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What is your theory on investments re age...

It seems for example that if you are 50 years of age then if you are investing in the stock market then it should be 50% stocks and 50% fixed income. This was a generalization a few years back. Do you think it still applies?

Or do you feel because interest rates are so low then it should be a higher percentage of stocks(etfs, mutual funds, stocks etc)?

I know that interest rates are really low but perhaps a person should have more in the bank making low interest. What are your thoughts for risk assessment re stocks
especially for seniors? This buoyant market will inevitably correct sooner or later.

Subscribed. Because I'd like to know as well.
I think the first step is to estimate how much you'll need to retire, and depending on how close you are to that number, invent accordingly.
It used to be "you need a million to retire". Is that still the case? More? Less? My brother-in-law is 70, and says he's spending much less than he estimated. Do you want to leave some to your kids, or a charity?

My father had a heart attack and died at 64. Both my grandfathers died at 64. Buy I have uncles on both sides who lived into their 90's. So I need either $0 or another number. I told the wife that when I'm gone she needs to move into a condo or apartment, because there's no way she'll be able to keep up the house and yard.

Approaching 63 I have similar questions. The problem is (in my mind), there’s no right answer. Until you know how long you’ll live, it’s just an educated guess. As a fiscally (too) conservative person, I’m about 50/50 between mutual funds of varying risk and cash. I know I’m missing out on gains, but have limited confidence in the markets. History has reliably proven me wrong though.

Don't invest in the market per se, invest in people's habits & behavior.
I own Soda & Cigarette dividend stocks on the side of my capital gains oriented 401K .
The stuff will kill you, but capitalism don't care and neither do I.

At age 65 and up, I’d go with 60% fixed income, 20% stocks and 20% cash stuffed in your mattress.

You won’t get rich, you won’t go broke, and you won’t starve to death.

I think it depends upon how much risk you are willing to endure. I also think that it depends upon how on track you are for retirement. Are you ahead of the game, then you could likely have more in the market. Are you behind, then maybe you need to be more conservative.

I'm not doing bad, but from my point of view, I'm behind. I'm also confident that I've got risk minimized, through index funds that are spread around through various asset classes, so I have more in the market than is usually recommended.

This is what Motley Fool has to say about it.

https://www.fool.com/retirement/strategies/asset-allocation-by-age/

Quote:

1. Adjust your asset allocation according to your age

When your investment timeline is short, market corrections are especially problematic -- both emotionally and financially. Emotionally, your stress level spikes because you had plans to use that money soon, and now some of it is gone. You might even get spooked and sell. And financially, selling your stocks at the bottom of the market locks in your losses and puts you at risk of missing the stocks' potential recovery.

Adjusting your allocation according to your age helps you to bypass those problems. For example:

You can consider investing heavily in stocks if you're younger than 50 and saving for retirement. You have plenty of years until you retire and can ride out any current market turbulence.
As you reach your 50s, consider allocating 60% of your portfolio to stocks and 40% to bonds. Adjust those numbers according to your risk tolerance. If risk makes you nervous, decrease the stock percentage and increase the bond percentage.
Once you're retired, you may prefer a more conservative allocation of 50% in stocks and 50% in bonds. Again, adjust this ratio based on your risk tolerance.
Hold any money you'll need within the next five years in cash or investment-grade bonds with varying maturity dates.
Keep your emergency fund entirely in cash. As is the nature of emergencies, you may need access to this money with just a moment's notice.

2. Consider your innate risk tolerance, not just your age

You may have heard of age-based asset allocation guidelines like the Rule of 100 and Rule of 110. The Rule of 100 determines the percentage of stocks you should hold by subtracting your age from 100. If you are 60, for example, the Rule of 100 advises holding 40% of your portfolio in stocks.

The Rule of 110 evolved from the Rule of 100 because people are generally living longer. It works the same way, but you subtract your age from 110 instead of 100.

These rules attempt to determine your ideal asset allocation solely by your age. But your age and how much time remains until you retire aren't the only factors in play. Your innate risk tolerance can be just as important. Ultimately, diversification across asset classes should provide you with peace of mind, regardless of how old you are.

