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Play the Stock Market for a Financially Secure Retired Life

13 November 2006 - Features - Editor

The temptation of the stock market is attractive for the young person with retirement in the distant horizon, as well as for a senior professional nearing the end of his or her career. Bank deposits, government securities, real estate and gold all have their places in every mature portfolio, but what is life without prospects of superior returns and dream appreciation at the same time?

We cannot take undue risks with retirement nest eggs. Safety has clear priority over profit and growth, though one expects the stock market to yield superior financial benefits. Would it be too much to expect to find companies in whose ownership one can participate with the best of both worlds? Though the stock market offers no guarantees, it is possible to follow a 5-point formula for financial security in Senior Citizen life.

  • Look for food and beverage brands in the hands of professional management teams: the world cannot do without basic ingredients and processed foods and beverages. Brands that have survived decades of consumer preferences are most likely to hold market shares for the duration of our generation. Grains, meat, milk, sodas, processed fruits and vegetables are some relatively safe categories from which investors can look forward to both safe and superior returns, transient fluctuations notwithstanding. These sectors are highly competitive, so companies which hire from the best management institutes and which have the most extensive training programs are most likely to succeed.

  • Risk management and guidance records: the inherent uncertainty of the future makes preventive and contingent planning almost as important as actual results. The best companies in which to invest for retirement are the ones which consistently meet declared targets, which provide detailed and logical information about how they deal with the sensitivities of their assumptions, and the speed with which they recover from sudden adverse events.

  • The safety of Life Sciences: though technological changes are difficult to foresee in to the distant future, we will always need medicines and productive agriculture. Research based companies in the Life Sciences have traditions of stability even when a stock market is in turbulence. The best ones, with diversified presence in a number of technical segments, continuous investments in innovation and revenues balanced between star and mature brands, are safe havens for people who look forward to blue chips of steady growth and returns.

  • Rights to natural resources: Venezuela has nationalized its gas resources. However, rights to mine metals, ores and fossil fuels in capitalist democracies will always have long term profit potentials. This is especially the case with companies which have dominant shares of known natural reserves of substances with multiple applications, for they can adjust supplies in part to meet vagaries of demand. Stocks of such companies are always worthwhile investments for people who operate in the stock market with the distant future in view.

  • Strong in India and China: much is written about these exotic and exciting markets, but not many know the culture and political systems of these countries. There are no serious doubts that India and China are both enormous markets for most goods and services, and reservoirs of relatively low cost labor. International companies with strong track records in both these countries are much better placed for the future than ones restricted to older and mature territories.

The stock market should be an important component of every retirement plan. Everyone can join at any time, and the five principles of prudence will help to even out the troughs through which economies tend to pass. We welcome your thoughts, opinions and experiences at our forum.

 


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