Nov 14 • 2 min read
Is a 100% Stock Portfolio Right For You?
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Legendary financial journalist Jason Zweig recently posed a provocative question in The Wall Street Journal: “Should You Just Buy Stocks Until You Die?” As someone who strongly believes in owning the great companies of the world for the long haul, I’ll admit—it’s an intriguing question. After all, the stock market might be the most accessible wealth-creation tool ever invented. History supports that claim. Patient, disciplined, diversified investors with long time horizons have done remarkably well. The only thing the market consistently punishes is unnecessary activity. So, you might assume my answer to Zweig’s question is an enthusiastic “Yes.” If only it were that simple. The Missing Ingredient: NuanceWhether we’re talking about investing, charitable giving, retirement, or college planning, there’s no such thing as a one-size-fits-all solution. The truth is, good planning requires nuance. Yet the media often ignores that. It loves bold, absolute answers: “Everyone should own stocks. Cash is trash. Bonds are dead." The reality, of course, is far messier. Why 100% Stocks Is Appropriate For SomeFor a select group of people, an all-equity portfolio can make perfect sense. Maybe they have reliable income from pensions or annuities covering all their needs and wants. Maybe they view their investments as a legacy for their grandchildren, not a source of near-term spending. Others might live comfortably off the dividend income their stock portfolio generates. In those cases, being 100% in equities could be entirely rational. But that doesn’t mean everyone in those situations should do it, or that it’s the right move for anyone else. Many retirees want a small cushion of stability for emergencies or peace of mind. Others, with more complex income streams, may need a larger allocation to bonds to help weather periods of volatility. These are all valid and thoughtful choices—not signs of weakness or conservatism. Zweig’s Caution (and a Key Omission)Zweig ultimately concludes that few, if any, investors should hold an all-stock portfolio—not because people lack nuance, but because future stock returns may not be as strong as in the past. He’s right that there are no guarantees. But what often goes unsaid is this: No asset class guarantees success. Not equities. Not bonds. Not real estate, gold, or crypto. Take bonds, for example. Many investors thought they were “safe” in 2020. Yet five years later, broad bond indexes have posted negative total returns. Cash, meanwhile, has struggled to keep up with inflation. Contrast that with global equities, which—quietly and imperfectly—have roughly doubled over that same period. That doesn’t make stocks risk-free. It simply highlights that every investment carries risk, even the ones that feel “safe.” The media often focuses narrowly on stock-market volatility while ignoring the silent risks of inflation, illiquidity, or opportunity cost. The Planner’s Job: Balancing Every RiskAs financial planners, we don’t get to ignore those trade-offs. Our job is to help clients balance all forms of risk—short-term and long-term, market-related and not—based on what their plan requires. There’s no formula that guarantees success. But through thoughtful analysis, diversification, and proactive tax and withdrawal planning, we can tilt the odds in your favor and prepare for life’s inevitable surprises. Bottom LineAt its core, good financial planning isn’t about finding the perfect investment mix. It’s about making the right combination of decisions—investment and otherwise—to live a meaningful, well-funded life on your own terms. That’s the nuance that matters most. And it’s exactly what we aim to deliver every day. Happy planning! 📚 What I've Been Reading
Thank you for reading! Please reply to this email with comments, questions, and/or feedback. Stay wealthy, Taylor Schulte, CFP® |