If you're 65 or older, already collecting benefits from Social Security and seasoned enough to stay cool through market cycles, then go ahead and buy more stocks. If you're 25 and every market correction strikes fear into your heart, then aim for a 50/50 split between stocks and bonds. You won't achieve the highest possible returns, but you will sleep better at night.
3. Don't let stock market conditions dictate your allocation strategy

When the economy is performing well, it's tempting to believe that the stock market will continue to rise forever, and that belief may encourage you to chase higher profits by holding more stocks. This is a mistake. Follow a planned asset allocation strategy precisely because you can't time the market and don't know when a correction is coming. If you let market conditions influence your allocation strategy, then you're not actually following a strategy.
4. Diversify your holdings within each asset class

Diversifying across stocks, bonds, and cash is important, but you should also diversify within these asset classes. Here are some ways to do that:

Stocks: Hold 20 or more individual stocks or invest in mutual funds or exchange-traded funds (ETFs). You can diversify your stock holdings by individual company and market sector. Utility companies, consumer staples, and healthcare companies tend to be more stable, while the technology and financial sectors are more reactive to economic cycles. Mutual funds and ETFs are already diversified, which makes them an attractive option when you are working with small dollar amounts.
Bonds: Diversify your bond holdings by investing in bond funds. Or, vary your holdings across bond maturities, sectors, and types. The different types of bonds available are primarily municipal, corporate, and government bonds.
Cash: Cash doesn't lose value like a stock or bond can, so diversifying your cash holdings doesn't necessarily need to be a priority. If you have lots of cash, you might hold it in separate banks so that all of it is FDIC-insured. (The FDIC limit is $250,000 per depositor per bank.) But most people aren't sitting on tons of cash. More realistically, you might diversify how you hold your cash to maximize your liquidity and interest earnings. For example, you could hold some cash in a liquid savings account and the rest in a less-liquid certificate of deposit (CD) with a higher interest rate than a typical savings account.

5. Invest in a target-date fund that manages asset allocation for you

If you're nodding off just reading about asset allocation, there is another option. You could invest in a target-date fund, which manages asset allocation for you. A target-date fund is a mutual fund that holds multiple asset classes and gradually moves toward a more conservative allocation as the target date approaches. The target date is referenced in the fund's name and denotes the year that you plan to retire. A 2055 fund, for example, is designed for folks who plan to retire in 2055.

Target-date funds generally follow allocation best practices. They're diversified across and within asset classes, and the allocation takes your age into account. These funds are also easy to own. You personally don't have to actively manage your allocation or even hold any other assets -- except for the cash in your emergency fund.

Even so, there are drawbacks. Target-date funds don't account for your individual risk tolerance or the possibility that your circumstances may change. You might get a big promotion that enables you to retire five years earlier, for example. In that case, you'd want to review the allocations in your portfolio and decide if they still make sense for you.
Make (and follow) your own rules, too

No single approach to asset allocation addresses every scenario perfectly. Carefully consider your risk tolerance and when you plan to retire to establish an approach that works for you. You could also wing it -- but make sure that your seat belt is firmly buckled because it could be a wild ride.

Here's my current breakdown, as a 50-something year old:

IRA: 50% of net worth
Equity: 70%
Fixed income: 20%
Cash: 10%

Roth IRA: 5% of net worth
Equity: 98%
Fixed income: 0%
Cash: 2%

401K: 10% of net worth
Equity: 68%
Fixed income: 32%
Breakdown of contributions to 401k:
Pre-tax: 10% of salary
Roth: 2% of salary
Company match: 25% of the first 5% of my contributions

Non-retirement Investments: 4% of net worth
Equity: 56%
Fixed income: 0%
Real Estate: 43%
Cash: 1%

Personal real estate assets
Home: 30% of total Net Worth

Debt:
Mortgage: 5% of total Net Worth

I consider myself moderately aggressive in my investments, and prefer to live debt free. In a couple of years, I may shift more of my investments into less risky fixed income "safe harbor" assets. But for now, I'm happy with how my investments have grown over the years, and the tea leaves seem to how that once we get past this COVID stuff, the economy should continue to grow.

As a 70-yr-old I got tired of the stock market causing me to worry whether or not I was going to loose my pants in it, so I got out. F--- them. I'm perfectly fine with money in the bank or credit union as the case may be. My wife is the money manager so if she's happy I'm happy.

Quote:

Originally Posted by masraum (Post 11541897)

You bring up an excellent point: Most people just look at age, and not your current net worth and how that relates to your future net worth.

