9781601386861 by Unknown

Author:Unknown
Language: eng
Format: epub
Published: 2010-05-19T20:02:02+00:00

New Retiree

Portfolio

Portfolio

Retiree

U.S. Stocks and REITs

45%

30%

10%

5%

Real Estate

10%

10%

0%

0%

International Stocks

25%

20%

0%

0%

fixed Income

20%

40%

45%

55%

Cash

0%

0%

45%

40%

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158

Retire Rich With Your Roth IRA, Roth 401(k), and Roth 403(b) Some financial institutions offer life-cycle funds among their investment choices. A life-cycle fund is designed to take over an investor’s entire portfolio and alter the asset allocations as the investor arrives at different ages. A life-cycle fund is not a good choice if you hold investments in other IRAs or taxable accounts. Unless the asset allocations in your other accounts mirror the allocations in the lifestyle fund, you will be defeating the purpose of a life-cycle strategy by throwing its asset allocations out of balance.

A life-cycle fund is intended to be your whole portfolio.

many investors mistakenly decide to “sample” a life-cycle fund in combination with other investments in a portfolio. this results in an unbalanced portfolio and the risk that investment objectives will not be met.

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Chapter 7: Building and Maintaining Your Portfolio 159

Some financial institutions offer life-cycle funds among their investment Overview of investing styles

choices. A life-cycle fund is designed to take over an investor’s entire port-Passive

Active

Buy and Hold

Life-cycle Investing

folio and alter the asset allocations as the investor arrives at different ages. A Management

Management

life-cycle fund is not a good choice if you hold investments in other IRAs or Strategy Attempt to achieve Attempt to

Buy good-quality Adjust allocation of

taxable accounts. Unless the asset allocations in your other accounts mirror the same return as achieve returns

investments

assets in a portfolio

the stock markets greater than

and leave them

as the investor moves

the allocations in the lifestyle fund, you will be defeating the purpose of a by creating a

those of the

untouched for as through different stages

life-cycle strategy by throwing its asset allocations out of balance.

well-balanced

financial markets long as possible. of life.

portfolio.

by actively buy-

ing investments

when the price is

A life-cycle fund is intended to be your whole portfolio.

low and selling

them when the

many investors mistakenly decide to “sample” a life-cycle fund in combination price is high.

with other investments in a portfolio. this results in an unbalanced portfolio and the risk that investment objectives will not be met.

Benefits A well-balanced

An experienced

As the overall

Younger investors will

portfolio

and knowledge-

value of the

take more risk to achieve

minimizes risk.

able investor

stock market

more growth; assets will

Does not require

might be able to increases over

be protected in safer

constant attention. achieve greater

the years, the

investments as retirement

growth.

value of stocks

age approaches.

will increase

with it.

Risks

Losses can occur Bad investments Even good-qual- There is no guarantee if the investor

can result in big ity stocks can

that this strategy will pro-

does not review

losses. Money

lose their value

duce a better outcome.

the portfolio

is lost when

after a few years Younger workers might

regularly and

frequent trades

as the economy

not be able to recover

adjust for changes incur trading

changes and

losses from volatile

in market sectors. fees and broker-

technology

investments, especially if

Loss of opportu-

age expenses.

advances. Inves- they experience periods

nity to earn more Requires a great tor should review of unemployment. Older in certain types of deal of research their portfolio workers might need to

investments.

and constant

regularly.

invest more aggres-

A downturn in the surveillance

sively to save enough

stock market can of the market.

for retirement.

wipe out assets

Stress and

if an investor

anxiety can take

does not respond a physical and

quickly.

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