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How to invest funds over & above retirement need?
Old 11-09-2012, 09:26 AM   #1
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How to invest funds over & above retirement need?

Let's say you've run FireCalc and determined the amount of money needed to fund retirement. And, you've got this appropriately diversified for a retirement portfolio.
Now, let's say there's some extra money. How would you (or do you) invest this? (1) stop playing the game and put it in CDs, (2) shoot for the sky and put it all in stocks, or, (3) add to your retirement portfolio at it's allocation?
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Old 11-09-2012, 10:07 AM   #2
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(4) Retire now.
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Old 11-09-2012, 10:09 AM   #3
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Quote:
Originally Posted by racy View Post
Let's say you've run FireCalc and determined the amount of money needed to fund retirement. And, you've got this appropriately diversified for a retirement portfolio.
Now, let's say there's some extra money. How would you (or do you) invest this? (1) stop playing the game and put it in CDs, (2) shoot for the sky and put it all in stocks, or, (3) add to your retirement portfolio at it's allocation?
Perhaps one could look at how endowment funds allocate. Last I looked, and it's been awhile, they were about 80 percent stocks. The rest was mostly bonds with a sprinkeling of everything else.
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Old 11-09-2012, 10:11 AM   #4
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In my case, I have kids and while I don't plan to leave a legacy, if I had extra money I was never going to use, I'd probably put it in a mostly (or all) stock portfolio and invest for the long, long term - intending that they (or a cause I care about) would eventually benefit. I'd also consider starting an aggressive giving program.
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Old 11-09-2012, 10:14 AM   #5
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(4) Retire now.
That's what I thinking.

I think Bernstein made a comment "If you have won the game, why keep playing"

Individual munis are an option , keep the powder dry and wait for a 2009 type event.
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Old 11-09-2012, 10:39 AM   #6
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Depends on how you want to look at it. I might call it a safety margin and leave it in my portfolio with the normal AA. If it's an inheritance that might happen in 30+ years I'd keep it all in stocks. My mom lives off her annuities and pension only. She is keeping her portfolio for the kids, all in stocks. What's the point of holding CD's instead of equities for 30+ years?
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Old 11-09-2012, 11:06 AM   #7
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Quote:
Originally Posted by racy View Post
Let's say you've run FireCalc and determined the amount of money needed to fund retirement. And, you've got this appropriately diversified for a retirement portfolio.
Now, let's say there's some extra money. How would you (or do you) invest this? (1) stop playing the game and put it in CDs, (2) shoot for the sky and put it all in stocks, or, (3) add to your retirement portfolio at it's allocation?
What any of us would do is of little value. As others have mentioned, it all depends on your goal for when you go poof. Assuming you want to leave an estate to family and/or charity (since all 3 suggest same) it just depends on what's important to you:

a) leaving more than you already have, and accepting more volatility (might leave more, might be less than approach 1), see 2,
b) you already have what you want to leave and you want it to grow a little but not lose value at all, see 1 or,
c) something in between, see 3.

Just choose your goal...
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Old 11-09-2012, 11:28 AM   #8
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Having no heirs, I'd prob'ly work it in so as to enjoy retirement at a higher standard of living than anticipated/hoped for. YMMV.

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Old 11-09-2012, 11:37 AM   #9
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I would probably leave it at my normal AA (currently 56/38/6) and splurge a bit more (perhaps that two-seater convertible that catches my eye). Second would be all stocks and last would be CDs. (In fact, now that I think about it - I don't think that I have ever owned a CD.)

As an experienced investor market volatility doesn't rattle me and stocks are a big part of why I am RE'd - so I would dance with the one who brought me.
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Old 11-09-2012, 03:20 PM   #10
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Probably leave it in a similar asset allocation to what I already have. Maybe back the stock allocation down some (which equates to padding the fixed income section of the portfolio).
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Old 11-09-2012, 03:32 PM   #11
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My pension provides more than what I need and this what I plan to live off of and consider it my monthly income. With the excess cash and PT job monies I fill up my I Bond limit each year, then put the rest in my mutual funds. I never plan on ever accessing either one and hope they continue to grow until I die, but if I need it my IBond safety net will be there, whether the stocks have crashed or not.
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