chinaco
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- Joined
- Feb 14, 2007
- Messages
- 5,072
This poll is about preferences for solid reliable income vs taking on Additional Risk/Potential Reward.
Situation for the poll
You are 55 and have a portfolio where 70% of the current value is enough (on a Present Value basis.. today's $) along with (SS + Pension) to produce the desired income stream (your real target income) to meet your needs till age 95. If you are younger just assume more assets to produce the income. You and spouse (if applicable) will be die sometime before or at 95 (so longevity past 95 is not a risk in this poll).
You have 2 options:
Option2 has a total bond allocation of around 80% across all assets
What is more important? Stable income adjusted for inflation the rest of your life or potential for more growth (at the risk of more loss)?
Situation for the poll
You are 55 and have a portfolio where 70% of the current value is enough (on a Present Value basis.. today's $) along with (SS + Pension) to produce the desired income stream (your real target income) to meet your needs till age 95. If you are younger just assume more assets to produce the income. You and spouse (if applicable) will be die sometime before or at 95 (so longevity past 95 is not a risk in this poll).
You have 2 options:
- Invest in a portfolio of Stocks and Bonds (e.g., 60/40 Mix). The upside is potential for growing your money past the current PV of income needs over 40 years. In other words, you make about a 7.5% average return but will suffer bear markets, potential for less growth... The upside is 7.5% Average... the downside could be loss of 25% or 40% of your assets. Depending on how you manage it... you could run out of money. Essentially, you are risking your lifestyle somewhat to have a somewhat larger estate at the end
- Invest 70% of the Portfolio in a TIPS ladder out till age 95 such that the money adjusts with the CPI-U plus the small investment premium on TIPS. Invest the remaining 30% of the portfolio in a smaller portfolio of Stocks and bonds (e.g., 60/40 Mix). This portfolio is to be used for whatever and however.
Option2 has a total bond allocation of around 80% across all assets
What is more important? Stable income adjusted for inflation the rest of your life or potential for more growth (at the risk of more loss)?