Asset allocation is the biggest investment planning decisions of portfolio investors will be one, or close to retirement especially.
However, the people I meet who want to age no longer makes sense rules of thumb, stocks and bonds based on the time of their separation basis.
“100 minus your age” approach to determine the proportion of your stocks / bonds, for example, is so far beyond its heyday, it should be retired. However, we are still people come into our office who have heard it, and I believe this is the way to go. “I’m 65 years old,” they said, “So only 35% of my money should be in stocks, and the rest should be a bond.”
The problem is that the rules are based on a different time, when people did not live long and do not need to pull much income from their investments.
Of course, there’s never really one size fits all strategic asset allocation. However, today’s financial environment it is even trickier than a decade ago, when depositors can count on traditional sources of “safe”, such as certificates of deposit, bonds, for more income.
At that time, you will find the CD-ROM to pay 4% or 5%. Today, you’ll be lucky to get a payment of 1%.
This means that many retirees have to make some adjustments modern own combination – to take on more risk than they may already be familiar 10 years ago – because they need to earn more. If you play it too safe, there’s a good chance that you will run out of money. You simply do not want to be able to keep up with the amount you recover. When
So, how you should look for yo ü determine their own asset allocation in? Most of the decision depends on your time horizon, income needs and your feelings about risk. The following are some of the factors you should consider your financial advisor to discuss:
- At present you draw income from your portfolio? According to your own retirement schedule, right, if you need to pull money market accounts and turn down, this could be devastating. So you have to weigh your needs grow this concern.
- If you are not currently drawing from the portfolio you will need to draw from it in the future?
- If you withdraw income, what is the withdrawal rate, your portfolio out?
- How do you view the risk of mood?You will COMFortable combination, the weight of the stock market in more than you originally planned?
- Can deal with the financial risks? How much are you willing to lose?
Looking for “happy place” between risk and economic growth is not an easy thing.
Some retiree Fine & reassembly stock. Their possibilities, they will be around for decades, and the idea of making money outlive their plan is what really worried about them. Other people have the freedom of more aggressive because they can live comfortably in their social security and pensions. Some people find that they feel better with more traditional 60-40 minutes, or some variation close to it.
Is there a formula that can tell you what is best for your financial future – how is this going to m no fixed percentage AKE all is well. So, if you are still using old-fashioned rules of the scheme, it is time to return to the drawing board.