There is much discussion about re-balancing now given the high markets. Asset Allocation is also discussed. This past run has been a good time to be loaded up with equities.
I am trying to wrap my head around the impact of fixed revenue streams on what an appropriate AA might be.
I have a decent pension which is not COLA'd. Retiree healthcare is an expense of approximately $10K per year (my contribution plus max out of pocket). I have land which is generating a fixed income for the next 15 years. Pension plus SS plus Land Rent exceeds $125K. Basically, I do not see a need to tap any investments unless we get into massive inflation.
As I understand it, the concept of Asset Allocation is to become more conservative as you get older, so that you manage volatility at a time when you are drawing down your investments. If the market takes a huge drop, you are not selling at the bottom in order to pay your bills. I do not foresee us being put into a position where we need to tap those investments. Does this indicate that our risk tolerance is higher, and thus an AA with more equities is appropriate?
I am trying to wrap my head around the impact of fixed revenue streams on what an appropriate AA might be.
I have a decent pension which is not COLA'd. Retiree healthcare is an expense of approximately $10K per year (my contribution plus max out of pocket). I have land which is generating a fixed income for the next 15 years. Pension plus SS plus Land Rent exceeds $125K. Basically, I do not see a need to tap any investments unless we get into massive inflation.
As I understand it, the concept of Asset Allocation is to become more conservative as you get older, so that you manage volatility at a time when you are drawing down your investments. If the market takes a huge drop, you are not selling at the bottom in order to pay your bills. I do not foresee us being put into a position where we need to tap those investments. Does this indicate that our risk tolerance is higher, and thus an AA with more equities is appropriate?