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Subject:  Re: Asset Allocation Date:  4/6/2006  3:18 PM
Author:  ziggy29 Number:  50932 of 88052

>> What is the best asset allocation for someone either retired or on the verge of being retired? <<

The answer varies greatly based on individual circumstances. How much money do you have in the portfolio, and how much of it do you need? Do you want to let most of it compound to pass to heirs, or do you intend to use most of it yourself? What's your tolerance for risk and volatility?

Some people who don't need much (if any) of their retirement savings, who can tolerate risk and intend to pass the wealth onto their children can probably put 80% into stocks without batting an eye. Others in more cautious and conservative circumstances may want to vary from, say, 0-60% stocks depending on a number of factors.

As a starting point, I'd like to see people put about 5 years of needed income into "safe stuff" that has very little volatility -- cash, CD ladders, maybe ultrashort bonds. Another 5-10 years worth of withdrawals can go toward things like dividend stocks, REITs and other somewhat riskier investments which throw off a lot of income. Everything above that can often be put into a diversified stock portfolio or stock mutual fund with little risk, since you'd be "playing" with money you won't need for at least 10-15 years. Again, this is just my preference and it's about how I think a typical retirement investor should go.

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