Asset Allocation: Part 4 of 5

This is the fourth in a series about asset allocation. In our last series 3, we learned about the different asset categories. In this series you will determine your ideal asset mix.

As mentioned in an earlier, asset allocation of yesteryear used to be simple.  The formula was to subtract your age from 100.  This resulted in the percentage of your portfolio you should have invested in stocks.  For example: a 65-year-old would have 35% in stocks and 65% in bonds and cash.  But, due to longer life expectancies, people run the risk that their investments will not grow fast enough to last their lifetime, when following this formula.  Reading the Retire Fast. Asset Allocation Series and using Bob's Retirement Calculator can help prevent this from happening to you.  

Bob's Retirement Calculator

In order to find your ideal mix, you should review additonal information located below:

Fidelity's Asset Allocation Planner

Bankrate Asset Allocation Calculator

Between the two above resources and consulting a TRUSTED Financial Advisor this will result in an asset allocation strategy that should suit your individual needs.  

Once you have your ideal mix identified, you can plug these percentages into Bob's Retirement Calculator.  This will help to identify if there is any shortfall with your current plan. If there is a shortfall, you can plan to work longer, take a smaller annual withdrawal amount and/or increase your savings rate.  Again, you can plug these “what if” scenarios into Bob's Retirement Calculator until you no longer have an investment shortfall.  Your asset allocation plan is done, for now.

Just because this is your ideal asset allocation mix today, does not mean it will work for you for the rest of your life.  You should evaluate your mix after each life event (i.e. marriage, divorce, birth of a child, retirement, etc.) or at least every five years. 

In our next and final Series 5 on Asset Allocation you will learn when and how to rebalance your portfolio. For more informaton on asset allocation take the Retirement Crash Test to learn more.

Plan Save Win

Asset Allocation Series by Retire Fast LLC., (Companies and mutual funds mentioned in our blog are used as illustrations or suggestions for study and are presented for educational purposes only.  They are not to be considered as endorsed or recommended for purchase by Retire Fast.)  Investors should conduct their own review and analysis of any company of interest before making an investment decision. Investors should further consult their accountant, tax expert and/or financial advisor before making any investment decisions. Neither Retire Fast.. nor its content providers are responsible for any damages or losses arising from any use of this information. Copyright © 2018 Retire Fast, LLC.  All rights reserved.


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