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Re: 831 [knewbike] [ In reply to ]
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So down over 300 today from the what looked to be the rebound bottom. I'm gonna go swim for an hour now, if it is negative when I get back, I'm going in!!!!
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Re: 831 [jw13] [ In reply to ]
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jw13 wrote:
That's a diversification issue, not an asset allocation issue. Although I would agree that as we get older (closer to retirement age), the exposure to equities in a retirement account should be reduced. I'm in my mid-40s and my retirement account is 90/10 stocks/bonds. I hate bonds as a long term investment, but as I get older, I'll gradually shift. 50 probably is the next bench mark that will cause me to re-allocate, but not by much.


I like your first sentence as my answer to oldandslow, too.

However, I don't understand why exposure to equities should be reduced. If you're going to live for 30 more years please explain how taking lower returns on your $$$ is a good plan.
Last edited by: SH: Oct 12, 18 11:17
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Re: 831 [SH] [ In reply to ]
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Oh, sure. Re-allocation of an investment account based on age (in very general terms) might look something like this:

Aged in the 40s: 90% equities/10 fixed income (i.e., bonds);

In the 50's, 75-85% equities/15-25% fixed;

The 60's, 50-75 equity/25-50 fixed.

The point is to increase capital preservation GRADUALLY as you age, while decreasing risk. The overall returns might suffer a bit, but the larger investment corpus generated over time should result in larger fixed income returns. Further, capital preservation minimizes the downside risk from sharp, short term market volatility, such as what happened this past week.

All of this is very individualized of course. Further, even fixed income assets can have wide margins of risk. Think tax-free muni bonds, vs. high yield corporate "junk bonds." Both are "fixed income" assets, but involve huge disparities in risk.

Again, these are just general concepts. A lot depends on each individual's risk tolerance, and overall financial condition. A 100% equities account might make perfect sense for the senior citizen who owns multiple homes and/or other real estate income producing properties outright.
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Re: 831 [SH] [ In reply to ]
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However, I don't understand why exposure to equities should be reduced. If you're going to live for 30 more years please explain how taking lower returns on your $$$ is a good plan.

Because if the market drops 40+%, you will probably have a heart attack and not live those 30 years for it to bounce back!! Well actually it bounces back in a few years worst case, unless you had the nasdaq at 5000 during the Dotcom crash, that one took a few more years...
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