The more $$ you have, the more you can invest in higher risk investments, such as the stock market.

Quote:

Originally Posted by Chocaholic (Post 11541845)

But at the same time, you don't want to be too heavy into the markets when you're nearly ready to begin withdrawing. If the markets tank right before you retire, and take 5-10 years to recover, your withdraws could drain your nest egg quickly. So to me, that's smart. It's probably not a bad idea to have 5-10 years of money in something stable, that way if the market tanks, you can use money that hasn't devalued.

But I'm far from expert, and quite a few years behind you.

Quote:

Originally Posted by Z-man (Post 11541933)

That's my thinking. If you don't have much and are retirement age, then you probably need to be very conservative.

People are living longer. I would say only the next 5 years of expenses should be in cash, the rest are in the market. Or maybe 80/20... And yes I also generally follow what The Motley Fool folks say. They do offer a service called Rule Your Retirement that you can pay for.

I quit working at 60...was plenty concerned if I was making the right decision.

Markets have been great since and my net worth is more now than it was when I retired. (8 years ago)
Have used Ed Jones for almost everything.
Their advisory account has returned over 10% every year that I've been in it.

I’m 57 and at 70% equities, 20% bonds and 10% alternatives like precious metals, sustainable energy, etc and I’m retiring in three weeks!

out of lazyness and some ignorance I have been buying these at least in my Roth

https://investor.vanguard.com/mutual-funds/target-retirement/#/

Up the risk/reward factor a bit by selecting a retirement date slightly longer than I hope to achieve.

All of us are VERY unique in our lives and investment strategies. What I've done, and do wouldn't make a damn bit of cents to anyone but me .... and I think it makes cents ... for me :D

No complaints.... so far ;)

Some REGERTS tho.... but no tattoo :)

I'm 62 and have almost nothing in the bank. I get my weekly booze/drugs/prostitutes/gambling money from property rentals. And have quite a bit (gulp) of money in the stock market.

I do quite well because I'm somewhat irresponsible or aggressive in my investing. I don't have kids or family so if I lose I just don't eat quite as well for a while. The strategy has worked out well I guess.

This thread needs some Tabs direction.

I will be 64 in January . I have had my investments managed with Morgan Stanley for the last 20 years . I retired 4 years ago . I was very adamant with my advisor for the last 5 years or so I am ok with leaving some gains on the table for more stability in the portfolio .

When you are getting close to retirement the last thing you want is a big hit to your portfolio because you don't have the time or income to infuse to recover . Even with a very conservative investment strategy I am getting 8% on a consistent basis . I know that's not killing it but I am losing nothing and that's important to me .

Quote:

Originally Posted by aschen (Post 11541993)

out of lazyness and some ignorance I have been buying these at least in my Roth

https://investor.vanguard.com/mutual-funds/target-retirement/#/

Up the risk/reward factor a bit by selecting a retirement date slightly longer than I hope to achieve.

Yep, I've heard that they can be a bit conservative and that's the way to adjust. They take a lot of the trouble out of figuring out what to do, but I think the costs are usually a little higher because of the extra management. Still, not a bad solution.

Quote:

Originally Posted by masraum (Post 11541897)

Excellent post, one echoed in the Motley Fool link you pasted, #2.

I have been investing since I was 10 years old - my parents did the whole allowance/chores money earned very well. Standard stuff: Go to the bank, open a savings account, pass book, the whole nine. I had to save, later invest, 25% of my allowance and later earnings on the ranch.

My Dad taught me how to look at stocks in the paper, FGS. Different time.

I was making good money as a Little League Umpire when I was 15: $7.50 a game and I averaged 4 games a week. This was in 1971. 25% automatically, a habit, was stashed.

The good news/bad news is that I was never a financial risk taker based on that upbringing. My parents were low to moderate risk takers financially and by default so am I. I have left a lot on the table but frankly I would have worried too much. Not worth it, at least in my mind.

We are are, however, willing to risk on physical assets, particularly real estate. We all did very well there, continue to do so.

Now, at 65, we are in excellent shape and I am very comfortable with a portfolio that reflects my age and risk tolerance.

If you're married, the stock/bond ratio as it pertains to you age is dumb. You're not investing for your lifetime, you're investing for whoever lives the longest. That's your time horizon.

