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Taking the (Investing) Road Less Traveled

Despite the compelling nature of these numbers, I don't see wholesale migration into equities as a sound strategy for the average everyday investor. Institutions and hedge funds may be equipped to win at this game, but individuals are not.

Retirees and near-retirees need to let the institutions play their own game. Individuals need to focus their own efforts on figuring out how to generate the income they need when interest rates are very low.

That's why I'm sticking with my strategy of shifting away from the classical pre or postretirement portfolio into what I call the neoclassical retirement portfolio. Here's a quick summation of the difference:

Not U.S. Treasuries ... but corporate bonds. Not high-yield money market funds ... but gold. Not fixed annuities ... but foreign bonds, bank loan funds and mortgage backed securities. Not growth index funds ... but carefully selected dividend-paying stocks.

I think what's important about this thinking is that the investment portfolios of retirees and near-retirees don't need to be dictated by what institutional investors are doing.

If institutions rotate into equities and drive prices higher, that's your cherry on top. If these market dynamics never materialize, and stocks remain flat, then the focus on income will turn out to be prudent.

Imbedded in the shift to the neoclassical retirement portfolio is the assumption of more risk. This may make for some uncomfortable and possibly sleepless nights, but in the current environment, I don't see that individual investors have a choice if they don't want to outlive their money.

I feel this is very prudent advice. It might also be very modestly priced advice as well, because investors who make the shift toward producing more income are able to do so without paying 20% of gains to the fund manager.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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