What is your theory on investments re age...

[recycled sixtie]

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.

[rockfan4]

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.

[Chocaholic]

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.

[3rd_gear_Ted]

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.

[Crowbob]

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.

[masraum]

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.

[masraum]

This is what Motley Fool has to say about it.

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

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.

[Z-man]

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.

[Scott Douglas]

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.

[Z-man]

Originally Posted by masraum

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.

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.

[masraum]

Originally Posted by Chocaholic

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.

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.

[masraum]

Originally Posted by Z-man

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.

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

[wildthing]

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.

[stevej37]

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.

[cantdrv55]

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!

[aschen]

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.

[KFC911]

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

No complaints.... so far

Some REGERTS tho.... but no tattoo

[Bill Douglas]

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.

[stevej37]

This thread needs some Tabs direction.

[rfuerst911sc]

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 .