reserves
of cash to take advantage of new business opportunities.
Together they make up over half of the value of American stock.
Because of their large size, large-cap
stocks are not expected to grow as rapidly as a smaller
capitalized company. Successful mid-caps and the small-caps tend
to outperform them over time. Investors looking for dividends
and preservation of capital with some growth potential choose
them. Large-cap stocks pay relatively more in dividends than
small- and mid-cap stocks.
Investors who want their money to remain
relatively safe over the long term are often attracted to
large-cap stocks.
Source:
Ameritrade |
|
While there were many consistencies in investment
choices for all Baby Boomer executives, the report found some
differences in investment strategies or asset class choices based on
age. The report looked at the executives in three different age
categories: those born 1946-1951, those born 1952-1958 and the youngest
of the Boomers born between 1959 and 1964.
Large-cap stocks were the most popular of assets
measured. According to the report, the number two and three most popular
asset classes varied by age group, but fixed income, small caps and
money markets were the favorites with Baby Boomers.
According to Ted Disabato, Chief Investment Officer
of Clark Consulting's Investment Group, "Baby Boomer executives
certainly have more investment choices than their parents did. They have
benefited greatly from the strong US economy over the last 60 years and
are very comfortable with equities as a major portion of their
retirement account."
Late Boomers (born ’46 – ’51)
Large-cap stocks were the most popular of assets
measured, with the oldest group placing nearly 40% of their assets in
that class (39.5%). The second and third most popular asset classes were
fixed income (14.1%) and small-caps (10.7%). For Middle Boomers
(1952-1958), small caps were also third most popular, with 12.9% of
assets measured. However, second-place money markets barely edged small
caps (13.4%) by fewer than 60 basis points.
Middle Boomers (born ‘52 – ’58)
Middle Boomers allocated 35.9% of their assets to
large-cap stocks, and the youngest group had 35.0% of their assets
allocated to large-caps.
Young Boomers (born ’59 - ’64)
The youngest of the Boomers--those born between
1959 and 1964--differed from their elders; small-caps were not in their
top three measured assets. Instead, they selected money markets (17.3%)
and fixed income (11.2%).
"Counter intuitively, the youngest group of Boomer executives allocated
almost twice as much of their accounts to the 'safer' investment of
money market funds than did the eldest group with 17.3% and 9.6%
respectively," Wamberg continued, "even though it might be wise for them
to take more risk. While we tend to presume that the closer one is to
retirement age, the more conservative their investments will be, our
report indicated otherwise."
The Clark Consulting Executive Retirement Report is
a quarterly report issued by Clark Consulting (NYSE:CLK), an executive
compensation and benefits consulting firm. The report examines the
investment selections of more than 17,000 executives with annual
compensation typically in excess of $100,000, who have accounts in
nonqualified retirement plans through Clark Consulting. The Executive
Retirement Report looks at those investments across nine different asset
classes including: balanced, fixed income, foreign, large-cap, mid-cap,
small-cap, money market, specialty and world. The selection of asset
funds and the allocations within those funds determine the investment
return generated for an executive's retirement account. Full results of
the Baby Boomer report will be available at
www.clarkconsulting.com/execreport .
About Clark Consulting
Clark Consulting (NYSE:CLK) is the
leading public executive compensation and benefits consulting firm.
Founded in 1967 and now with over 70 offices nationwide, Clark
Consulting helps more than 3,850 corporate, healthcare and banking
clients to keep their best people. Clark Consulting's compensation
consultants specialize in designing innovative programs that attract,
retain, motivate and reward executives, employees and Directors. The
company's benefits consultants provide leading edge advice on the
design, financing and plan administration of benefits programs. For
additional information, please visit
http://www.clarkconsulting.com.
Click to More Senior News on the
Front Page
Copyright: SeniorJournal.com |
