I would like to move a substantial portion of the equities to high dividend preferred stocks or long bonds but am advised not to. You should be concerned about capital erosion at any age. While 3 percent inflation doesn't seem like much after the trials of the late seventies, I am amazed at the number of people who treat it like a non-event. When inflation first hit 3 percent in the early seventies, then President Richard Nixon imposed wage and price controls. A dollar of interest income today will have only 74 cents of purchasing power in 10 years and 55 cents of purchasing power in 20 years.
Equity investments have two major advantages over bonds and preferred issues.
Q. My husband and I have a son and a daughter and have been saving for them for years buying shares through the National Association of Investment Clubs. Now comes the hard part. The children are about to enter school and I will need to begin to liquidate, consolidate, and move into more conservative investments gradually so as to guard against great market swings. I do want to preserve the value and reduce risk. A. Don't worry too much about capital gains.