Once you're financially secure, all those predetermined plans and ratios go out the window. We're not going to see any Great Depressions anymore, so you should be investing somewhat vigorously. Patience and consistency are key. Panicking under any circumstances is the worse thing you can do. Don't.

It's been proven time and time again the the stock market (not the bond market BTW) provides the greatest return on investment long term. Don't be a baby. It always bounces back. Always.

Everyone's situation is different.

If I were 16 and starting all over today, I would invest as much as can every payday in SWVXX. This is what we've done for our grandchildren and their money has doubled in the short lives.

I always recommend educate yourself and ask questions.

Good place to start learning.

https://www.bogleheads.org/forum/index.php

So question for the Pelican brain trust:

Regarding Equities: what's your breakdown? Single Stocks? ETF's? Mutual funds? Does it differ from what type of investment you have? (IRA, Roth IRA, 401K...etc)..

Quote:

Originally Posted by stevej37 (Post 11541967)

The markets have been very good for the last 10 +/- years, hard not to make money. Just something to point out.

Quote:

Originally Posted by NYNick (Post 11542168)

IIt always bounces back. Always.

Yeh, but sometimes it takes a LONG time bounce back. Look at the highs of 1929 and 1966. both are about 30 years to recover.

With the Fed keeping the interest rates low (artificially), the federal deficit, and the cyrpto craze, I think we are in uncharted waters. But if I knew what I was talking about, would I be here?

Personally, I am not 'all in' on the market like I have been before the last 3 or 4 years.

https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart

Quote:

Originally Posted by Z-man (Post 11542296)

Your age, risk tolerance and retirement goals would determine the Answers to your question.

Me, I’m retired, a Chicken**** and dumb so I’m staying in mostly index funds for my 401k, shiny metals with a healthy pile of cash.

Best thing to do first is get debt free in or just before retirement.

Quote:

Originally Posted by Z-man (Post 11542296)

For me and my wife, for pre-tax holdings it's 80/20 stocks/bonds in Vanguard Wellington, Vanguard Primecap, Vanguard Total Stock Market Index Fund, and Vanguard Total Bond Market Index Fund. All have low management fees and according to the site, our personal rate ot return has been 15% over the last 10 years.

For post-tax holdings, the majority is in Vanguard Total Stock Market and Vanguard Wellesley - ~85/15 stock/bonds plus some cash.

I'll second Scott Watkins, check out the forum at bogleheads.com. Their philosophy is that dealing with individual stocks is basically just gambling.

I guess I am following a more aggressive approach as I do not have any bonds and the bare min in cash. My investments are stocks, ETF's, and 4 mutual funds as well as my 401k. I mostly focus on dividend aristocrat companies that are: Large S&P500, have paid dividends for 25+ consecutive years, and have year after year increases. I've been doing Roth conversions every year and my goal is to have my entire IRA converted to a Roth within the next 10 years without bumping me into the next tax bracket. I am lucky to be able to offset my conversion tax liability with my rental deductions and depreciation. The only debt I have is my rental property and that is being 100% covered by my tenant's rents and generates a good cash flow.

I am 60 and will work until I am 70 - I like my job and it pays well enough for me to save a substantial amount each year. I have rental property as well so I feel that if the market were to dip, even over a prolonged period, I could survive on SS and rental property income.

Quote:

Originally Posted by Z-man (Post 11541933)

The stock market has not been High risk since 4Q 2008.

Anyone could make money in the stock market for the last 13 years, there have been no real downs other than the Covidian scare where anyone with half a brain could have made big bank.

My buddy dumped 100K into the markets when they dipped in March 2020, all of it in Airlines and Cruise Lines.

He tripled his money. I thought he was crazy, he saw something I did not and benefited greatly.

Here is a fantastic tool when it comes to investing in the market.

https://traderschoice.net/about-traders-choice/

Scroll down and look at the MMRI - right now it is saying low risk, invest and do not worry.

I am in my mid 50's and have my money spread out everywhere. I cannot toss out percentages off the top of my head.

I have a Money Market Accnt that I contribute a decent amount weekly to.

Wife and I have both max out standard IRA's every year that are both investment accounts, I am about to contact the adviser and move them into PM only investments for the next couple of years. I think we are 6-12 months from a Market crash.

I have a decent amount in Crypto all across many different crypto's. I toss it on a wall and hope something sticks. Looking for the next Bitcoin... SHIB I am looking at you.

