Most experts agree that long-term growth can be achieved best by investing in stocks. Remember that returns from the CREF variable investments fluctuate and there are no guarantees. You probably also will want some of your retirement savings in TIAA's traditional annuity, because it guarantees principal and interest while providing the opportunity for extra earnings. A steady course, using a diversified combination of asset types and approaches, may be the best strategy. Your attitude toward risk is vitally important.
Investment risk relates to the uncertain nature of the prices of securities.
Different investments expose you to different kinds of risk. Most experts agree that you should not take too much risk with your pension accumulation. But if you don't take enough risk, you may not build enough assets to finance the kind of retirement you want. Inflation risk refers to the likelihood that the economic value of retirement income in the future will decrease due to higher prices. For example, assume that the inflation rate is 5 percent annually.