I also converted 50% of my cash into physical Silver and gold these last 6 years.

As well as having enough cash on hand to live a year without banks.

Want me to get started on my 1 year pantry goals?

I really need to get out of this tract home and onto some land so I can get livestock and start a small family farm.

*edit* I should also add, I have zero debt, no CC ,no car loans, and no mortgage. My only bills are utilities and home insurance / taxes. We just dumped close to 50K into the house on home improvements in order to make it maintenance free for the next 10 years. New impact doors, impact windows, hurricane shutters, metal roof, up to code Garage door, new Generator, new up to code Screen enclosure over pool and new Air Conditioning.

The house should need nothing for the next 10 years easy. My salary is the most it has ever been in my life, my business is 100% debt free and cranking in profits, while I do not expect these good economic times to last, I am prepared for a slow down with no overhead other than payroll and utilities. My plan is to sock away enough in the next 10 years to consider partial retirement. I love what I do and cannot fathom stopping myself from doing it.

I'm 60..

And recently decided I'm done with working

I have 1.2 million in my 401K

And over 800K in my ESOP

I plan on paying myself a salary equal to what I get now until I'm 65... then hitting up social security and Medicaid when I'm 65

Which will reduce how much I have to dip into my retirement funds..

At 56 years old, I have no debt (10 acre farm, and cars paid off). I will have a 28 year pension at 62 years old, and the 401K is currently approaching 500K. The 401K is split evenly between Roth, and standard, and has been gaining an average of 20% yearly for the last 6-7 years with additionally 20% of my pay being added. I plan on building a cash fund that will cover 2-3 years of expenses in case the stock market dives, that I could use instead of selling low. I also have a Schwab investing acct that I play with high risk stuff...I made $$ on AMC, and soon will on DWAC.

My concern is paying for 3 years of health care if I go at 62 with my pre-existing conditions.

Quote:

Originally Posted by Z-man (Post 11542296)

Breakdown? 2/3s equities, 1/3 bonds, cash and stable valve.

Single stocks,ETFs, Mutual funds? All are part of the equities portion. There is some overlap.

IRA, Roth IRA, 401k ...etc? At the end of day, where ever you invest your money it's steal just one portfolio.:DSmileWavy

Quote:

Originally Posted by Z-man (Post 11542296)

low cost equity index funds
ETFs that mimic ^
mutual funds that mimic ^

The only changes is that for tax-deferred, I unclude REIT, but for everything else, I do not.

Dividend growth investing....then you don't have to worry about most of this BS

^^^
Mine would be in more of the Dividend Payer area I think. The dividend has stayed the same for at least 4 years now.
But it still works out great. :)

Quote:

Originally Posted by 93nav (Post 11542317)

Yeh, but sometimes it takes a LONG time bounce back. Look at the highs of 1929 and 1966. both are about 30 years to recover.

https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart

As I said, we're not going to see any Great Depressions around here again, not to mention your time frame includes WWII, and two other wars.

Consistent investing for decades is the key to success. For those with neither the time, inclination or knowledge to actively manage their own money, a few low cost 5 star index funds will do the trick. Evaluate them occasionally and adjust as necessary.

"As I said, we're not going to see any Great Depressions around here again, not to mention your time frame includes WWII, and two other wars.

Consistent investing for decades is the key to success. For those with neither the time, inclination or knowledge to actively manage their own money, a few low cost 5 star index funds will do the trick. Evaluate them occasionally and adjust as necessary."

And the church said amen!

Quote:

Originally Posted by hbueno (Post 11542436)

This and similar.

I smell a change in the air, however. The markets have been crazy easy since 2008, and for a good time before that bump in the road as well due to low inflation and interest rates. I'm not sure that the current rise in inflation isn't going to lead to a cycle of higher rates, which could swing some money out of the markets. The fed will try to manage this but how successful they will be remains to be seen.
Nonetheless, I think that a good strategy remains to invest in broad sectors of the economy thru funds and balance there. Shoot for a decent average return rather than big hits. Yes, we all know folks that made fortunes in Apple or Google or Tesla "back then" but those are exceptions and not how I would do retirement planning.

And like Paul, real estate has been pretty solid through the last 20 years and is an "investment" you can appreciate in more ways than appreciation.